Let’s get down to the specifics of how price moves. First, remember from Part 1 that price moves within patterns. Although it appears that price moves in a rather unpredictable, chaotic manner, a trained eye can see that it moves in patterns. These patterns are referred to as fractals. Although a fractal is a very involved and complicated geometric pattern, it can basically be defined as a pattern within a pattern, or a micro-pattern. This is how price moves—in micro patterns.

Let’s take a look at a chart.

Forex Price Action
Study the above chart and notice that price continually moves in an ebb and flow between these shaded boxes. This is a 5 minute chart, but price moves in this behavioral manner on all time frames. Let’s use the red shaded boxes as an example for our discussion. At red shaded box 1, price is finding resistance to the upside at 1.2971. Finally, price makes a nice clean break above the 2971 level. When price makes a clean break of resistance like this, you can be most assured that when price eventually comes back to that level later, it will now act as support. This is because of the human behavioral tendencies behind price.

And, of course, at red shaded box 2 this is exactly what happens. Price break up for a 50 pip move above the 2970 level, and then when if finally comes back down several hours later, the 2971 area now acts as support. If a trader would have entered the market long at 2970, he would have been up +28 pips after about an hour. This is how price moves again and again. You can see it all over this chart above. Using the Forex profit multiplier is all based on price action.

Take a look at the 1.2997 area, which is the blue line with the yellow shaded boxes. As price rises to the 2997 level the first time, it finds resistance at yellow shaded box 3. Then, after a few minutes it finally breaks to the upside. About an hour later, price revisits this level at box 4, and it now acts as support. Then, price eventually moves down lower for several hours and then rises to the 2971 level again at yellow shaded box 5 and, what do you, it acts as support again. This is how price moves.

Begin to simply sit down and watch price move on a 5 minute and 15 minute chart and notice how it continually stalls and bounces off of these levels. This is the natural ebb and flow of price action. Once you apply yourself to seeing this movement of price in the chart, you will eventually start to see exactly where price will always stall. But that is the easy part. The harder part is being able to identify which levels will actually hold long enough to give you a good payout of pips.

You don’t want to take trades at levels that will just hold price for a few minutes and offer maybe 5 pips. You want to find the levels that are going to offer good reversals, where price may move 10, 20, or 30+ pips. In Part 3 of this Special Report, we will begin to break down how we can build a trading methodology around this simple understanding of price. Make sure you read our first part on Price Action

***Your capital may be at risk. This material is not investment advice.***

Price Action is Significant with Any Trading Instrument

The most important technical tool a trader can have, without a doubt, is the ability to correctly understand and interpret price. In classical technical analysis there are two types of indicators: lagging and leading. The ultimate leading indicator is price itself. In this special 3 part report, we will: 1. Break down the fundamental elements of price action 2. Analyze charts in order to see it clearly 3. Discuss how to build a trading methodology around an understanding of price action

Fundamental Elements of Price Action
In order to understand price action and how it moves, one must first recognize the force behind price. Humans are the fundamental driving force behind price. This is referred to as behavioral finance. The interesting thing about humans is they tend to do things in patterns—repeatable patterns. And this is how price moves. Price continually moves in repeatable patterns. When a new trader begins to look at charts for the first time it can be quite overwhelming. In fact, it appears to be quite chaotic at first glance.

However, a trained eye does not see chaos at all. In fact, a trained eye sees a degree of order in the apparent chaos. There is an ebb and flow to human behavior, and that ebb and flow is graphically represented on every chart of every instrument that has ever been traded in the history of financial markets. And that is the beauty of embarking on the incredible journey to becoming a master of price action. Price action applies to all financial markets, so not matter whether one is trading currencies, commodities, or equities, if one begins to see price and its true movements, one will have an edge in any market he or she chooses to trade. So the first lesson is to understand there is actually order within the apparent chaos.

We will soon uncover the basics of price action, but first one must understand how to develop an eye to see this order. In parts 2 and 3 of this Special Report, there will be several graphic representations of price and it will be clear in these examples, how it moves, but in order for a trader to see and understand the movement of price in real-time market action, one must spend countless hours observing price. There is no substitute for time. I will share the characteristics and movements of price with you, but you must watch price move time and time and time again on a chart in real-time market action in order to really understand and see it for yourself.

In Malcolm Gladwell’s book, Outliers, he discusses that it takes no less than 10,000 hours of concentrated practice to reach a level of world-class talent in a skill. That amounts to 40 hours per week for 5 years. One can definitely understand the basics of price action rather quickly, but a true mastery takes time. It may or it may not take 10,000 hours, but it does indeed take time. Be patient. As you begin to understand the concepts shared in Parts 2 and 3, take time to simply watch price every day, and notice how it moves. Make sure you read our second part on Price Action Don’t forget to take a sneak peak of our Oracle Trader review which is launching this month.

***Your capital may be at risk. This material is not investment advice.***

Using the Black Mamba as a Sidekick
The words “Black Mamba” may be bring one of two images to your mind. First, if you are a basketball fan, it brings to mind the ferociously talented Kobe Bryant, as he is nicknamed the Black Mamba. Second, it may bring to mind an image of the most deadly snake in Africa. Although I do love basketball, and consider Kobe Bryant to be one of the All-Time Greats, this FX Strategy is so named because it shares some key characteristics with the Black Mamba, Africa’s most deadly snake.

The Black Mamba is a poisonous snake in Africa that hunts its prey by hiding and waiting for it to get within striking distance. When its unknowing prey falls within striking distance, the Black Mamba goes to work. This is exactly how we pursue our trade set-ups as traders of the Black Mamba Strategy.

Let’s get to it. Currency pairs do not move an infinite amount of pips per day. In fact, they actually move in a rather predictable pattern. Under normal market conditions, the EUR/USD generally moves about 130 pips. That can increase or decrease depending on certain fundamental drivers, but for the most case, the E/U will generally move that amount.
The aim of this trading strategy is to locate the zone where a currency pair will be exhausting its daily range and then determine whether there are any key levels in those areas that may offer us a high probability reversal point.

Stealth Trading Style
Technically, this is considered a contrarian market approach, since you will be fading market momentum. It is also termed a “reversion to mean” strategy, which statistically is a strategy that is profitable over the long term.

The preparation for this strategy ideally takes place each night between 7-8 pm. At 7 pm est, you want to look at price and measure X amount of pips in each direction, with X being your daily range. I like to calculate the daily range by taking the average over the previous 10 trading days. This will help you stay in alignment with current market conditions instead of simply sticking to a fixed number which could change over time as market conditions change. To find the average, you can either program it in any of the various trading platforms that have learn-able programming language, or you can do it by hand. Mark 7 pm est on your chart for each of the previous 10 trading days and determine how many pips that pair moved each day. Then take the total divided by 10, and voila you have your daily range.

Let’s assume the range is 150 pips for the pair you are looking at. Sometime during the Asian session, draw a horizontal line 150 pips in each direction from the opening price at 7 pm. These 2 lines are the zones where you will now look for a key level of reversal.

The reason I take 7 pm est is because that is the beginning of the new day in London, and London times are what the majority of traders around the world are looking at. Here is an example below.

Black Mamba Forex Trading Strategy
Now, you are going to look for key levels within or close to those red boxes where price may offer a reversal.

***Your capital may be at risk. This material is not investment advice.***