The Only Price Action Trading Strategy You Will Ever Need...
Published: 2020-11-11
Status:
Available
|
Analyzed
Published: 2020-11-11
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
The speaker believes that traders without a defined strategy are likely to lose money. They will teach a specific strategy to avoid this outcome.
"if i were to ask you to go place a trade right now in the markets what would you be trading based on would you be trading based on some random indicator would you be trading based on pure emotion because you really don't have a strategy right now if that is the case then that is exactly what you need to do if you plan to blow your account or if you want to continue to lose money trading and financial markets and if you do not then you need to understand the strategy i'm going to be teaching you throughout today's video"
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The speaker will teach a trading strategy that uses two technical factors to identify accurate trading opportunities.
"so in this video i'll be teaching you exactly how to utilize this two technical factor way of spotting extremely accurate trading opportunities"
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The speaker is using the AUD/NZD as an example of a trade that took off significantly from a specific 'green zone', implying a predictable pattern.
"can anyone tell me why the aussie new zealand took off like a rocket from this green zone when i press play you'll see what i'm saying"
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The example trade shown (AUD/NZD) is a demonstration of the trading strategy that will be taught in the video.
"the trade you see on the screen was based on the exact strategy you're gonna learn today"
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A previous trade on AUD/NZD achieved a 3.3:1 risk-reward ratio.
"here's our also new zealand trade it's currently up about a 3.3 to 1 risk reward on this trade"
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The speaker is closing a profitable AUD/NZD trade at a support zone identified by the same principles taught in the video, indicating a reversal.
"i'm actually about to take the profits off on this trade because of the same things you're learning in this video but the opposite direction we came into this area of support and all of the things lined up for me to see this as a pivotal reversal zone out of the algae new zealand"
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The AUD/NZD trade resulted in over 100 pips profit with a 27 pip stop loss, achieving a 4:1 risk-reward ratio.
"which caused me to then place a trade which is now up over 100 pips and my stop loss on this trade was about 27 pips so that puts me at a four to one risk reward"
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The core of the trading strategy involves combining 'levels of structure' with the RSI indicator.
"the two things we're going to be combining our levels of structure which we talk about a lot on the channel but that's not all the rsi indicator is going to play a huge role in this"
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The RSI indicator used in the strategy is set to a period of 14.
"the rsi indicator is easy to find and my setting for it is 14."
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The strategy looks for RSI divergence when price approaches a major structure level.
"what do you think i'm looking for while we're coming into a level of major structure here's that level of major structure while we're coming into it i want you to look at the rsi indicator what's happening and maybe this will help if you're not familiar with what this is it is called rsi divergence and it's a very powerful tool you can use in your trading"
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RSI divergence alone is not sufficient; its accuracy is significantly enhanced when combined with major structure levels.
"rsi divergence by itself will not give you extremely accurate trading opportunities it's good but it won't give you these holy grail like trading opportunities what will though is combining this rsi divergence with major levels of structure"
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Bullish RSI divergence occurs when price makes lower lows while the RSI makes higher lows.
"what we were looking at for this trade is we have a market that's pushing down right i'll draw this trend line so we can see the lower lows that price is creating while the price is creating all of these lower lows the rsi is diverging by creating higher lows that's all rsi divergence is is rsi doing the opposite of what price is"
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Definition of bullish RSI divergence: price makes lower lows, RSI makes higher lows.
"if price is creating lower lows lower lows lower lows and rsi indicator is creating higher lows higher those higher lows then we have rsi divergence"
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The combination of RSI divergence and major structure levels is crucial for accurate trading opportunities. RSI divergence alone is insufficient without structure.
"price didn't have the major level of structure to bounce off of with this rsi divergence so that's why we don't just trade based on solely rsi divergence in order to get the most accurate trading opportunities we wait for this rsi divergence to creep into our zone of major structure"
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The two-step process for the strategy is: 1. Identify important structure levels. 2. Look for RSI divergence.
"we find our important area of structure that's step number one the second technical factor we use is this rsi divergence"
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The speaker previously identified a specific area on the EUR/USD as a potential short trade opportunity.
"we just saw us take profits on this trade and when we did i told you during that clip in that video that this was an area i would be looking at for possible short trades on the euro dollar"
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The speaker highlights a EUR/USD level that has previously acted as both support and resistance, identifying it as a major structure level.
"initially we have an area of structure that's acted as support support support support resistance an area of structure that is a major area of structure"
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Bearish RSI divergence occurs when price makes higher highs and the RSI indicator makes lower highs.
"for bearish rsi divergence what do we need price making higher highs and the rsi indicator to be making what lower highs"
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Explains the difference between bullish and bearish RSI divergence: Bullish = price lower lows, RSI higher lows. Bearish = price higher highs, RSI lower highs.
"think the opposite if you're not familiar with rsi divergence think the opposite of what we just did if for bullish rsi divergence we need price to be making lower lows while the rsi indicator makes higher lows then for bearish rsi divergence what do we need price making higher highs and the rsi indicator to be making what lower highs"
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The speaker reiterates that their two-factor strategy (structure + RSI divergence) has yielded highly accurate trading opportunities.
"this is a two this is a two technical factor way of trading that has provided me with some of the most accurate trading opportunities i have ever seen"
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The speaker will apply the discussed trading approach to the top five major currency pairs.
"i'm going to take you through the top five major pairs and discuss how i would use this exact approach to price action trading"
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A past trade on the EUR/USD from the previous week will be discussed.
"on the euro dollar do you see anything interesting here let's talk about what's already happened okay on the euro dollar i want you to pay really close attention to this last week we had a trade on the euro dollar"
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A live EUR/USD long trade is being opened with a target of 1.4:1 risk-reward.
"looking at a nice long opportunity here on the euro dollar right now i'm gonna go ahead and open up a live trade with you guys my target i'm sitting here looking at this as a 1.4"
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The speaker plans to manage the EUR/USD trade by trailing the stop-loss to breakeven and adjusting the take-profit to aim for a risk-reward ratio greater than 1.4:1.
"i'm not gonna have necessarily a take profit there i'll be moving my take profit up and moving my stop loss up to break even at around that point and then continuing to see if we get some type of big reversal out of this market so i can get more than a one point four to one risk reward out of this trade"
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Major structure levels are identified by recency (recent testing) and strength (significant price reaction, like being 'pushed around').
"find a major structure level and by the way the way i spot out major structure levels is recency was it a recent level tested by price and either strength or frequency combined with that strength meaning did this market get pushed around like the bully would push a little kid around on the playground the answer to that question right here yes"
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The first step of the strategy is to identify important structure levels using recency and strength.
"this becomes my important area of structure and that's how we utilize the first step we find our important area of structure"
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Illustrates bullish RSI divergence on EUR/USD: price makes lower lows, RSI makes higher lows.
"well if we take a look at the rsi what do you see happening we have a low right here on price and a lower low on price we have a low right here on the rsi and a higher low on the rsi"
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The EUR/USD trade was based on the identified RSI divergence and structure; the specific entry reason will be taught in free training.
"this was the reason we took that trade and the entry reason that you'll learn in the free training below"
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The previously identified EUR/USD major level was highlighted last week as a potential area for short trades.
"let's take a look at what happened next we had this level spotted last week as a level we would be looking for possible short trades out of on the euro dollar because it was a major level"
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The EUR/USD resistance level is confirmed as a major structure level due to recent testing and frequency (tested multiple times).
"scrolling the chart back you can see that this is a level that was tested multiple times as resistance so what do we have recency and frequency we have a level that was recently tested multiple times that means recency and frequency is valid"
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The speaker will demonstrate bearish RSI divergence on EUR/USD by drawing trend lines on price and RSI.
"divergence do we get rsi divergence here let's draw trend lines it's a very easy way to do it from high to high there's our trend line from high to high on the rsi do we have divergence"
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Following the identified bearish divergence and structure on EUR/USD, the market fell over 140 pips.
"the market fell from this area by over 140 pips"
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For GBP/USD, the speaker is looking for a major structure level on the daily chart, identified by recency and strength (significant downward push).
"on the pound dollar what we'll be waiting on this is giving me a good opportunity to show you the way i wait on this in the future where on the daily chart what i'm looking for is major levels of structure was this a recent level of resistance recency yes it was was it strong did it have strength will it push the market down dramatically in a big way"
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After identifying a major structure level on GBP/USD, the speaker will look for bearish RSI divergence (price higher highs, RSI lower highs).
"my major level is found what do you think i'll be looking for on this chart as we get into this area i'll be looking for the market to show me that we have rsi divergence meaning that price is going to continue to make higher highs getting into this area and the rsi is going to make lower highs getting into this area"
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Confirmation of bearish divergence on GBP/USD (RSI lower highs, price higher highs) will lead to looking for a specific entry reason taught in free training.
"if that happens and we get this lower highs on the rsi and we get higher highs on price then i'll be looking for a particular entry reason again that will be in the free training below this video is already gonna be too long"
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If the current green candle on GBP/USD closes higher, the broken resistance will become a new major support level.
"well that green zone is really not going to be a major level but if our green candle we have right now closes up here then our new major level of support will be the most recent level of resistance that was broken"
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The broken resistance level on GBP/USD is confirmed as a major structure level due to its recency and strength.
"ask yourself the same thing what is this level recent the level of resistance that was just broken yeah it's the most recent level that was broken was it strong yes it pushed the market down dramatically in a big way"
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On GBP/USD, after price breaks resistance and becomes support, the speaker will look for a pullback to this zone. If the market becomes oversold and shows bullish RSI divergence (RSI higher lows, price lower lows), it will present a trading opportunity for a move higher.
"meaning now i would be dropping down to smaller time frames one hour and four hour charts looking for this market to pull back on a one-hour chart would be more likely so let's go down to that on a one-hour chart it's quite possible that if this market has a pullback all the way to this zone we start to see this market go oversold if we see this market go oversold and start to provide some kind of rsi divergence while we are oversold higher lows on the rsi lower lows on price then that is when i'll be looking for possible trading opportunities out of the euro excuse me out of the pound dollar to push the market higher"
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For AUD/USD, after identifying a major daily/4-hour structure level, the next step is to look for RSI divergence on the 4-hour and 1-hour charts.
"we have our major level of structure now i want you to imagine this at this major level of structure before we even drop down to smaller time frames what would i be looking for on those smaller time frames if i'm looking for my major level on the daily in the four hour then on the four hour and the one hour i'm looking for what rsi divergence"
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On AUD/USD, an overbought RSI and higher price highs into a structure zone, coupled with lower RSI highs, indicate bearish divergence.
"we've had an overbought rsi here we've then had higher highs in price into the zone of structure i was already paying attention to for possible short trades we have lower highs on the rsi indicator as we come up into that zone"
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The speaker is waiting for an entry signal on AUD/USD this week based on the identified bearish divergence at a major structure level, expecting a reversal and downward move.
"if i would if i get an entry from here which i will be waiting on throughout the rest of this week if you want to know what that entry is this is the last time i say it i promise it is free linked in the description i'll be looking for that entry here and for the market to reverse and push down from this level"
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Confirms AUD/USD resistance level as major structure based on recency and strength (significant price reaction).
"why is this a major level of structure look back ask yourself the three major questions was it a recent level that was tested the answer is yes it is the most recent level looking left of resistance the market just hit is it a strong level well did the market get pushed around like a little kid would if there was a bully on the playground yes it did"
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On USD/JPY, the speaker will not trade based on divergence on lower timeframes until price reaches the major resistance zone, as it's not the most accurate strategy until then.
"dollar yen is pushing higher right now now tell me before we get to this zone in red our major resistance level right recently it was tested and it was a very strong level of resistance before we get to that area am i going to be looking for divergence and trading based on that on lower time frames no because that doesn't provide the most accurate trading opportunities possible"
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Reinforces that the combination of divergence and structure is key, not just one factor alone.
"just divergence is not enough just major levels of structure is not nearly as accurate as combining the two"
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USD/JPY is approaching a major resistance level with a very high RSI (around 85), suggesting a high probability of RSI divergence occurring within that level.
"right now it looks like we could get rsi divergence see how high this rsi went we're up closer to like 85 so the rsi went extremely high on most yin pairs by the way the yen must have tanked because the dollar yen the caddy and the euro yen they all have this huge push up and with that being the case and we have this really high rsi we very likely can get into this level and still have some type of rsi divergence"
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On USD/JPY, if RSI divergence occurs at the major structure level (between 107 and 106.41), the speaker will look for a specific entry reason.
"if we do i'll be looking for a specific entry reason in this area between 107 and 106.41 because it's a major level of structure and we need rsi divergence in that level in order to give me the greatest trading opportunity possible"
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For USD/CHF, the first step is identifying a recent daily resistance level (major structure). The second step is to look for RSI divergence on smaller timeframes.
"currently on the daily we have a recent level of resistance that i'm looking at for possible trading opportunities this is my first step i've got my major level second step i'll be dropping down to smaller time frames and looking for rsi divergence"
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Despite seeing RSI divergence on USD/CHF, the speaker is not trading it because the market is not yet at the target major resistance level, which is where the most accurate opportunities are expected.
"we got a high we have a higher high here we have a high we have a lower high here on rsi we got rsi divergence but do we place trades based on that no we do not this market is not overextended in my opinion and not ready to take a big fall i'm not ready to trade this market until we get up to my next major level of structure resistance"
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Once USD/CHF reaches the next major resistance level, the speaker will actively seek RSI divergence for accurate trading opportunities.
"at that point yes i will be looking for rsi divergence in that area to provide me with an incredible trading opportunity that is extremely accurate"
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The speaker advises traders to backtest and demo trade the strategy for six months to build confidence and handle inevitable losses.
"they have provided me with an edge but for you to be confident enough to continue trading them through the inevitable losses that they will have eventually you will need to back test this you will need to demo trade this for six months"
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Backtesting and demo trading are essential for gaining confidence and improving the chances of profitable trading with the strategy.
"then you will need to back test it and demo trade it yourself to add confidence and to give yourself the best chance of trading it profitably"
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