UNDERSTANDING PRICE ACTION

intraday tactics on forex - applicable to all markets

UNDERSTANDING

PRICE ACTION

Practical Analysis of the

5-Minute Time Frame

Bob Volman

Copyright ? 2014 by Bob Volman. All rights reserved.

Published by: Light Tower Publishing

ISBN 978-90-822786-0-6

ProRealTime charts used with permission of

No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the author, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the author at the address below.

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Disclaimer: This publication is solely designed for the purposes of information and education. Neither the publisher nor author shall be liable for any loss, claims or damage incurred by any person as a consequence of the use of, or reliance on, the contents herein.

Table of Contents

Preface V

Part 1: Practical Analysis

Chapter 1: Chapter 2:

Chapter 3: Chapter 4: Chapter 5:

Chapter 6:

Chapter 7: Chapter 8:

A Time to Trade and a Time to Study 3

Price Action Principles--Theory 5 Double pressure 6 Support and resistance 8 False breaks, tease breaks and proper breaks 11 False highs and lows 16 Pullbacks reversals 20 Ceiling test 25 Round number effect 30

Price Action Principles--Practice 33

Orders, Target and Stop 67

Trade Setups 73 Pattern break 76 Pattern break pullback 97 Pattern break combi 108 Pullback reversal 125

Manual Exits 143 News report exit 144 Resistance exit 148 Reversal exit 156

Skipping Trades and Trading Breaks for Failure 177

Recap Part 1 211

Part 2: Evaluation and Management

Chapter 9:

Consecutive Intraday Charts 245 March 250 April 272 May 293 June 316 July 337 August 359

Chapter 10: Trade Size--Compounding 383

Chapter 11: Adapting to Low Volatility 391

Chapter 12:

Final Words 421 About the Author 422 Index 423

Preface

In these modern times of high-tech trading devices, with all the latest gadgets at the push of a button, price action traders may come off as somewhat old-school. With nothing in front of them but the bars in the chart, there is little in their workspace that bears witness of the digital wave. Are they mere relics from a fading past, soon to be extinct, or could it be that there is merit in this seemingly stubborn defiance of trading evolution?

One way to answer this is to point out the actual benefits of every indicator craze that has swept across the trading landscape for the past so many years. Not an easy chore by any means. A simpler solu tion, perhaps, is to focus attention on the price action trader instead and see if we can come to appreciate his one and only tool, the naked chart.

With the latter idea in mind, Understanding Price Action is written not just to establish the virtues of the price action method, but to serve as a practical guide on the matter. The core premise within is that any dedicated student, before long, should be able to trade confidently and profitably from a clean chart without ever feeling lost or otherwise deprived.

For the purpose of illustration, any price chart could basically do, but few are better suited for the job than the 5-minute chart of the eur/ usd currency pair. A true creature of habit, this market has long since been the favorite of countless traders around the globe and it's hard to

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