Hi
Todays forex trading course lesson is made up of some static charts. Tomorrow there will be a follow on video, but that video will not be understood unless you understand the following charts and their explanations.
As a side note here before we get into the PAT charts below.
Candle charts and or bar charts simply do not provide any real meaning to understanding the cycles of a market. The High, Low, Open, or Close of any time bar is pretty much irrelevant because the FACT is that ALL markets are a CONSTANT STREAM OF DATA. To place meaning on the high, low, open, or close of any bar is to arbitrarily place a break in the constant stream of data and then arbitrarily draw meaning from that self imposed break. ‘Have a think about that, it should ring a few alarm bells’
So…moving on to our charts below.
In this chart we see that congestion builds in the TOP lane of the TFT tool (yellow lines) The market then goes on to give a Jump Bar. Keep in mind always that its the BELIEF BAR that is the all important information line.
Also keep in mind here a VERY IMPORTANT FACT. What you are learning about here is ‘NOT’ PATTERNS. You are learning about the development of market cycles and how those cycles play out.
When you can read the cycles of a market, everything else pales into insignificance. (and it is not that difficult using PAT trading software)
Looking at this chart then we can see the ‘pattern’ BUT as we know its not the pattern that is important its the cycle, its what is going on behind the pattern that we need to understand.
You might like to think of the congestion period as the germination of an idea, a thought, a feeling, almost like a pregnancy that will at give birth at any time in the future. The birth or the manifestation of the congestion is shown by the blue arrows. It is the Jump Bar!
Half baked ideas
I am sure you have heard the expression “thats a half baked idea” it implies that what you have come up with as an idea or concept has not been well thought out and therefore lacks validity. In the case of the market we can say that a half baked idea, or a birth that lacks validity is a JB (jump bar) that does not make it across the Main FZ (Floating Zone)
Forex trading course chart one
Lets have a look at another chart and add in another factor that may question the validity of a move.
Forex trading course chart two
In chart number two above there are three examples. Starting from the left we can see that the congestion builds in the lower lane and then we get a JB UP across the FZ. Further into the day we see the same thing but the other way up, that is the congestion builds in the TOP lane and then we have a JB DOWN.
OK now at this point I must remind you AGAIN to STOP thinking patterns.
Our brains WANT AND NEED PATTERNS to make sense of the world around us in our ‘natural’ environment. Trading is an UN-natural environment for the brain to be in, and this is why we have to constantly fight against patterns when trading)
As a side note how many ridiculous candle patterns and names have traders come up with over the years, all in an attempt to place meaning on something? It’s spooky to think about eh! “Oh my God……….Morning cloud over and a hirami cross pattern is coming my way” 
Enough of the frivolities and back to reality..
Now let your eyes roam to the right and look at the third highlighted area of congestion. Do you instantly spot the difference? Maybe you do maybe you dont. Maybe you say…’Ah! the congestion built in the LOWER lane and then the JB broke the main FZ to the lower side of it.
If you said that then of course you are right. Your course is complete, you have passed, now all you have to do to make every trade a winning trade is to learn how to spot the difference like you just have. All you have to do to SELL a market is wait for the congestion to build in the LOWER lane and then JB south and all you have to do to BUY a market is to wait for the congestion to build in the TOP and then JB North. WAIT!
Because you have likely made one FATAL error. Chances are that your brain has automatically jumped right along with the JB into PATTERN MODE thinking again.
Lets start again and this time think CYCLES.
Here is the same chart to save scrolling up and down.
Learn how to trade forex live
Bottom left we see the congestion and the JB. This congestion comes after a gradual fall off, of prices, its a week feeble move from congestion. Why is it week and feeble? Good question, the answer to which is that it comes from the LOWER lane. As a result of this we can draw a conclusion which goes something like this…
This could be the start of a cycle, BUT there is little commitment to it (remember that good moves require the process of accumulation or distribution to take place, PRIOR to those good moves)
So IF this were to be the start of an up move I would expect to see some accumulation by the MM’s to then sell off into any later rise.
As a result of this CYCLE starting in the BOTTOM lane I do not expect the market to rise very far and I am not going to join it.
Later on we see the same process but in reverse, that is the congestion builds in the TOP lane and the breaks south. BUT as it starts in the TOP lane again I suspect a weak and feeble response. (ie no commitment to a sustained down move)
Just as a side note here…………Imagine the power you have as a trader if you have good evidence that any move is unlikely to continue in that direction for very much longer (more of that in a later lesson)
If I can now see that there is a weak and feeble move to the down side maybe I should look for a long? And there is a long trade available a short while after the bar highlighted in green. (the green is NOT the issue, its just a marker) However, I do not want to cover this long trade in this post.
Now look at the third congestion area at the top and note that this one is in the BOTTOM channel and the JB breaks DOWN. Now go back and compare the difference……..do you understand the difference? Make sure you can see it.
Now we have to start the process to understand the cycles.
First there was an attempted up move with no real commitment. (like a half baked idea)
Second there was an attempted down move with no real commitment. (like a half baked idea)
There was a steady rise from about 8.20 after no commitment to the down side.
This would point to me the possibility of selling into a weak rise. IF this is the case I will expect a sharp sell off when the distribution is complete.
The down move came following the congestion in the BOTTOM lane and JB Down and it came with some force.
Well that is enough for this lesson.
Go over your charts and start to find the cycles. Compare different moves from different lanes and keep in mind the MAIN FZ.
Have fun, because trading should be
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