What Separates Price Action Event Zones From Support and Resistance Levels?

Hello and welcome to another edition of the bulls vs the bears. Today we are going to find out what separates price action event zones from support and resistance levels. Now you need to know price action even zones and support/resistance levels like the back of your hand. Now do I really have to go into what support and resistance levels are? I;m sure most of you know what these two levels are. If not, click here.

For your information, price event areas have been part of forex trading jargon for a quite while. It’s only recently that it’s being introduced into the forex trading main stream. So to avoid further confusion, I’m going to define what these two tools are. And then I’m going to dig deep into what separates these two wonderful tools.

First off:

What’s A Price Action Event Area?

Well, a price action event area is a critical horizontal area on a price chart where a price signal formed. In this same price action event area, you’ll also find a major trend move(uptrend or downtrend)  or sideways range taken shape. These event areas are popularly know as hotspots on the price charts. You should watch these hotspots like a hawk in case in case they retrace(or pull back). If price happens to to touch these event zones, you can be sure the major players will start considering their options. Now let’s take a look at a price event area through the eyes of a pin bar signal.

Event zone

Ladies and gentlemen.  Laying in front of you is an illustration of the price event area  through the eyes of a pin bar buy signal. The grey shaded ares represent both support and resistant areas.  The arrows pointing downwards suggest price retracing after price bounced off both support and resistance levels. Now take look at the bulls blasting through the level of resistance thanks to a pin bar formation at the level of support.

Keep a close watch on the  arrows pointing downwards  at the line of resistance. The line of support converts into a line of resistance, and the bulls break through this key level and head for the mountains on the back of another pin bar formation. And when this happens, just rack up all the profits along this trail. Understand one thing about price event areas. When you miss out on a price signal, don’t panic. Just wait for price to retrace in the same event area and then you make your move.

Next up is:

Support and Resistance Areas

I’m sure most of you know by now that support and resistance areas are static horizontal levels that are drawn across the price chart. Let’s take a look at support and resistance levels.

EURUSD Support Becomes Resistance

Ladies and gentlemen, this is an illustration of support/resistance levels, using the EURUSD pair. These are standard support and resistance levels drawn across highs and lows.

However, there are instances where the support and resistance lines are a more elaborate and longer in length than this example here, So don’t hit the panic button just yet. Now let’s look at support/resistance levels   a daily chart time frame, using the AUDUSD pair.

Image result for forex standard support and resistance levels on daily chart time frame

Ladies and gentlemen, here is another illustration of support/resistance levels using the daily chart time frame. Unlike the previous example, you don’t see any an event area in evidence on this chart. However, price event areas reflect a major price occurrence at the support/resistance levels. Plus, event areas carry a higher premium than support/resistance areas.

Now to the question du jour(of the day):

What  Separates Price Event Areas From Support and Resistance Areas?

This may sound crazy to some of you. But every even zone is a support resistance area, but not every support and resistance area is a price event zone. This begs the next question:

How Do I Tell The Difference?

You see in a price event zone, a price signal suggests a huge breakout from a consolidation area or key level. Let’s take a look at an illustration using the power of confluence.

Image result for forex price action signal in event zone

Ladies and gentlemen, right in front of you is an illustration of a price event area using the AUDUSD pair. The black circled numbers and the red arrows represent price signals long the key levels.

The price signals spark major breakouts at both support and resistance levels. And when  such an occurrence takes place, nobody has to tell you that you are looking at a price event area. If you want to find out more about multiple price signals look up Something Called Confluence.

Now let’s use the CADJPY pair to ascertain why support/resistance is not a price event area.

Image result for why support/resistance levels are not price event zones

If you look at the price chart you’ll see that there is no sustained consolidation before the breakout. Even worse, there is no evidence of a price signal triggering the breakouts in either the support or resistance levels. Even worse, we don’t see any price signal triggering a breakout  at neither the support nor the the resistance levels. S you  see why I say the support and resistance levels

That’s a wrap for “A Closer Look At Price Action Event Zones And Support & Resistance Levels.” As you can see price action event zones and Support/resistant levels help you understand the  overall dynamics of the formation of a trade. This give and go between the price signal/entry and the market conditions give rise to the high probability opportunities. Til next time  take care.

Til next time take care.

Open Live  Forex Trading Account 

If you’re looking to open a live trading account sign up with EasyMarkets

Open Demo Trading Account 

But if you want to get a feel for the platform first  and practice your trading strategies before going live, open a free demo account with EasyMarkets

How To Find The Best Trade Entry For Maximum Profits

Hello and welcome to another edition of the bulls vs the bears. Today we are going to find out how to find the best trade entry for maximum profits. Basically we are looking for lower risk and higher reward. Ask most people what their ideal low low risk and high reward is and they’ll say”A massive stop loss and massive profits.” But then somebody will retort saying”Yea. That’s easy for you to say.”

Sure these sublime trade situations are hard to find. They are like shooting stars. You find them today , and that’s it. But I’m hear to tell you that it’s possible to spot these sublime sightings. You just need to do a little digging. So without wasting much time, I’m going to show you two ways you can spot the best trade entry. And then I’ll show you a few illustrations of how to spot these trades.

Look For Obvious Price Signals

Look Obvious price signals. These signals should so obvious that  you can’t miss them. T  Most will tell you that the best time frame to spot these price signals is the daily chart frame. Because that is where all the excitement is. Do this over and over again, and you will get the hang of it.

Next up

Look for Factors of Confluence That Confirm The Price Signal

The next step is to look for factors of confluence that confirm the price signal. Basically you spot the signal, and then go back to another time frame and check to see if  the signal aligns with other key levels or has formed thanks to a pullback within a  trend, or that there is another factor of confluence in the chart.

Basically you want to find as much supporting evidence if you want to find the perfect trading point. Because the last thing you want to o do is to increase the risk:reward potential  just to satisfy your restless urge. Just stay within your trading plan and you should be good to go. Like I said last time, greed kills.

I will let you in on a little secret. You may not find the perfect entry out there, but you can definitely find trades that carry a lot of confluence(or weight) behind them.

Now that we’ve gotten the meat out of the way, Let’s get into some examples

Trader Jack_Le — Trading Ideas & Charts — TradingView

 

First is a clear example of a pin bar sell signal at the line of resistance. Pay close attention to the way the pin bar’s tail sticks out at the top. This obviously suggests a major price reversal, and it also tells you that price might be dropping pretty soon. This is pretty obvious it’s ridiculous.

Now next look at the illustration of confluence in the next pic

Using-Pin-Bar-Price-Action-Trade-Forex-Confluence

 

Right in front of us are three factors of confluence ina EURAUD graphic. This was a consequence of two zones acting as both support and resistance. If you ask me they give enough grounds to warrant a trade entry. Once again, see the way pin bar tail jut out at each of the three zones. That’s because of major pullbacks in each of the three areas.

Now these price signals are so obvious you can miss them. And when you get the entry right, expect to see a spectacular downward slalom run, as is the case at the line of resistance. See  the way the  bears just barge  through the resistance barrier like it’s stolen something from them. And when that happens it can only mean one thing – humongous profits.

Now let’s look at another example illustrating an entry tweak and potential risk rewards

How To Find The Best Entry Points For Your Forex Trades | Forex Filli

Ladies and gentlemen, we are going to look try to tweak our entry and improve on the risk reward potential on the trade. It’s going to be tough entering on the 50% retrace as price has barely touched the the first level of support at the bottom. The good news is you can still enter on the retrace of the pin(as indicated by the red arrow on the “Buy Entry”) and place your stop above the pin high(as indicated by the red diagonal line). Do this and you have yourself a strong stop loss and a decent profit.

We can see the same pattern at the RR2(Risk Reward) level. Stop loss is placed above the pin bar and entry is made just around the the third line of support. This sets the stage for a huge profit binge.

Finally let’s look at a bearish pin bar illustration whose profit potential is not so obvious

The Pin Bar Price Action Signal - Forex Price Action Trading ...

Here you see along – tailed pin  bar followed by a strong bearish pattern. These   bars formed after price broke and closed under this level previously. Now it wont be so obvious  since they don’t immediately scream “SELL US.” But the strong momentum behind the sell off should pretty much tell you it’s time to put in your sell order.

That’s a wrap for “How To Find The Best Trade Entry For Maximum Profits.” The main thing you should take away from this lesson the best trades form, backed by supporting factors better known as factors of confluence. With a little practice and knowledge of what you are looking for, this will be a cake walk for you.

Just look out for an intersection of a signal and  a key level. Or it could even be the intersection of a key  level and  a trend. Just trade like a  sharp shooter and wait for the right pieces to fit. Once the flash bulb in your head  goes off,  just pull the trigger and enter your trade.

Til next time take care.

Open Live  Forex Trading Account 

If you’re looking to open a live trading account sign up with EasyMarkets

Open Demo  Forex Trading Account 

But if you want to practice your trades and get a feel for the trading platform, open a free demo account with EasyMarkets.