Contrary to popular belief, when an asset is going up, that doesn't necessarily mean the asset is long biased. It's the same when price is going down; just because price is falling
doesn't make that asset short biased. What we see on a chart at first glance often times is just random price movement with no substance. Hence, "Rangy Markets". Price will arbitrarily
rise, then fall with no sustained direction.
So instead of taking the direction of an asset's price at face value, I analyze the "Underlying Direction of Price". So confirming a long or short bias is not just about the
direction in which price is moving from point A to point B. It is "How" Price Travels from Point A to Point B" that informs us of the bias of an asset's price. So in other words,
even if price is rising, if it isn't rising in a "Long way", then that asset is not long biased. It's just random price action created by buyers and sellers for reasons nobody knows.
(By the way, there's no need to know either.) Remember!The question to ask yourself is: "How did price travel from point A to point B"?.
Now, the easiest way to know whether underlying price is supporting a given directional move is through examining the lower time frames. To explain, lets say weekly price has
been rising for the last 3 months. In order to confirm whether the weekly rise is sustainable is by analyzing the price action on the lower time frames. So for example,
if there are legitimate continuation patterns long, and moreover legitimate break outs long on the time frames under the weekly chart; then underlying price is confirming
the weekly rise, and thus is a sustainable long move. On the other hand however, if there are legitimate reversal patterns short as well as failed attempts at long breakouts,
it is likely that the weekly rise in price is "unsustainable".
Try it yourself. If you find a higher time frame directional move, don't unsuspectingly take that move at face value. Dig down to the lower time frames and use any price action
techinique at your disposal to confirm the higher time frame's rise. If you find that although price is rising, the lower time frames are "not" confirming the move; you can expect
the move is unsustainable and will fail in due time. Remember! It's all about "HOW" price travels from point A to point B.
That's it! I hope this helps!
Have a great day guys!
Ken
doesn't make that asset short biased. What we see on a chart at first glance often times is just random price movement with no substance. Hence, "Rangy Markets". Price will arbitrarily
rise, then fall with no sustained direction.
So instead of taking the direction of an asset's price at face value, I analyze the "Underlying Direction of Price". So confirming a long or short bias is not just about the
direction in which price is moving from point A to point B. It is "How" Price Travels from Point A to Point B" that informs us of the bias of an asset's price. So in other words,
even if price is rising, if it isn't rising in a "Long way", then that asset is not long biased. It's just random price action created by buyers and sellers for reasons nobody knows.
(By the way, there's no need to know either.) Remember!The question to ask yourself is: "How did price travel from point A to point B"?.
Now, the easiest way to know whether underlying price is supporting a given directional move is through examining the lower time frames. To explain, lets say weekly price has
been rising for the last 3 months. In order to confirm whether the weekly rise is sustainable is by analyzing the price action on the lower time frames. So for example,
if there are legitimate continuation patterns long, and moreover legitimate break outs long on the time frames under the weekly chart; then underlying price is confirming
the weekly rise, and thus is a sustainable long move. On the other hand however, if there are legitimate reversal patterns short as well as failed attempts at long breakouts,
it is likely that the weekly rise in price is "unsustainable".
Try it yourself. If you find a higher time frame directional move, don't unsuspectingly take that move at face value. Dig down to the lower time frames and use any price action
techinique at your disposal to confirm the higher time frame's rise. If you find that although price is rising, the lower time frames are "not" confirming the move; you can expect
the move is unsustainable and will fail in due time. Remember! It's all about "HOW" price travels from point A to point B.
That's it! I hope this helps!
Have a great day guys!
Ken
Forex Trader/Forex Trading Education/Weekly Forex Forecasts and Midweek Forex Analysis