welcome back to my youtube channel hopefully you're doing great in this video we'll go over three price action setups that you need to prioritize while reading a price action because during our trading sessions we as traders we constantly need to make quick snap decisions we are constantly re-analyzing the chart to make sure we are reading the market context correctly and for that reason we only want to prioritize and we only want to look for setups that has the highest likelihood of succeeding and this is what we're going to talk about in this video and basically
what it all comes down to it is much more simple than general public would like you to believe if you want to be a consistently profitable trader you don't need any fancy indicators and you don't need any complicated strategies all you need to do is focus on these three setups number one is going to be a second entry to like a pullback with the trend at the proper key entry point key entry point is either trend line support or resistance line or the exponential moving average so you want to focus on the second entry with
the direction of a trade trend you also want to focus on a felt second entries that goes against the trend during an uptrend second entry long is a good high probability setup and a second entry short is most likely going to trap traders who are trying to pick a major trend reversal so therefore second entry short failure within an uptrend is going to be a high probability setup and lastly most breakouts of consolidating areas of trading ranges will fail and therefore any breakout you want to fade you know most breakouts fails you want to be
on the other side of the breakout now of course if you take these three setups blindly uh your win percentage is going to be still decent but not as high as you would like and this is where the skill of reading the price action comes into play and this is where you want to properly analyze the context so we're going to talk about how to analyze the context and how to look for these setups today's structure started with the looking for like a trading range with the bullish bias why this is a bullish bias because
we keep making higher highs higher lows and we are slowly trending higher so you guys see that i have the short term trend lines on the chart and i have this for one specific reason when i have a breakover trend line traders will most likely create a new extreme this is the break and this is the new extreme indicating that the downtrend played out i have an uptrend i have a break i have a new high form indicating that the uptrend played out all right and i'm doing the same thing all over the place i'm
drawing the shortened trend line and here we have our first high probability setup we have a new low and we have first entry short pullback second entry short and also we have a new high right here per century long pullback a second entry long since the uptrend played out so the most recent trend right now is buried downtrend and we have a break and we wait for a new extreme of the very downtrend so this is the two-legged pullback that i depicted right here with the proper context there's the break there's the new extreme which
indicates that the downtrend played out downtrend can continue working lower all right it can happen but the way we would find it out would be if there would be a strong rejection of the ema but it didn't happen ema didn't put any resistance and we instantly reversed and pushed through it this is indicating that this dungeon truly played out and we are looking for reasons to go along this was the lowest low that we formed after this downtrend played out and we are starting our count over and we have a percentage short push higher above
emi second entry short alright and if you take a look at this this picture right here this is the felt second entry short that goes against the trend because the downtrend played out and the uptrend is right now the most recent trend so this is the second entry short is the two like a pullback which would be a high probability setup but it goes against the trend and we are pushing above the ema so this would be a high probability setup all right now this second entry short failure is quite far away from ema so
this is not particularly the setup that i would like but this lesson is mostly going to be about understanding the three main patterns that you want to look for as the price keeps pushing higher notice how i keep drawing the shortened trend lines i have a break i have a new extreme and you keep pushing higher quite strongly so there is a possibility that there can be a higher and larger pattern in play something like this which gives even more strength to the overall bullish bias so i have a break of a trendline i have
a new extreme and you guys can see that i've wrote here a depletion when you see a big parse at the very end of the move at the very end of the trend a lot of times that indicates the depletion or exhaustion for the trend and the larger correction is most likely going to follow so you guys can see you have a break new extreme and also this is the failed breakout above this key level right i didn't mark this setup why because the overall bullish bias was so strong that you don't want to be
risking fading the breakout even though if you combine it with the depletion this can be a much safer entry all right i keep drawing the trend lines even if it's with the direction of a trend you know there's a bigger uptrend and i need to draw my shortened trend lines even for the corrections and you guys can see every new high percentage long pullback second entry long but this is a horrible signal bar you cannot go long above bearish bar and there is no trigger above this polish bar plus you're inside of this channel so
there is no second entry line right here but you guys see if you took this blindly without the proper contacts and without the proper signal bar you would got burned here all right take a look how this key level is forming at at that point on you're possibly expecting for price to go all the way down here but it didn't happen price pushed higher above ema gave you a higher low setup and they're indicating strong push above ema once more and these are felt second entry short this is the setup that we talked about earlier
two felt attempts to go short against the trend overall trend is up this is the new low per essential short second entry short failure off the key entry point this is extremely important this bar is nicely hugging the ema and you have room to this prior swing so this is a high probability setup notice how you don't worry about taking all these setups up here all these setups down here those are not high probability you only focus on the best setups that you can when it comes to high probability setups they generally take time to
develop and they're most likely not going to be a high probability setup right after high probability setup and you guys can see after this felt second entry short we didn't go much higher we created sort of like a double top and easily reversed we have a second entry long right here above the above the bearish bar which is not a great bar to have but i only marked it just for you guys to see that you need to combine the proper market context with the proper price action setup so this would be a two like
a pullback that would have failed but you don't want to go long about this bar and you don't want to go long especially after you didn't really push that much higher because you'd be expecting for price to push all the way down here and not for price to create close like a double top and little correction all right at this point on you have bunch of bars going sideways and this is now the felt breakout this is the price action pattern the most breakouts will fail you guys can see a lot of bars going sideways
you broke through the downside you with the direction of a trend so you're buying with the trend is the failed breakout and also on a slightly larger scale this is the two-legged pullback these are the two major lags right so this is the failed breakout and two major lags off the exponential moving average it worked barely enough for scalp and price action reversed and made the push higher and notice there is no high probability setup that i'm marking you have a new extreme your first century long pull back second entry long but you're not at
the key entry point so you're not taking a trade remember maybe i haven't pointed it out you only want to focus on these setups at the proper key entry points at the trend lines at the support resistance lines or at the exponential moving average all right this is why you cannot go along here because there is no key entry point plus the shortened downtrend is in play you need to wait for the corrections to play out all right the market broke this trend line and created a first century short second entry short this is the
two-legged pullback high probably set up off the ema i think it was a little bit too early still to pull the trigger here because you may be expecting for price to create a new high for the overall uptrend so i haven't marked this trade right here but this is the for you guys to see that this is the two legged pullback there is the new low and there's the first century short pull back a second entry short i was a little bit afraid to go short directly into this key level so this is why i
skipped this trade but you guys can see how reliable these patterns are second entry short at ema second entry show you haven't quite touched the ema so this is why i don't like it also you have a break and a new low of the shortened downtrend and you are at the key level so you don't know what may happen mark market push lower as the market is pushing over and it keeps pushing over this normally indicates there is a larger pattern in play and this was the pattern that i was looking for at the time
market created new extreme you have a first century short which is not yet the high probably the setup you have a second entry show you have the two like a pullback once again all right you have this second entry but this time it is with the downtrend so this is the only thing you're focusing you're not focusing a bunch of first entries you're not chasing the market going selling all the way at these lows this is how you're going to get trapped trying to risk a lot once you're getting far away from this key entry
and wait for price come to the key entry point and wait for price to create the two like a pullback also this is the first break so you're expecting for market to create a new extreme all right so you have three good second entry shorts but this one is with the proper market contacts and it's at the proper key entry point hopefully that makes sense the market keeps pushing lower keys pushing lower you're not interested in any of these setups far from ema and you're definitely not picking a bottom take a look what would have
been happening to you if you were trying to pick bottom every single time this is a falling knife stick with the trend even though you have a break and a new extreme you still want to see a reversal pattern before you go long all right but this is such a strong downtrend that you don't even want to look for a reversal pattern mark a push lower you have a new extreme you have a first century short little pullback second entry short this is the tool i get pullback once again with the direction of a trend
and as we turn down at this point on i realized that there could be a higher pattern because take a look how many new lows you're making from this break new low new extreme new extreme new extreme constantly you're making your extreme so this is where i'm going to make my pattern slightly wider all right so the green pattern is right now valid because the first two swings confirmed it first two swings set the trendline up third swing confirmed it and i'm not taking this first entry and i have a second entry short lower high
confirming the key entry point not just one not just one but two and i am able to sell of two key entry points ema and this trend line and look what would have happened quick easy scalp four high probability setups in a row all right take a look where you find yourself you find yourself at another major key level this was the high higher key level is the lower key level and like just like we talked about most breakouts train ranges will fail and this is on the bigger picture a large trading range with a
big downtrend right and this is why i'm not marking the field breakout but it works like a clockwork you broke the ski level and you the breakout failed but i i'm not marking the longs here why because the downtrend is so big and the trading range is so large that let me just quickly measure this is 60 and a half point downtrend in trading ranges once the trading range is big enough that there are trends legit trends within the trading range you need to stop fading the breakouts fading the breakout mainly goes in small to
medium ones once the trading engine is large skip fading the breakouts because this is a 60 point downtrend and you never know how many few pushes you're going to make down and this is exactly what would have happened but you don't want to go short take a look at the new low first century short pull back second entry short you would go short directly below the key level when you're expecting for breakout to fail this is why the context is everything you cannot just close your eyes throw darts at the board and take every second
entry you see you will make much more money if you combine with the proper market context all right plus you already move way too low and this is where your common sense is telling you i need to start selling because i've seen this market go down like this but you need to realize that in trading you want to wait for people to take profit and the deeper the correction the better you want to sell at the highs you cannot afford to sell at the lows all right i notice how once again i keep drawing my
shortened trend lines i didn't enjoy it right here but i have a break attempt to create a new stream a break in your extreme here i have a trend line i have a break new extreme and there's a new low first century short a second entry short but this time it's above the ema all right we were supposed to push below ema and take a look there's the shortened option i can't go short just yet all right i'm definitely not thinking about buying because this is the 60 point move downtrend all right so there is
a break attempt to create a new extreme and a big bearish bar with the lower high a lower high situation that close below ema off the key entry point and plus it's the first break of this entire downtrend you're expecting for price to create a new extreme and this is exactly what happened new extreme was formed and once you see a new extreme that's when you want to stop selling just yet this is why you have a new low first century short second entry short i'm not marking this because it pushed above the ema you're
inside of this uptrend and you just formed a new extreme so there's going to be a correction at hand you cannot go short just yet you you have a rules you don't cherry pick you have a break new extreme so you're waiting for price to correct itself especially after such a strong downtrend this area was very confusing because you have a major downturn working lower and at the same time you're hovering around this key entry around this key level you guys can see that the ema is getting flat and i didn't mark any setup at
this point because price is looking fairly bullish it's looking fairly bearish it's looking fairly bullish and finally market showed you the direction where it's one where you want to go and once the ema's flat like this you're starting to chop around it is better to avoid it any setups right here you have a new high first century long second entry long failure which probably tells you that this bigger downtrend is going to play out but i still think that this is quite hard to recognize in real time because there is this big consolidation area once
market from this high and indicated you they were pushing back slowly below ema this is where you start looking for your larger pattern because right now we haven't just moved 60 points right now we have moved 16 almost 70 points and we keep pushing lower this was the fail breakout and from the failed breakout you're expecting for price to make it to the other side of the training range or at least to the middle and it didn't happen you just barely chopped around above this key level and you instantly pull back down this is a
good indication that the downtrend is resuming strong push below ema you have a new extreme so remember what i'm looking at i'm looking for second entry with the trend trend is now down so i have a new new low first century short pullback second entry short this is once again the two-legged pullback at the ema at the key entry point so you have the contacts in play you have the key entry point you have the two like a pullback and you have a nice signal bar on this inside bar plus the uptrend played out with
the little break new extreme form so you know that the buyers are no longer in control and the overall bias is bearish all right take a look whatever nice trade this would have been you have a new low and once again you're not worried about entering all the way down here you cannot react on fear of missing out that you missed some of these high probability setups and you're going to chase the market all the way down at these lows it worked on a day like this because the don show was so strong but it
may not work and you're risking um you're risking without reason skip taking these trades all the way down here you have a new low first century short second entry short once again can you guess why it is not marked because it is not at the ema all right you already move way too down even though the bias is so strong bearish you're taking a chance you wait for price to get to key and triple you have a new low first century short second entry short off to exponential moving average you're basically shorting after this entire
move played out so this is aggressive but since you have such a nice bar it was quick easy scalp off the exponential moving average i marked it anyway but looking back you're going short directly into the low of the day which is quite risky all right but once again you're focusing just on the three high probability setups now we could have been looking for let's say new high first century long second inch long failure remember second entry shorts with the downtrend are high probability setups and second entry longs are going to be traps so if
the second inch long will fail that's a trap but i'm not marking any of these failed second entry longs new high first century long second entry loan failure because you already move way too down you're quite far away from ema this short right here so this is why i'm not marking this and i'm only focusing on the second entry with the trend all right you have a new extreme you have a percentage short pullback second entry short close below ema there is a little bit resistance starting to form you have a break attempt to create
a new extreme but this was a strong dungeon and you have this resistance this is a trait worth a chance and you created a new swing low you were percentage short second entry short with the direction of a trend you have no key entry point so you're thinking shall i take this probably not but you draw the resistance and you understand that we've been going sideways how do i know i have multiple bottoms multiple tops and ema is flat and most breakouts of trading ranges will fail so this is going to be a high probability
setup so you combine a second entry short with the failed breakout with the overall direction which is down or look at the massive downtrend now you're not thinking about buying at all even though you keep making multiple bottoms quadruple bottoms i don't care when the when you make 100 point move downtrend down you're not thinking about quickly buying all right so the price once again created a triple bot and you have a first century short pullback second entry short you have this short term uptrend that played out with the break new extreme you closed above
the ema so this is a little bit disturbing you really want for price to close below but how take a look how this strong key entry point is holding multiple but multiple tabs you're once again shorting with the direction of a trend you can treat it as a failed breakout i try to enter on this bar right here once it showed you that you're really not going higher but it took off so quickly this one is slightly slightly aggressive since you close above the ema and you're very close to key entry points you might expect
price to push here but since this is a trading range and most breakouts fail you're at the highs after and played out second entry short this is the two legged pullback this is how you wanna trade right and once again market push lower and you're broke below this trading range most breakouts fail but you're not buying why because the overall bias is down don't pick a bottom once again you have a first century short second entry short you're not taking this you're far from key entry point you're shorting at the very low of the day
okay you always have to wait for price come to you to your key entry point you have a new low first century short second entry short but you closed above the ema and you have no key entry point you have no trading range no resistance no fail break higher you have you're not below ema and you're not you're not at the trend line so this is in a no man's land and you see you would have got easy trap but still trading is about taking a chance no strategy is perfect so if you take every
single second entry you're still going to have seven seventy percent mid percentage blindly all right this goes to show you how just you need to focus on the second entries you have a break of the straight line new extreme form so that means that we're expecting correction or straight up reversal if a strong move higher uh at this point this is starting to be quite confusing a lot of the times because according to price action rules after breaking new extreme you're expecting correctional state of reversal but when you have such a strong downtrend strong trend
you know that you're most likely going to be making new extremes and new extremes constantly so i don't recommend looking for longs unless you have really a proven uptrend working in that bullish direction because the overall bigger patterns always takes precedence and when you move 100 points down that's the bigger pattern so i haven't marked any long here i haven't marked even any short here because it's not really clear what's going to happen here you have a break you have first lecture in your extreme pull back second like the new stream so you know that
the option played out you have a push lower below ema indicating strong bearish momentum and once again you're not one you're not even thinking about a bunch of these setups you actually have a new high first century long second entry long failure but it is a horrible doji bar and take a look you push strong ability ema and we look what you have new low percentage short second intro to like a pullback on a bigger picture you have a break and a new extreme of the uptrend that indicates that it played out and you're at
the key entry point you have a nice signal bar this is the second entry short once again you you push lower look what you have here first century short i don't care even if it's a key entry point i don't care i have a new law i have another new low so i'm no longer thinking about selling and market keeps rolling up higher but i already started doing this lesson and it is getting quite late and we have once again the volatility still remains but hopefully you guys understand that these three setups making me that
make it a little bit visible these three setups are your breadth and body that you focus on but you need to read the proper market context draw your trend lines stick with the trend and know you're not going to be perfect especially when you're learning you're going to make a lot of mistakes but with time it will get much much easier and you will realize that you're mainly main your mistakes are coming mainly from your from your mind because you're probably forcing trades you're taking in trades that are risky that you shouldn't be taking you're
not waiting for signal bars to finish you're trying to pick bottoms or trying to pick tops you're you're tweaking the rules just a little bit and your mind is playing tricks with you and you are not really you know trained yet to um to to contain your mind so remember the psychological aspect of trading is even more important than this you can learn this within two or three years you can find these setups easily and have 70 win percentage almost anybody can do that but to remain patient and not jump the gun not be afraid
of taking trades because not taking a trade is a trading error as well when you see a nice second entry at the key entry point with the trend you need to pull the trigger because if you don't that means that the next setup you will take if it's losing trade you don't have your numbers all right because you're supposed to be taking the hyper high probability trades and if you're skipping them that your math is not on point all right so the more setups high probability you take to overall in the long run your numbers
are going to be better all right so hopefully this video was helpful hopefully you guys uh find it useful keep keep looking for these setups let me quickly make it a break new extreme you have a break new stream first century long second entry long big push lower you have a new low first let me just finish it quickly since i'm already doing this you you have a new low first entry shot so you're not interested you have a new low first century short second entry short where at the key entry point price cannot let
price ema cannot let price close above it and then you have a clear new extreme and two lakhs so i wouldn't take this second entry show you have a second intro right here first century short second entry short but ema is holding you guys can see how reliable it's like a pullback pattern is but you since you already have a break in a new extreme i think it's getting quite risky to keep forcing trade so i'm not going i'm not the fan of this trade all right so i'm gonna wrap it up enjoy the weekend
take care bye
