Trading Like a Pro: Putting Everything Together


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Video Transcription:

Hello, traders. Welcome to the Pro Trading Course, and the seventh module, Trading Like a Pro. In this lesson we are going to put everything we have learned so far together, and we’re going to do so by looking at this buy-trade on the U.S. dollar/Canadian dollar. All right? First of all, what we’re going to do, we’re going to go to the daily chart to look for the area of support that we are trading on. Now, I’m going to use a thick horizontal red line for support, and a thick horizontal red line for resistance, as usual. And right here, we have that important zone that we were talking about. You can see that it was actually tested right here, as resistance, and then tested as support.

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What we’re going to do is we’re going to draw a pitch rectangle. Oops, I’m sorry about the color, guys. I’m going to change it right away. All the way from the top to the bottom of this support zone. We’re going to go back to the one-hour chart, where we were at, and we are going to look at these levels. Now, as you can see, we are actually bouncing right off the level that we just drew on the daily chart. And we are going to put our stop-loss below the level. And that means that we are going to have a kind of wide stop-loss of around 80 pips [SP], which would mean that you have to know how to manage your precision sites. In this case, we only got one lot.

The first thing we’re going to do when we are back in the one-hour chart is look for the next area of resistance. And remember, this is smart-money areas. All pitch areas are smart-money areas. And what we’re going to do here is we’re going to look for the previous high, which is this one right here. And you can see that it was actually tested at these weeks. Always look for weeks, guys, because weeks denote rejection. You can see that we have weeks here, that rejected this zone once. We have weeks here that rejected this zone once. We have weeks here that retested and rejected this zone again. And we are going to put on another line right here at the bottom. Why? Because this is the area that we tested before breaking it, and retesting it. Remember that support and resistance are not levels, but are zones.

Trading Like a Pro-Putting everything together

Now that we have this… Well, we know that this is where sellers, our big sellers are going to be stepping in, if price goes all the way up here. And this is where buyers are stepping in. Remember that we said that when you find a lot of choppy price action and then a hard move, this is where the real volume is at. And we already saw on the past lesson with the market profile, that volume is actually building in this zone where we think buyers are going to be stepping in. The first thing we’re going to do is we’re going to grab a Fibonacci [SP] tool, and what we’re going to do actually is look for this pattern right here, and see if we have in our hands a harmonic barrage cycle, which we could actually be sellers of.

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Now, let’s look at what the market is giving us right now. And what we’re going to do here, is we are going to grab a Fibonacci tool and measure the retracement from the low to the high of the cycle. Which will be around this level to this level. Now, if we use the default Fibonacci retracement levels, we are not going to find it, because what we are trying to look at, is to see if this is actually a bat. Because it looks like a bat more than a butterfly, or a shark that have shallower retracement in this point. And we are going to add the 88-6, because that is actually the limit of the bat. So this is the 88-6 level, and we have the limit of the bat around this, around the 88-6.

Now, we are still within the limits of the bat, but if we go lower, this cycle is no longer going to be valid. Still, we can’t have it confirmed just yet, because we need to know the retracement from the low to the high on the B-point. So what we’re going to do is we’re going to grab again the Fibonacci tool, and this retracement cannot go beyond the 50 or 55 percentage. So we’re going to grab the 50, and we’re going to see if it goes a little beyond. And as you can see, we bounce right off the 50.

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When you’re trading with harmonics, you really cannot be that exact to bounce off an exact level. We can go a little above, or a little beyond a few pips. But if it goes beyond the 61-8, this is no longer a bullish bat. And this cannot go beyond the 88-6 of the A to B move. So what we’re going to do, is we’re going to grab another Fibonacci tool, and we are going to see if we are around the 76-4. If we are around the 76-4, this bat is confirmed, and we have a more reliable setup in our hands. Now, we bounced right off the 76-4, so we do have a bullish bat in our hands. I’m not going to write bullish-bat, because it’s just going to clutter our work space.

Now, what we’re going to do here is we are going to see if this is a zone where sellers might be taking profit. And to do so, we are going to see and use the expansion tool from the A to B move. We need to look at the expansion from this retracement. And as you can see, we are right at the 1-61-8, which is exactly the kind of targets that the sellers that got in on the 76-4 for the last leg of the barrage-harmonic [SP] pattern would take profit.

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Now, because we do have these levels to take into consideration, we are going to draw those horizontal lines. And, we are going to use another color because we’re already using red for the big money zone, so we might as well use a lime green. And this is a zone of resistance. You can see that it was tested once, broken with it, and then we moved around it. But right here, it confluences perfectly with the 76-4, for a perfect shot at a short opportunity. Now what we’re going to do here is we are going to, again, look in the middle, and look at that 50 level. That was tested right here. Now, this is another level that we need to carefully look when we are long because as you can see, there is a lot of volume here around the 30-16 or 30-17 level.

We have a lot of tries to break below and rejections. We have one, two, three, four. So here there were a lot of buyers, so smart money was getting in on a buy, was getting in on a buy, and was getting in on a buy. I think, and we can assume that they got in here, and of course, they were trying to push price up all the way to these levels where they took profit. And again here, until we broke to the downside, and we have this war between buyers and sellers around the level. Now, this is another confirmation that we need to be careful with the 30-17 level. But that really doesn’t matter because we are not there just yet. Our chart is not done. Our analysis is not done.

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What we’re going to do, we’re going to go to the forward chart, and we are going to draw some trend lines. And the reason we are going to draw some trend lines is because we want to see where price might test these levels, or what levels has price already tested that confluence with descending support or descending resistance. To draw a channel, you first of all…well, in a down move, of course, you’re going to draw the channel’s resistance first, grabbing the first high, then the second high, and drawing that trend line.

Then you are going to copy that trend line and paste it to the first low. And as you can see, this low was respected along all the move in price. And you can, again, do so with another low, which price is also respected. And the reason we do this is because we visually want to know where our non-horizontal support and resistance zones are. We are also going to add the daily pivots, and the weekly pivots. And there you have them. We have the daily and the weekly pivot around this 50 area, which makes it for a more interesting zone where sellers are going to be stepping in.

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We have the monthly pivot as an ultimate target for our long position, but where we want to look right now is the weekly support one and the daily support one which also confluences with the bat or the bullish-bat that we have drawn. The 1-61-8 expansion from this short opportunity, and the entire zone of support where buyers are going to be stepping in. So what we have here is an even stronger confluence of levels, which means that this is a very strong high probability setup on the one-hour chart.

And what we’re going to do here, we’re going to see where we’re going to be taking profits at. And I’m going to grab a Fibonacci tool, as you already know, to calculate the profits with my harmonic pattern. And I’m going to use yet another color so we don’t clog our chart, and I’m going to use another type of line. And you can see that right here at the 50 level, we have a confluence between the weekly pivot, the daily pivot, and the previous 50. So basically, this would be a great zone to take profits on half of our position. If you want to ride the rest of your position up, you are actually making a better than the one-to-one risk to reward ratio by making 133 pips, and risking about 80, if I’m not mistaken. Exactly 80.

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You can take your full position out here, but you can also let the rest of it ride, and see if we are going to hit this level, which confluences perfectly with the daily resistance too. And of course, this trend line on the four-hour chart. And basically, what we have done here is we have analyzed price-action in a matter that we know where smart money is placing itself. We know the areas to look for when we are trading or when we are already in a trade with the areas to look for sellers in this case, because we are in a buy-trade. And we know how to look for confluence, and Fibonacci clusters, and important levels.

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