13 best PRICE ACTION signals I found after 15 years

Summary

This video offers a comprehensive guide to mastering price action trading strategies. With over 15 years of experience, the presenter shares 13 favorite price action signals, including the 'fakie', breakout buildup, and 'dirty retest'. The script delves into the importance of combining these tools with an understanding of market principles, such as stop-loss placements and liquidity zones, to enhance trading performance. It also emphasizes the need to recognize market imperfections and the benefits of specializing in specific patterns for consistent trading success.

Takeaways

• 📈 The video discusses 13 favorite price action strategies, tips, and tricks that the speaker has learned over 15 years of trading.
• 🎯 The 'fakie' or failed breakout is a key price action signal where the market pierces through a support or resistance level but then quickly reverses, indicating a strong reaction and potential trading opportunity.
• 📊 The importance of observing the market's reaction to previous highs and lows is emphasized, as multiple rejections can signal momentum changes.
• 📉 The 'breakout buildup' pattern is highlighted as a useful tool for identifying potential trend continuations, especially when the market shows less selling interest upon retesting resistance levels.
• 💧 The 'dirty retest' concept is introduced, explaining how liquidity zones and stop runs can affect price movements and provide insights into stop placement for traders.
• 🚩 Flags are identified as classic trend continuation patterns that can help traders enter or add to existing positions within an ongoing trend.
• 🔢 The 'triple tab' pattern is a sign of weakening momentum within a trend and can indicate an impending trend reversal.
• 🔄 Price divergences are used to compare the strength of different trend waves and can signal a potential market turnaround.
• 🔢 The '123 pattern' is a method for identifying a change in trend direction, where breaking above previous highs can signal a new upward trend.
• 🔲 The 'flat top triangle' is another trend continuation pattern that involves resistance levels and can lead to stop runs if the market fails to push through.
• 📉 Deceleration in candle size after a strong move can indicate a potential trend reversal, especially when observed at key support and resistance levels.
• 📊 Supply and demand zones are important for identifying strong market areas that can lead to significant price reactions when retested.
• 📋 The 'engulfing momentum candlestick' is a significant signal of a momentum reversal, particularly when it occurs at a demand area within a larger trend.
• 🔑 The final advice given is to combine different price action tools, understand the underlying principles, connect signals, learn to see market imperfections, and specialize in specific patterns for better trading results.

Q & A

What are the key concepts discussed in the video regarding price action trading?

The video discusses several key concepts such as the 'fakie' or failed breakouts, breakout buildup, the dirty retest, flags as trend continuation patterns, the triple tab pattern, price divergences, the 123 pattern, the flat top triangle, deceleration, supply and demand zones, and the engulfing momentum candlestick.

What is a 'fakie' in the context of price action trading?

A 'fakie' refers to a situation where the market pierces through a support or resistance level but then quickly reverses back and rejects the level, often leading to a strong price movement in the opposite direction.

Can you explain the breakout buildup pattern mentioned in the video?

The breakout buildup pattern occurs when the market approaches a resistance level and, instead of a strong sell-off as seen previously, there is barely any movement, indicating a lack of selling interest. This can be a precursor to a breakout and a continuation of the trend.

What is a 'dirty retest' and why is it important for traders?

A 'dirty retest' is a liquidity concept where the market retraces back into a previously established pattern or breakout area, triggering stops and creating a strong reaction. Understanding this concept helps with stop placement and overall chart analysis.

How do flags function as trend continuation patterns in price action trading?

Flags are consolidation patterns that occur against the ongoing trend direction, usually with a much shallower angle compared to the trend. They indicate a potential continuation of the trend after the consolidation period.

What does the triple tab pattern signify in trend analysis?

The triple tab pattern signifies three consecutive higher highs, each less strong than the previous one, indicating weakening momentum in an uptrend and potentially signaling the end of the trend.

How can price divergences help in understanding trend strength?

Price divergences compare the strength of different trending phases. If a trend leg is much shorter in duration or selling pressure is significantly less, it indicates weakening interest in the trend, potentially signaling a trend reversal.

What is the significance of the 123 pattern in trend reversals?

The 123 pattern is significant as it marks the first move against the previous trend direction, with a higher high and a higher low (1-2), followed by a continuation of the new trend direction, often indicating a potential trend reversal.

How does the flat top triangle function as a trend continuation pattern?

The flat top triangle is a pattern where the market consistently hits a resistance level but makes lower highs on each attempt, never making lower lows, indicating a potential continuation of the uptrend after a breakout above the resistance.

What role does deceleration play in identifying trend reversals?

Deceleration refers to a significant reduction in candle size following a strong price movement, indicating weakening momentum. It serves as an early warning sign of a potential trend reversal, especially when observed at support or resistance levels.

How can understanding supply and demand zones enhance trading strategies?

Supply and demand zones identify areas of strong buying or selling pressure. By waiting for the market to reach these zones and observing price reactions, traders can make more informed decisions about potential trend continuations or reversals.

What is the importance of the engulfing momentum candlestick in price action trading?

The engulfing momentum candlestick is a strong reversal signal that shows a significant shift in momentum, often occurring at key support or resistance areas. It can indicate the start of a new trend direction following a strong move.

What advice does the video give for traders who struggle with price action?

The video advises traders to combine different tools and concepts, understand the underlying principles of buying and selling, connect signals, recognize market imperfections, and specialize in specific patterns to increase confidence and improve trading performance.