View Full Version : Congestion Entrance Price Action
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Congestion Entry
Definitions:
1. Trend - relies on the traditional HH HL or LL LH. Heres a link to understand price action tendency. http://www.tradeology.com/priceaction.html
2. Direction - the current bar closes under or over the previous bar highest high or lowest low.
Greater Time Frame Rules:
Rule 1 Identify the trend based on a greater beginning time frame that's also a multiple of a lesser time frame of 4 or 5. Starting time is concerned, past month's ending, beginning of the year, past week's receptive, etc.. . The idea is to pick 1 time and apply the price at the time as your benchmark price to determine whether the current trend is down or up.
Rule 2 Next pub shuts within preceding bars range, this is congestion entrance.
Rule 3 mark the highest high and lowest low of these two bars.
Rule 4 switch to your lower time frame a number of
Lower Time Frame Rules:
Rule 5 identify the next close lower compared to the previoous bars reduced and place entry.
Rule 6 Set stop loss in the highest high of previous bars.
Profit taking is up to your own discretion.Ideas welcome.
Graph: * I will upgrade charts later based on the rule 1.
This example relies on the market and the inverse is true for entering long any trade.
Goal:
to produce this trade as profitable as possible with the smallest amount of risk.In other words create a top P/L multiple.
Note:
Any hints about how best to improve on this notion will be updated with this very first article to make it a lot easier to find for people who have an interest.
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Hi
what's the logic behind switching to lower time frame, why not just place your stop order below the congestion place once you've established the leadership from the greater time frame, along with your SL about the current high or low and your TP the closest S/R points
Because I understand price is in precisely the exact same point which TF you change to
That's what I do anyway and its working alright, but maybe after your explanations I may see the light in your way.
Pls I am anticipating your reply
kos I change to a small time period to cut back my stop loss size. The market scales in size but it's shape stays the same. I would like to be apart of large market moves but also want my stop loss to be minimal in that I can have a chance for a large P/L ratio. Thats why I change time frames. About maximizing entrance to reduce loss and maximize potential profits. Hope that helps.
Opinion? I believe you are confused, Mate. As a trader, I have no opinion. Trading is data and statistics.
I had been reacting to mrjtdude. Yep... another'trader' who believes that his OPINION is the right one and the only real one, and has nothing substantial to say and backs up a debate with something as trivial as the preceding statement... I don't intend to start a flame war with you, MATE. I wish you continued success with your facts and figures.
Hi,
the best way to set entryTP?
Thank you!
Welcome back mrjtdude,
another old member since 2007 wit only 31 articles, coming to give back to the area, another price action system, the only difference is that you haven't told us how profitable and how long you have been on the computer system.
I notice that members between 2006 and 2007 are all coming back using their systems to teach us
Where did you all go? Or are you in lurking mode since then.
If its price action am with you on that, nude trading.
Welcome back sir
kos
I like your simple system, thanks to share, it's very beneficial
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http://forexinterval.blogspot.com/2009/08/forex-market-chart.html
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Pervaz:
Post a chart of how you understand it then I will try to answer your question. Others may have the same problem in realizing the setup.
Yuyudada:
Target Profit can be anything you may already have or use a simple multiple of your stop loss on lower time frame (ie 3x, 9x or anything ). Idea is always money management. The smaller your time period the lower your stop loss amount but also more chance for your stop loss to be removed. The greater your time period the more loss you'll have with less chance of your stop being removed.
:
Just how long have I used this method? I just made it up but have been a fan of having a form of price action. Price appears to give you handle before any indior will. I be at the moment than hanging in the past once I trade.
Yuyudada:
Entrance order is following the close. . .so you would buy on the open of the next bar.
errich fx:
Thanks. If you have any ideas on the best way best to improve it I'm all ears. It's all about sharing and making things better.
Mikey109021:
Questions answered
everybody is welcome for changes or new insights on enhancing the trading idea.
Rule #1 is faulty.
Pick a start time. The price is going to be the same on all charts. (Starting Price)
Compare that price with the current price. Current price will either be above, below or equal to the Starting Price.
Rule #1 is faulty.
Select a start time. The price will be the exact same on all charts. (Starting Price)
Compare that price with the current price. Current price will be above, below or equal to the Starting Price. Rule 1 states that you need to spot the trend and direction to a higher time frame.
How can what you wrote above relate to rule 1?
Rule 1 states that you need to spot the trend and direction on a higher time frame.
How does what you wrote above link to rule 1? Https://forexintuitive.com/attachments/1527256978858755357.jpg
I believe FrankenPip is telling you that the chart period doesn't matter. Use a date/time to receive your reference price. Is the current price above or below your reference price?
Examples: Weekly open price. Monthly open price. Daily open price. Price 5 days past. Etc....
From the chart, the current price is under the previous daily open and preceding weekly open but above the previous monthly available. What is the trend?
Mrjtdude,
I trade a very similar setup that's been profitable for me for the past few months, so that I understand this works. I wouldn't say that you made this up, however. You have discovered this along with many others including myself. The fact that you came to your conclusions by yourself is a step in the right direction.
The only suggestions I have for you should take a look at which higher timeframe to look at against which reduced time frame (read up on harmonic cycles and trading for more information to this), and also daily range trading alongside support and resistance (so many great threads about this so many aspects ) for targets.
I used to use Fibonacci within my trading (not knocking it, it works!) I have since found using various S/R functions.
Good luck
No need to elaborate any further. Trading is a breakthrough
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I think FrankenPip is telling you that the chart period doesn't make a difference. Use a date/time to get your reference price. Is your current price above or below your reference price?
Examples: Weekly available price. Monthly available price. Daily open price. Price 5 days ago. Etc....
From the chart, the current price is below the prior daily open and preceding weekly available but over the prior monthly open. What is the trend? Potentially you could be at a ranging market or consolidation period (potentially lasting a number of hours or maybe days). Your current price means nothing if you don't take it into context, which can only be carried out by looking at a chart or a spreadsheet with all the previous x prices such as the current price.
Yea, I really don't think anybody has come up with anything really original for a while. It has been done before I agree. Perhaps I should have rephrased it stumbled across, wasn't actually saying I'd come up with anything new. I'm not the best communior in the world.
Harmonic trading and cycles, daily range sup. res. Will read thanks for the information.
Frankenpip and gbp:
I'm an idiot but I'm not following how that relates to greater time frame trend with support and resistance. HH HL LL LH. I know your speaking to a time stamp and the terms of weekly and monthly opens to the current price. In the event that you were to rewrite the very first rule how do you do it. I'll unveil it if it's flawed. Thanks for the information.
Hi mrjtdude
what's the logic behind switching to reduced time period, why don't you just place your stop order below the congestion place once you have established the direction from the Higher time period, along with your SL on the current low or high and your TP the nearest S/R points
Since I understand price is in the same point which TF you switch to
That's what I do anyway and its working good, but maybe after your explanations I might see the light in your way.
Pls I'm looking forward to your response
kos
Hi mrjtdude
What is the logic behind switching to lower time frame, why don't you just place your stop order under the congestion area as soon as you have established the direction from the greater time frame, along with your SL on the recent high or low and your TP the nearest S/R points
Because I understand price is in the same point which TF you switch into
That is exactly what I do anyway and its working alright, but possibly after your explanations I may see the light in your own way.
Pls I am looking forward to your response
kos Kos,
look at Hammers and Walls for perspective. Lets say you set a wall over the hour time frame. You may not always observe a hammer onto the H1 time frame, however if you should look at m15 for instance, you might find a hammer there and thereby finish the scenario for transaction setup.
In this instance, we are not looking for walls, we're looking for HH, HL, LH, LL. We switch to a lower timeframe once we have a bar of consolidation (an inside bar). We look for a clear higher or lower compared to the last bar close on the lower time frame. Since we've switched time frames to a lesser one, in the majority of instances, entry will be earlier than waiting for a breakout of the bar before the inside bar on the higher time frame.
Please ask if you need additional clarifiion.
Hi Limstylz
I wanted to PM you about T101 but your PM and email Isn't enabled
kos
Potentially you might be in a ranging market or consolidation interval (potentially lasting a number of hours or even days). Your current price means nothing if you don't take it in to context, which can only be done by looking at a chart or a spreadsheet using all the previous x prices including the current price. Price is always ranging and trending, Mate. Choose 2 prices and you also can ascertain if price is determined or trending. Pick 2 occasions and you can ascertain if price is determined or trending. Or you can pick 2 prices and pick 2 times to find out if price is ranging or trending. 1 trader's trend is another trader's range.
I am an idiot but I am not following the way that relates to greater time frame trend together with support and resistance. HH HL LL LH. I understand your speaking to a time stamp and the relation of monthly and weekly opens into this current price. If you were to rewrite the first rule how would you get it done. I will rewrite it if it is flawed. Thanks for the info. Never said you're an idiot, Mate, that wouldn't be considerate.
The very first rule could be: Describe the trend based on your starting time. Starting time is concerned, previous month's ending, beginning of this year, previous week's open, etc.. . The idea is to select 1 time and use the price at the time as your reference price to find out if the current trend is down or up.
Never said you were an idiot, Mate, which wouldn't be considerate.
The very first rule may be: Describe the trend according to your starting period. Starting time can be, previous month's end, beginning of this year, previous week's receptive, etc.,. . The idea is to select 1 time and apply the price at that time as your benchmark price to determine if the current trend is up or down. Good point. I'll add that particular info into the rule but I kind of thought that was implied by using whatever greater time period someone selects. Those two time frames that I picked were out of the blue.
There's another rule which I will add according to Limstylz proposal about using multiples of a period frame. With it being 4x or 5x is something I have read as well but not sure of the logic of these multiples aside from 4x being a multiple of 2x. Not certain if these numbers actually mean anything in lively cycles of period (the true truth of market movements).
The biggest problem though with multiple time frames is the cycles of each time period are lively in length. When there was a much better approach to align those dynamics closer to a given time range then I'd guess it'd be a far higher probability of making the correct entrance. Discrete fourier transform might help some IF you applied some sort of margin of error regarding the cycle ending and/or beginning.
HTF = Monthly
LTF = Weekly
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There's another rule which I will add according to suggestion about using multiples of a time frame. With it being 4x or 5x is something I have read as well but not convinced of the logic of these multiples aside from 4x being a multiple of 2x. Not certain if these numbers really mean anything in lively cycles of time (the authentic truth of market movements). But, cycles are constantly in flux. Fourier transform is proven to offer irregular and inconsistent counts. You will find better cycle counting tools (however I can't for the life of me remember what they're ). I know traders that utilize Hurst and Schaff cycles regularly. But I do not believe this method should be that technical.
The approved theory with numerous time frame trading is to get a timeframe that's far enough away in the tf that you want to trade out of so that sound is less of a concern, but near enough to see possible entrance points to change to a decrease tf.
IMO taking a look at the weekly and monthly charts will be too long when looking at this kind of price action except to watch SR zones. A fairly consistent pairing is more inclined to be H4 and H1.
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I drew trend-lines in the close of June and July. Pick one trend to base your decisions on. You don't need to think about time frames, it's the beginning price that matters.
you don't have to think about time frames, it's the beginning price that matters. You have created your view apparent from the beginning, partner. We are aware that you don't think about time frame significant, that doesn't indie that that the rest of us do not.
How many more ways are you going to put this?
You have made your view clear from the beginning, partner. We know that you do not think about time period important, that does not mean that that the rest of us do not.
How many more ways are you going to put this? Opinion? I believe you are confused, Mate. As a trader, I have no opinion. Trading is data and statistics.
I was reacting to mrjtdude.
Hi mrjtdude
Can you post a few more Illuions - I think I understood what You're saying However not sure - Perhaps I Can throw up a chart or 2 to see if I understood properly
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