Price is now looking to try and move higher, potentially making a re-test of the price flip resistance level on the daily price action chart, after breaking the high of the inside bar.
As the chart illustrates for you below, price paused and formed the inside bar after breaking out lower, through the major daily support level. This move lower was kicked off by a Bearish Engulfing Bar. There have been quite a lot of trigger signals and also price action clues in this market for price action traders to pick up on and use in their trading.
Traders can also use these clues to read the trading behaviour of the current traders in the market. This is basically what price action is – a graphical representation on a chart of what traders are buying and selling. So if traders buy, the price goes up on the chart and if they sell, it goes down. These clues come out on a chart for price action traders to read over time.
Traders can also use these clues to read the trading behaviour of the current traders in the market.
Now that price has broken lower and through this major daily level, this same level could prove to be a crucial price flip level should price make a re-test and a new attempt at trying to break it. This level could be a great place to hunt for high-probability short trade setups.
Whilst the daily time frame is a great one (against which we always need to mark our levels), there would not be enough space for price to be at a swing point on a daily chart in this scenario, if we make a reversal setup such as a pin bar. I discuss this a lot more and exactly why it is so crucial to making high probability trades in this lesson:
For that reason we could watch this level and look at time frames such as 8 hour, 6 hour, 4 hour, 2 hour, 1 hour or potentially lower if you are comfortable on lower time frames.
You can use this same method and process to hunt other trades where you use a major daily level and then move to a smaller time frame such as an 8-hour or 4-hour chart.
Daily AUDNZD Chart
Daily AUDNZD Chart
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