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The true thinking process of the banks - Forex Master Pattern Hello there traders, in this article I have compressed information which will be useful for every trader. There is this trading methodology which very little know of (Even though its public information) that revolves around a market cycle which consist of an contraction, expansion, and trend. This article will just open the doors to your understanding of these principles, and will just go over the basics, to master it you must practice it a lot and identify many different zones in the markets. Practice Makes Perfect __________________________________________________________________________________________________________________________________________________________________ What will be gone over in this article? This article will explain what exactly are contraction phases, expansions, and trends and how to identify these different market phases. Get a basic understanding of what institutional traders look for and how they operate vs Retail. What exactly is the value line and how it acts like the "center of gravity". __________________________________________________________________________________________________________________________________________________________________ What is the Forex Master Pattern? The “Forex Master Pattern”, is a alternative type of Technical Analysis which shows the true psychological patterns of the Financial Markets. This pattern has 3 Phases, which is known as the Contraction, Expansion, and the Trend Phase, which will complete one market cycle in this term. This pattern also creates a concept known as the “value line,” which is the fair value zone or the neutral belief zone where buyers and sellers agree is the fair value. Consider it in terms of the center of gravity. This pattern is present on every timeframe and in every market with enough liquidity and volume, and shows the behavior, psychology and activity of retail, professional traders, institutional traders and investors and market makers. __________________________________________________________________________________________________________________________________________________________________ The Contraction Phase The contraction phase is the setup and it indicates a period that the market is in consolidation, with a tight and narrow range. During the contraction phase there is going to be low institutional volume and they are avoiding positions and trades. It is best to avoid trade entries in this phase and wait for a clear trend after the expansion. The Expansion Phase The expansion phase is the play and its when the institutional traders begin to accumulate positions. There are many things that institutional traders would do in this phase. If the institutional trader or "market maker", main goal is to buy the asset, they will drive the price lower with their money to draw in retail traders to place shorts and sell their positions which will generate liquidity for "smart money" to buy cheaper. and vice versa. If the institutional trader or "market maker", main goal is to sell then they will make the price go up a little with their own money to lure in traders who will buy their bags so that "smart money", can sell in a profit and overvalued. The Trend Phase The trend phase is the final phase that completes this market cycle. Once the institutional traders feel like it is time for them to start taking profits, will commence the distribution cycle which causes price to move down. All this profit taking from "smart money", will eventually lead retail traders to understanding that they were in the wrong side of the trade and the panic, liquidations, and stops start. Eventually they panic and start buying back in, and this generates liquidity for institutional investors and traders to take profits, leaving retail with overvalued bags, for the cycle to repeat itself again. For the short scenario it'll be a vice versa too, they will move price up with their own money, cause retail to believe the price is going up so that they get into wrong trades (Retail buys, Smart Money Shorts), they start accumulating short positions or selling their bag and with the trend drive price back to value or even below, and at this point retail again begin the panic, liquidations, and get stopped, and ultimately sell their bags to institutional traders who buy at a discount. This pattern is also similar to the accumulation and distribution cycle and are basically the same theories with different executions. __________________________________________________________________________________________________________________________________________________________________ What is the value line? Previously in this article I have explained how contraction zones create fair value lines. Value lines can be described as the average price and the neutral belief zone for price. It sorta acts like an center of gravity. Knowing the HTF value lines can be your key to success since you will understand the general direction of the market. Value lines help you visually understand what territory the market is in, like if its consolidating at value you should avoid entering any trade at all cost and wait for the expansion and perhaps the trend. These value lines and contractions can also be used to find certain broadening wedge ranges and the longer price stays in a proper broadening wedge the more volatile it will get. The broadening wedge starting from the origin of the contraction is rare to find but can create some pretty good scalping environments and conditions. Conclusion: Well I hope this was educational, and it gives you another way of understanding the markets. This article was pretty basic in understanding this pattern and methodology but hopefully now you have more awareness. The best way to start understanding these principles is to practice in the charts and learn to identify the three phases. This isn't a strategy but more like a theory or a concept which explains the behavior of the market. With proper understanding you can create many different strategies since this is extremely versatile and works on any market and timeframe if the liquidity is there. So go on the charts and try to identify the three phases and see how you can improve your trading game!.
Education
by Traders_Endeavors
2
High probable Sell ConditionsAs the DXY kept dropping lower, Stock Indices such as the Dow and the SPXUSD kept rallying higher as expected. From my weekly forecast I expect the DXY to rally once more taking out the current swing high on the overall daily timeframe, and as expected, Both US30 and the SPXUSD indicating bearish confluence factors (such as bearish cracks in correlation, Bearish turtle soup conditions). Therefore, for the upcoming weeks we're most likely going to trade to that 3491.3 level. This is the highest probable scenario amoung others (because there's always more than one possible outcome).
FOREXCOM:SPX500Short
by Cyber_FX
$EURUSD = Ending the week With a Judas Swing Short *SMT**SMT* = Smart Money Theory = everything you think that is not retail related to trading. First, SMT does not believe that triangles, wedges, trendlines, channels, harmonics, etc. has any effect on how price reacts. I'm sorry, but you won't convince me that Tesla or Bitcoin knows it has created a triangle and that it knows how to react to that? It does and will remember price levels, that's it. The second is to recognize that the price is not random, it is set by an algorithm controlled by those that control the asset. The Third thing to remember is price will do 2 things 1) move toward attacking where there is Liquidity (Equal Highs, Equal Lows, phantom Trendlines, etc.) and 2) Move toward Imbalance (Fair Value Gaps, Liquidity Voids. Open Gaps) That's the basics. The rest is very unique in the vocabulary you need to have and the concepts that wrap around these ideas.* The asian range ican be a good determining factor as to where to look as to which direction the end of the week will move toward. First I look at the NY opening price at midnight. Price should cross that point at some time during the next trading day, whether it be during london or NY session, I honestly don't know. But it should get just above the recent swing high and breaking buy side liquidity and hitting a bearish blockj and then dropping towards the sell side liquidity breaking the lsell side iquidity created last friday by the daily low. The standard deviation of the asian range is exactly at that same low from last friday. So I have two entries,. 0.51% of account - 1.7:1 ratio Entry 1 -0.98135 Stop Loss - 0.98797 Take Profit - 0.97000 (Just above the standard deviation to be safe) 1.75% of account ~6.4:1 ratio Now my second entry is based on the space between two bearish order blocks . Entry 2 -0.98456 SDtop Loss - 0.98670 Take Profit 0.97000 Additionally, I ee the dollar dropping to a bullish order block and moving up to fill a liquidity void (that should happen about the same time as the take profit hits) Then My analysis has the dollar dropping below the liquidity as the dollar contiues to drop in its valuation. I'm hoping I hit both entries and I am able to calculate this correctly that I hit both entries and hit bothj take profits. However, due to the nature of the asian sedsion, I think It's only going to hit the first entry and take profit. If I expect that, I will probably add more to my position at some point, probnably when I can the direction is reversing, (if it does) I could be wrong and it continue upwards, breaking structure in the upper prices. Howevber, if you look at my ideas back til may, I have not lost a trade. I may have to pass on the knowledge that was given to me via private mentorship if I keep this up. EDIT: AFTER POSTING AND LOOKING AT PRICE ACTION THERE IS A 15 MIN fvg ALREADY LOWER THAN CURRENT PRICE, IT WILL WANT TO FILL THAT IMBALANCE. Lastly in case it doesn't get to my final take profiut, I do have 3 goals to aim for. I usually do 30% 1st target, 30% second target 35% last target, leave a 5 % trailer to see if it continues down and keep moving your stop loss each time you hit a take profit so you dont los your winnnings. Good luck and happy trading. OANDA:EURUSD TVC:DXY ICEUS:DX1! BMFBOVESPA:EUR1!
Short
by BodiesXWix
5
USDJPY Sell Limits UpdateUJ created a bearish flag where most retail traders sold the "breakout" of the flag, which actually turned out to be a fake out to liquidate retail buyers from buying the bottom of the "trend line channel" aka "support line" and to liquidate sellers from selling the "fake breakout" of the bearish flag. Our price entry targets is still in play, as well as profit target levels. Never make a permanent trading decision based on your emotions, patience is key. WE get paid to wait for the best setups to trade.
by TRADER_AP_FX