The Authority’ on Price Action Trading. In forex supply and demand zones in stock, Nial won the Million Dollar Trader Competition.
I’m going to help you with today. How many times have you seen a market retrace back to a level or area where a recent major move started from, only to respect that level almost exactly before making another strong directional move? In the example chart below, we can see a few important things taking place. A key resistance level was established near 9735. An event-area is something I teach more in-depth in my course and members area.
A price action signal by itself can start an event area, it doesn’t have to be at an existing support or resistance level. Let’s look at some more examples: In the chart example below, we can see a good example of how to use an event area both with and without a price action signal as the entry trigger. Note the first pin bar on the left of the chart, this initially formed the event area because of the strong down move that followed. Sure enough, price has respected this event area on each subsequent re-test. The pin bar buy signal from February 27th would have been a very obvious trade since it was rejecting and false-breaking down through the event area and price had bullish momentum behind it at that point. Note the nice up move that followed. Note, the key level near 1.
A long-tailed pin bar sell signal formed here on March 13th, this price action signal and the move lower from it further solidified this level as an event area. Note, how the market then fell away from that level as price sold lower from the pin. You could have entered a blind buy limit near 1. 6670 area, or you could have waited to see if a buy signal would form. In this case, a very nice long-tailed pin bar buy signal did indeed form and price is still moving higher from it as of this writing. I also made a video of this buy signal when it formed, you can check it out here.
Once you get more experience and familiarity with these levels, your eyes will begin to instantly be drawn to them on a daily price chart, and you’ll start to feel more confident in your ability to analyze and trade with just raw price action and levels. This next example was a pretty easy one to identify and one that we first discussed in our January 14th commentary. In November of 2013 we had two pin bars in the NZDUSD carve out an event area up near 0. We can see the market fell all the way down to the key support near 0.
8080 after breaking down below that event area pin bar from January 14th. I’m telling you guys, this stuff is POWERFUL! The daily charts below both show the spot Gold market, one of my favorites to trade. 00 level was an event area to keep our eyes on if price re-tested it in the future. October 15th, just a couple weeks later. The chart below is also of Gold, and we are looking at the exact same event area from the chart above, just more recently.
00 level has been an important level and event area all the way back from that pin bar on August 7th we discussed in the chart above. Now we are looking at about the most recent 3. 00 event area is still in-play and working quite well. Note that since the start of this year price has tested this event area 4 times and each time the level held, at least initially. Most recently we had a fakey buy signal from this event area which formed April 24th and that we discussed in our April 24th commentary.