How To Find Levels

A basic walkthrough of the system

Price action comprises of balance and imbalance, also known as contraction and expansion.

• A trend is an imbalance, fewer sellers than buyers or fewer buyers than sellers, driving price in the direction of the largest group;

• Bounces during downtrends or pullbacks during uptrends are temporary imbalances against the trend, that cause a pause in that trend.

Bounces and pullbacks are swing attempts against the trend, and have a high probability of failing. After the pause in trend, the trend resumes and continues, leaving the bounce or pullback behind as a ‘failed swing’. This is essentially where my system starts. Every bounce or pullback is a potential reversal. All price has to do out of a bounce, is hold the low and make a higher high to market a successful swing. More about this further down.

Levels

Levels to trade against, all come from failed swings. Ever bounce or pullback has a low and a high, and a bull/bear line in the middle. We can use these to draw setups. You could call them boxes. Daily levels are derived from daily failed swings and consolidations (balance zones).

Let me show you:

When price is trending, at some point it reaches a local top and pulls back into EMA9.

When EMA9 supports price, it confirms the pause in trend and completes the pullback. We can now draw a base around these pivots, as we have a swing high and a swing low. Price makes a higher high above the swing high (break out attempt) and price makes a lower low below the swing low (break down attempt).