Hello there, today we’ll continue our course with important levels.
In my experience, people tend to clutter their charts with lots of levels and ranges and other crap, which generally doesn’t work. So today, lets focus on some levels that actually do work.
But First lets jog our memory regarding impulsive levels.
There are 2 types of market impulses – bearish and bullish, bearish being a big seller, and bullish – buyer. The most common mistake for rookies is that when the price reaches this level,
and starts to reverse a bit, they open trades. That’s a bad idea, and tends to cost you. Today we’ll discuss how we can verify these levels and make sure they’re what we’re looking for.
So, general picture is that the price consolidates, and then impulses up. You mark this zone, because there might be a big buyer here, thats fine.
Then, when the price comes back here, and starts to reverse a bit, people buy. This is not how you should be doing it. If you try to get into the buyer’s head, if you need to buy a large amount of anything, you need someone who’s willing to sell that large amount, also known as liquidity. In this case you have two options – to buy the assets at a higher price, or understand that some people buy where I mentioned
But all the stoplosses of these poor chaps are below this zone
If you’re the big buyer, these very stoplosses are liquidity, and option number two would be to hit all their stop losses, and get the assets at a better price
It’s the best way for you to accumulate a position. And that’s why usually the price goes below the level, forms a false breakout, and only then goes up with an impulse.
And that, is why we enter only after that, and this whole process is known as an impulsive movement confirmation.
Now let me show you all this on a live chart.
Live Chart Analysis
First off, we mark impulsive movements. In our case we have two
But these aren’t confirmed levels yet. There is likely a big seller, and a big buyer here, but we need confirmation.
Here we see a false breakout, followed by a test, and so we know that this is now a confirmed level
And mark it as such. Next lesson I’ll talk about opening trades, but for now we’ll just focus on confirming levels.
Here we have another impulse, but it’s a bit difficult to make out a consolidation
I you cant see it, just mark the candle’s wick.
Here is another impulse, but, again, no consolidation, so let’s just mark it as a zone of interest for now
Here we have a bit of a breakout, but it’s hard to use. It’s a lot better when the breakout is the body of a candle, not just the wick
Better when a candle closes, and another opens below the zone.
And here we see an actual breakout, a couple candles closed and opened below the zone, and the above.
So this is now a verified level.
Here our previous zone gets confirmed as well,
Now, as I’ve said next lesson we’ll talk about how you actually open trades with this.
Be sure to do you homework.
Thanks for reading and have a good day.