Price Action Breakdown: Exclusive Price Action Trading Approach to Financial Markets by Laurentiu Damir

Author:Laurentiu Damir [Damir, Laurentiu]
Language: eng
Format: epub, pdf
Published: 2016-02-19T18:30:00+00:00

Figure 24: Big value area example

See the chart above. We have the control price which we draw first by looking for an area where price seems to be stopping, turning, making value above and below it. We then proceed to draw the high and low of the value area to include the bulk of trading just like described in the first chapter. We then move on to mark the excess price above the value high and below the value low. Notice how at the start of the up move there is much smaller trading activity below the control than there is above. The market is not facilitating trading in this area as the seller is not interested. It is not viewed as an advantageous price area. This is showing us clearly that the buyers outnumber the sellers. The excess price location also gives clues regarding supply and demand dynamics. There is great demand at value area low, where we see buying tails and excess every time the price reaches that area. The supply, or selling orders are observed at the value area high where the excess is. Remember that excess shows the footprint of the long term trader. Just by counting the number of excess levels above and below value and observing how much time price has spent above value, as compared to below value, gives clear indication on who is winning the battle at this moment. Again, the situation soon changes and through the last part of the big value area, the area with the least trading activity moves above the control price. The market is not facilitating trading in that area above the control, marked with those double arrows. Why? Because there are no buyers there anymore. The trading activity remains confined between the control and value area low, providing us with clues about supply and demand location once again. The supply is now at the control price and the demand at value area low. Furthermore, we see rejection of the control price in two occasions with those swift spikes marked with circles on the chart. The fact that all trading activity is happening below the control price in an uptrend, and that the sellers enter the market aggressively at the control price is clear indication that the uptrend is about to terminate.

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