Context price action

Trade opportunities have been in earnest so far in September. Somewhat odd to those trading the higher timeframes such as the daily or weekly scale of things. Where nothing much has occurred, but dig under the surface to the 4 hours, one hour and maybe occasionally the 5 minute and price movement has been identifiable.

A couple of examples from my recent trading log:

AUD/JPY short, entry and exit on the 5-minute chart.

The setup above is a short entry in AUD/JPY using the 5-minute chart. A live screenshot with the left-hand edge of the blue line depicting my entry position. My target is the lower red horizontal line, a goal that is reached later that day.

NZD/USD short, entry and exit on the one hour chart.

The entry and exit on the trade above started on the 12th September and concluded four days later. A double-entry with each short shown by the red arrow at the top of the chart. Exit for both entries was at the green diamond and slightly before my target depicted by the lower red horizontal line. Holding to the goal would have been a good thing to do, but we achieved a trade that provided nearly six times of reward to risk (6R).

Price action and the context of multiple timeframe charts gives me an early insight into the sentiment of the market and, importantly, the probable market flow of the big players. Technically the trade has to make sense and has to be incorporated with a setup that provides me with a clear reward to risk calculation. The deal has to make sense also on a reasonable timeframe above my entry chart, which provides the essential strategic or fundamental agreement (the macro).

When you explain what type of financial trader you are, it will often fit into one of the following broad explanations:


As a context, price action trader who reviews multiple time frames, I consider that in one way or another, I have a preview into all four disciplines.

Here’s a trade that I exited almost on the bell of the weekend market close last night at 20:59.

USD/JPY short, entry and exit on the one hour chart.

The above setup started at the higher horizontal black arrow and concluded successfully at the lower similar mark. Fortunately, the price reached the target as the market was closing for the weekend.

The entry was over two days and as you can see from the picture price took its time to move determinedly lower. When it did, it made the hold all worthwhile.

Below is a sentiment notice that the dollar was likely to weaken. Interesting how context price action identified this sentiment some 24 hours earlier!

Media sentiment regarding USD/PY.

Published by Day Trader

I flew fast jets for 30 years of my life. I've traded full-time, more or less, for the last ten years, initially from fundamentals and over the last few years as a dedicated day trader. I live on the North Norfolk coast.

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