How to analyze the market from scratch (Impulse & Correction)

Education

Gold Spot / U.S. Dollar (OANDA:XAUUSD)

OANDA:XAUUSD Gold Spot / U.S. Dollar

tradingplan riskmanagement tradingpsychology priceaction structure pattern impulse correction analyze chart

Hello everyone:

Many have asked me about demonstrating how to analyze the chart from complete scratch.
When looking at my chart and educational video, it all seems very simple, but many are telling me they are struggling to identify the market.

Today I will go over how I analyze the chart, from the Higher time frame down to lower time frame by using multi-time frame analysis, top down approach.
Specifically by identifying price action, impulse and correction phases of the market.

1. Start from the Higher Time Frame (HTF): HTF can be any time frame higher than the daily chart, such as monthly, weekly, daily.
Personally I like to use daily as a go to time frame as it is widely used by traders.

2. Identify the impulse phase of the market. Understand the impulse phase is a period of fast momentum,
price is either pushing up or down very aggressively, and not much consolidation visible on the HTF.

3. Identify a period of consolidations. Using trendlines, connect the swing highs and lows of the price.
This is to identify the correction/consolidation phase of the market.
Which is the most important aspect in price action analysis.
You will need to be very knowledgeable on the type of continuation, reversal correction patterns/structures the market usually will form.
(I will share many price action patterns/structures that I identify and use in the market below)

4. Once you identify the HTF phase of the market, you will then go down to the Lower time frames (LTF).
LTF can be anything under 2/1 HR, 30/15 Min charts. It's not a specific time frame, rather “Multi time frame analysis”.
You will also identify the impulse phases & Correction phases on the LTF and use trendlines to connect the swing highs and lows of the correction/consolidation phase, just like what we did on the HTF.

5. Now that you have both the HTF and LTF charts drawn out, the key here is to have both the HTF and LTF tell you the same direction/bias.
They should align up and have the same bullish/bearish bias. This will strengthen your probability of success.
I always make sure when I am about to enter any trades, I want the multi-time frames all telling me the same story. Same bias, same direction.

6. Now all that comes down to is forecasting the possible entries, which I have made many videos on this topic and I will share some below.
Understand you would always want to make sure you are either entering during the impulse phase on the LTF,
or the price is about to start the impulse phase to gain the upper hands in the market.
You do not want to enter when the price is in a consolidation which is why many traders end up losing money, stuck in the correction and price isn't moving too much, rather just sideways.

7. Continue to work on analyzing the chart from scratch, get comfortable at identifying the impulse phase in the market,
and do backtesting continuously so you identify the corrections in the market.
This will make you see the chart and the market completely different than before, and you will have a much better probability of entering trades that work out in your favour.

Any questions, comments or feedback welcome to let me know.

Jojo

Below I will share many educational videos that will help you to understand more on price action analysis, impulse/correction phase, entry, forecasting, backtesting and more.

Continuation and Reversal Correction

Continuation & Reversal Correction in price action structures