- Find a structural feature or price action sequence that will lead to “reasonable” expectation for a certain price outcome. For example, a REALLY obvious break of a pattern, level or trendline.
- Ask yourself, “But what if it doesn’t?”. What if price does not behave in the way expected by those who rely on standard TA methods? How will price look if the expectations should prove correct? How will price look if the expectations prove wrong? And will that provide trade opportunity?
- Why? Because trade opportunity is found where expectations fail to meet reality.
Let’s look at a sequence I absolutely love, which made it into my Trades Journal last week.
It’s Wednesday, 5th August 2015. But let’s step back to the start of the session first to get some context. We’ll begin with the daily chart, to give you a really “big picture” view.
Let’s zoom in a little to see the same idea on the 30 minute chart.
Let’s check out what happened on the Trading Timeframe, after the Crude Oil Inventories report provided the orderflow necessary to break the level.
Let’s look at the breakout using two different lower timeframe views (15 sec chart and then 2-range chart), to see if weakness was evident on the second break. And to see if there was some way to trigger an entry.
- Find a structural feature or price action sequence that will lead to “reasonable” expectation for a certain price outcome. For example, a REALLY obvious break of a pattern, level or trendline.
- Ask yourself, “But what if it doesn’t?”. What if price does not behave in the way expected by those who rely on standard TA methods? How will price look if the expectations should prove correct? How will price look if the expectations prove wrong? And will that provide trade opportunity?
- Why? Because trade opportunity is found where expectations fail to meet reality.
Happy trading,
Lance Beggs