TRADING GUIDE V1 Contents A) 1. BASICS ........................................................................................................... 11 1.1 SUPPORT AND RESISTANCE BASIC ............................................................................................. 11 1.1.1 The Basics ............................................................................................................................ 11 1.1.2 Trendlines ............................................................................................................................ 12 1.1.3 Round Numbers .................................................................................................................. 13 1.1.4 Moving Averages ................................................................................................................. 14 1.1.5 Other Indicators .................................................................................................................. 14 1.1.6 The Bottom Line .................................................................................................................. 15 1.2 PRICE ACTION TRADING ............................................................................................................. 16 1.2.1 Support & Resistance .......................................................................................................... 16 1.2.2 Dynamic Support & Resistance ........................................................................................... 18 1.2.3 Impulse & Corrective move ................................................................................................ 20 1.2.4 The 4 stages of the markets every serious trader must know ............................................ 21 1.2.5 How to tell when the market is trending ............................................................................ 23 1.2.6 How to tell when the market is ranging .............................................................................. 27 1.2.7 How to read the price action of any markets (and determine the strength and weakness of it) 29 1.2.8 Stop memorizing candlestick patterns, you only need to know these 4 things ................. 33 1.2.9 Advanced candlestick knowledge (that nobody talks about) ............................................. 37 1.2.10 Price action patterns — Rising three method ................................................................... 45 1.2.11 Price action patterns — Wide range candles .................................................................... 47 1.2.12 Price action patterns — Narrow range candles ................................................................ 48 1.2.13 A price action trading strategy that works ....................................................................... 49 B) 2. INDICATORS TOOLS ........................................................................................ 54 2.1 ON BALANCE VOLUME ............................................................................................................... 54 2.1.1 Introduction ........................................................................................................................ 54 2.1.2 Breaking Down the Theory ................................................................................................. 54 2.1.3 Smart Money ....................................................................................................................... 54 2.2 MOVING AVERAGES ................................................................................................................... 56 2.2.1 What is a 'Moving Average - MA' ........................................................................................ 56 2.2.2 BREAKING DOWN 'Moving Average - MA' .......................................................................... 56 2.2.3 Moving Averages: How To Use Them ................................................................................. 57 C) 3. DEFINATIONS ................................................................................................. 61 3.1 TRENDLINE ................................................................................................................................. 61 3.1.1 What is a 'Trendline' ........................................................................................................... 61 3.1.2 BREAKING DOWN 'Trendline' .............................................................................................. 61 3.1.3 Fundamental vs. Technical Analysis .................................................................................... 61 3.1.4 Creating Trendlines ............................................................................................................. 61 3.2 CUP AND HANDLE DEFINATION ................................................................................................. 62 3.2.1 What is a 'Cup and Handle' ................................................................................................. 62 3.2.1 BREAKING DOWN 'Cup and Handle' ................................................................................... 62 3.2.2 Cup and Handle Characteristics .......................................................................................... 62 3.2.3 Trading the Cup and Handle ............................................................................................... 63 3.2.4 Cup and Handle Stops and Targets ..................................................................................... 63 3.3 IMPULSE WAVE PATTERN DEFINATION ..................................................................................... 64 3.3.1 DEFINITION of 'Impulse Wave Pattern' ............................................................................... 64 3.3.2 BREAKING DOWN 'Impulse Wave Pattern' ............................................................................. 64 3.4 FIBONACCI RETRACEMENT DEFINATION ................................................................................... 65 3.4.1 What is a 'Fibonacci Retracement' ...................................................................................... 65 D) 4. TRENDS .......................................................................................................... 66 4.1 THE UTILITY OF TRENDLINES ...................................................................................................... 66 4.1.1 Trendline ............................................................................................................................. 66 4.1.2 Trendline Basics .................................................................................................................. 66 4.1.3 Support and Resistance....................................................................................................... 67 4.1.4 Drawing Your Own Trendlines ............................................................................................ 67 4.1.5 The Bottom Line .................................................................................................................. 69 4.2 IDENTIFYING MARKET TRENDS .................................................................................................. 70 4.2.1 Basics ................................................................................................................................... 70 4.2.2 Secular Trends ..................................................................................................................... 70 4.2.3 Intermediate-Trends ........................................................................................................... 71 4.2.4 Long-Term Trends ............................................................................................................... 71 4.2.5 The Bottom Line .................................................................................................................. 72 E) 5. CANDLESTICKS ............................................................................................... 73 5.1 INTRODUCTION TO CANDLESTICKS ............................................................................................ 73 5.1.1 History ..................................................................................................................................... 73 5.1.2 Formation ............................................................................................................................ 73 5.1.3 Long Versus Short Bodies .................................................................................................... 75 5.1.4 Long Versus Short Shadows ................................................................................................ 76 5.1.5 Doji 78 5.1.6 Doji and Trend ..................................................................................................................... 79 Long-Legged Doji .......................................................................................................................... 80 5.1.7 Dragonfly and Gravestone Doji ........................................................................................... 81 5.1.8 Bulls Versus Bears ............................................................................................................... 82 5.1.9 What Candlesticks Don't Tell You ....................................................................................... 83 5.1.11 Candlestick Positioning ....................................................................................................