How To Use Price Action Rules To DayTrade

In this video I'm going to explain how to use price action rules to trade the market. We're looking at S&P 500 and mini futures and trading price action means relying solely on pure price movement on a chart which means we're not really using indicators. I have one indicator on the chart but it is supportive indicator only 21 bar exponential moving average and as a trader right now I need to identify the structure and I need to use proper price action rules. So because the structure is trend range this is easy to identify because we have flat EMA and we're going very sideways you can see there is no trending market we're just going completely sideways and you can see all options played out. I have to apply range rules I want to buy low and sell high because in ranges once prices reaches the extremes market will pivot. So your goal as a trader is to identify extremes I'm going to identify the resistance here because I have a lot of bounces here and when it comes to support there's slight bullish bias but it's very minimal so for this reason I like keeping support tight like this for now because also I have a lot of bounces here but as of right now all options played out this is the trend line rule okay. Every trend needs new extreme tested and I now just need to wait because we have short mutual working lower. So what does this mean for me? If I want to buy low and sell high and market is working lower I want to take a lot of high confirmation trade close to the EMA. Can I have a lot of high here but this is terrible signal bar number one it's an inside bar number two the tail at the bottom is so bullish this is such a weak tier 4 bar I cannot take this lower high so nothing I can do just need to wait under normal circumstances if you have strong bearish bar you can take lower high and downtrend played out with the break push to new extreme okay. So right now because I've break below and once again market moves in pairs of twos looks like I'm starting to think about buying however I don't have no good bar this is inside bar doji enough to support weak bar as well so I'm just being patient now waiting okay we're just still far from the key entry point now above EMA so I'm just waiting one thing I can see once again bad bar terrible doji bar one thing I can see is that we have a little bit of a bottoming pattern because after new extreme you have a couple pushes the market is trying to break lower but the support keeps holding which is telling me that the buyers are back in the market okay buyers are buying this important price level which is exactly what you expect in trend range okay so remember buy low sell high we're at the bottom so we're thinking about buying low we have one more push lower and we have a nice bullish bar you can tell this bar broke one tick lower below all of these lows reverse back up and this is a great bullish bar look at the tail at the bottom this is great very strong multiple test so this right here is a multiple test and this is great about this setup remember you're going to combine all these rules downtrend played out so you have trend unloaded played out and you have trend range rules you want to buy low and you have so many bounces of this important key level that this is a great price action trade and market continue pushing higher so you can even have very strong runner here on this strong price action push this is how it happens you get the biggest runner when you buy very low or sell that high now i'm gonna just move the resistance a little bit higher because the range is expanding now what about selling high now can you do it well technically you can this is a second entry short but there's a little nuance you can see here the downtrend had clear broad break push to new low and some broad price action here here the break is so tiny so far from the ema it doesn't even look like a break okay it looks like a one push working hard this is why i don't recommend selling just yet same thing here and same thing here okay i talked about this a lot you want to see clear broad break and push to new extreme this is so insignificant you can easily make a case for slightly wider channel like this you can see and it still looks completely valid okay you need to see broad break push to new extreme the break should at least touch the ema because many times markets want to see the real push to new stream so this is happening attempt that to the new high and market felt at the bottom again so now you're getting confirmation again that you are trading a trend range because sellers they saw the extreme of the range okay new extreme we have trend down so i'm playing the trend line rule i want to see second entry short at the ema can i get it no i actually have a small break new low here i have a small break new low but once again okay same issue that happened here the break is so tiny so far from the ema once again you can easily make a case for channel to be just a little bit wider like this okay good lesson about these channels and you're also not fully at the key level at the support so i'm not really thinking about buying just yet but i'm gonna respect the new low because i don't want to keep thinking about selling just yet you have a high low here but once again it's not sufficient enough you're not at the key level it's too steep there is no bearish bar pullback okay and there is a very tiny break which can mean there can be technical push to new stream just like here and just like we saw a few days back okay i felt second entry short but this one is once again way too bad it broke below ema's all these bars congested way too big in the middle of the range was going to remain and now you have pushed to an extreme with a broad break broad break push to new low and you find yourself at the bottom of the range remember the range rules buy low sell high okay it's counterintuitive because your common sense is telling you look at market working more like this okay and it's hard for you to just reverse this this is why trading goes against the common sense but you have to use these rules they will guide you through the market and help you trust the price action you actually have high side of this push up first century long pullback second entry long and once again you have second entry long combined with the multiple tests because this kilo has been confirmed so many times and this string range is very healthy there is no imbalance whatsoever there is no imbalance you're just oscillating up and up and down so this is great hyperactive trade great single bar far from the ema broad break pushed in extreme perfect trend and once again look at the massive runner you have a hollow here but this hollow is not great because it's simply way too big you're buying at the very top of the move in the middle of the range if it at least from a little bit lower you're buying close to the ema this is very you know at the top of the move this is a little bit too steep i can't take it okay once again can you sell not really you don't have the new high the break is tiny maybe you can get new high market reverse down that's how strong the trend range rule is once again super healthy range market is working lower okay we expect new downtrend to start we're below ema we expect market to go to the bottom and you have new high first entry long pullback second entry long failure reversal pattern so we have felt second entry long reversal pattern okay we're coming off the range highs we're gonna go to the bottom decent bar bar is actually good but promise it's not for the ema with the body a little bit concerning this is why i'm going to just a little bit more aggressive more advanced if it's closer to the ema with the body it's much better but there's a little gap between the body and the ema not ideal there can be some pullback but decent trade enough it's still not working market keeps pushing lower okay i have some break push to new extreme but if i'm going to analyze this structure closely i can see that this resembles more mini spike and a channel pattern something like this there's very nice market geometry okay because if i'm gonna keep trying why the channel it keeps expanding keeps expanding keep expanding this is a good sign that there is a spike and the channel pattern so i'm expecting prices to go to the bottom and i'm looking for second entry short close to the ema can i get it new low first entry short i'm gonna take advantage of this price level because i can see resistance around this level so downtrend is new low following the trend line rule you have a second entry sure but the single bar is so bad even with the key level i cannot justify taking bullish bar can i get some lower high below no you have a lot of high here but at this point you already have micro level bottom which is very close to new extreme so i cannot risk this i mean if this is not double bottom this is actually okay because you have low high and it's a multiple test of this skill this skill is very strong but the micro level bottom messed things up i have to respect the rules even though they're not working nothing we can do okay market is breaking lower your break push to the extreme once again broad price action push to new low okay new high first entry long second entry long far from the ema tiny bar what are triggering rules telling us buy low sell high we're at the bottom of the range you can see great bullish bar great fell breakout fell breakout you're gonna combine all the rules the downtrend played out and you're at the bottom of the range you have to trust the rules and you also have to like a pull back down measured move so i can actually make it even from this point make it a little bit longer make it a little more accurate okay measure move perfect measure move reached perfect price action so this is how to trade healthy trading range like this there is no imbalance whatsoever downtrends and options are playing out and you're just going to buy low and sell high okay so you can already have a bunch of trades you can close it and go home it's not even one hour after open and once again these trades are generating massive runners that's how it is in train ranges if you buy or sell near these extremes we have uptrend working higher so i'm looking for second entry long at the ema this is not happening once again i can't really sell because the same thing that's happening here happened right here there's a spike in a channel pattern i'm going to redraw spike in a channel pattern like this okay i actually have lower high here i took this trade i took this trade because i was really betting on the range rules but i missed a couple things here actually i saw them but i disregarded it i really bet on the training rules because as a trader you need to take calculated risks so notice you have overshoot of the wider channel which is not good but more importantly price is broke above ema this is bad on this little high it's confirming but you cannot push above ema you need to stay below the fact that you pushed above ema it's confirming that the structure is more bullish and there's this spike in a channel pattern i took it i mean i'm not gonna mark it it's not a great trade looking back in hindsight because it pushed above ema overshoot the spike a channel pattern but i won't talk about it i took a chance here was a great bar i thought it's gonna go lower betting the range rules but this time market ended up working higher okay market keeps working i'm breaking you high i'm gonna mark breaking you high however i definitely cannot sell remember we just right now pushing too far from the range in fact i'm thinking about drawing a wider channel but i need to see new push face and i have new push face okay i can draw wider channel like this we are right now transforming in a new trend one breakout will always be successful at the end of the day i'm gonna redraw the downtrend working lower i have actually i have a second entry along here but you cannot go long above horrible bearish doji inside bar and the bullish bar didn't get a trigger so there is no setup for me to take okay now we are below ema so i cannot go long below ema because i don't know how long the pullback is going to be i need to wait for the push above ema and i felt like an entry short i finally have a push above ema okay i have felt short but it's an inside bar so i don't want to take inside bar like this okay so i gotta remain patient can i get me a second entry long i can this one is far from the ema cannot go long here i have the secondary bar which you can basically view it as a second entry long this one is not bad a little bit far from the ema with the body but ema keeps holding nice reverse of these tail oh excuse me nice tail reversal of the ema decent trade to be considered because remember you still expect new high to be tested this one will end up being a losing trade okay push down push up you can basically draw many congestion two trends still need new high and now you have second entry long again first entry long second entry long great hyperbolic setup option needs new high great signal bar you're not congested option is too high two channels actually too high great push to new high do we have new high okay we have double top again okay double top and double bottom is very close to be considered new extreme i was still expecting test of new high but i would not go long there's a second entry long i would wait due to double top market can consider it as new high tested okay market actually keeps breaking lower i'm gonna redraw the new downtrend and i'm gonna redraw range we can have new market cycle a little bit confusing now because you need new low for the downtrend but you cannot sell close to range lows at the same time you don't really want to go long just yet downtrends new low you're not at the key level so you're just waiting patiently finally breaking new low downtrend laid out so right now i have to follow the price action and what is in front of me so what is in front of me well downtrend played out and i am in a trend range it looks like so i'm actually thinking about third second entry short above ema gonna redraw the uptrend working higher i have small overshoot here which is not ideal but i have a third second entry short i actually took this trade but notice we broke below ema and i have small overshoot so i waited for trigger here and i dropped deep limit order somewhere here okay because you have overshoot and you break below ema it ended up working for me because it reversed all the way back up it ended up working even for eight ticks if you enter normally but it's definitely prudent to use limit order here i actually got three points on this bar on this trade because i used deep limit order because we broke below ema and i had small overshoot but range held downtrend played out oops i'm gonna mark it let's say oops let's get into short okay now you're below ema so now i have to remain patient too big of a bar congestion something is off now okay i'm not thinking about buying now because you are expecting from this support market to go higher the fact that you can't even reach the midline is a good sign that right now the new downtrend will start okay so this is a good sign not to fade this breakout hopefully it makes sense because this is what is supposed to happen you're not supposed to be rejected at the bottom of the range like this you're supposed to go higher because the fact that it's not here combined with the fact that uptrend played out means we may have a new downtrend starting and we indeed have a new downtrend i'm going to draw a new channel i have overshoot here on this channel you always want to have channel on the chart i cannot take no trade even if there is a textbook second entry short i would skip due to this overshoot you have a second entry short here failed breakout but it's i need this a little high to kind of negate overshoot to confirm the structure there was no little high justified the downtrend played out with the breaking low but market keeps continuously trending down and you can see a lot more pushes lower so i have to locate downtrend right now i keep getting overshoots though so this is not ideal okay tons of overshoots it's not acting like overshoot problem with this is that i have no other swing here so it looks a bit oversold like there's overshoot but it's hard to find this overshoot i can draw channel if i'm going to draw this yeah this is way too way too flat i cannot do this so this channel looks good you had to draw wider channel because this was too strong to push down okay you can see how many bars you have down you have 80 points working lower but the ambiguity about the trend channel line is telling me that i right now should respect potential structure i actually like keeping this as a small overshoot but if you're not sure if there's overshoot or not which in this case you're not sure i always say it's better to respect the overshoot okay you can always miss a trade and enter on the next one it's better than to have unnecessarily premature losing trade and you can see we're going very sideways we're back above ema so it's definitely smart to remain patient now this is quite sideways quite long consolidation i don't think you would go short here just weak bars here so sideways flat ema when you need something though you may like low high can i get it no i mean i have some felt breakout here but not such a clean range here it's tempting trade but this range right here is not as clear i would prefer some still lower higher thoughts i it worked but it's just not the best i mean it's okay you can tell most breakouts will fail congestion congestion break higher if you took it i can see why i'm personally looking for setup below ema and look at this you attempt to go lower and push back above ema this is not good i had to redraw a new uptrend and i need to right now respect the price session i need to see push below ema and felt second entry long because this structure is getting too bullish too bullish you may be tempted to draw a wider trend like this but you cannot because in price action bigger pattern takes precedence this downtrend started actually from this point this is 100 points down this is the bigger pattern you expect new law following the trend line rule so if anything you're expecting to go short you have a first entry long second entry long it looks like can't reset first entry long second entry long failure again you know this is a tempting trade i skipped it why did i skip this trade because to my liking this bullish correction was too long okay this bullish correction was way too long it looked like there's a new trend and you expect new low but i need to see some proven downtrend first and a second entry short at the ema okay this felt second intro is okay if it forms somewhere let's say here around this area basically the shorter this bullish correction is the more you can trust it up like this this was quite long so actually i saw a few traders took it and your analysis is correct it's definitely better to be shorting than buying so if you took it i can see why maybe more advanced trader can consider but because the bullish push was too strong you need to wait for the stronger push below ema and a second entry short perfect can we get it okay we have overshoot of this downtrend and this is our best scenario we like okay when two trends need new low the main one and the secondary one so can i get some good trade okay you have a second entry short of course you cannot take you had overshoot of the secondary channel and you have one leg working higher so i need to see a little high below ema a little high here but this one is far from the ema i cannot take your visual to like a pullback breaking your high perfect so now the correction played out enough to overshoot so now i want to see a little high below ema to test the new low but there is no lower high below ema just push to new extreme downtrend played out and now i have to pause looking to go short i don't think i can take this long too congested mainly below ema i just have to remain patient okay and now it's getting pretty much way too late the market is about to close now all right so this is the overall structure for today we ended up having a lot of trades today decent trend day few tricky trades as well but overall there are so many trades to choose from especially if you get few early no trades on the way down really because you've overshoot an inside bar here another overshoot maybe this will breakout is okay a little bit more aggressive trade right here and unfortunately no good low high to take advantage of a great context breaking low and now market is about to close so decent price action now you know which rules to apply and how to navigate the structure i hope the video was helpful and you had a great trading day i'm gonna wrap it up i'm gonna talk to you next time feel like you're trading