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I would like to start a thread on price action observations on the 5 minute charts of ES and the FX major currencies. The purpose is to note and share my observations. It is not a trading journal because there are no trades described here. The focus is on the behaviour of price and possible setups to learn from.
The first is a trend reversal on the ES:
1. There was a L2 or L3 setup at the ema. At this time, the trend was down. Price was below the ema. The bar and tail sizes were not large and there was not a lot of overlap between the bars.
2. There was a big bull bar up which broke the bear trend line. This was also the 2nd leg up. 2 bars later, a bear bar formed. There could be a test of the low extreme. However, the bull bar up was strong and there was no 3 bar reversal set up. It was better to wait.
3. There was a 3rd push up. Price fell from the new high to form a doji bar with a long upper tail. The next bar was a bear bar down. With 3 pushes up, a 3 bar reversal set up and failed breakout, this could be the start of a test of the extreme low.
4. There was a TTR just below the ema with higher lows. Before the TTR, there was a possible double bottom higher low. The TTR itself contained mostly bull bars with higher lows. This was a sign of bulls gathering strength. A breakout followed soon.
Can you help answer these questions from other members on NexusFi?
1) At this point and in the zoomed out view, price looked like it was in a trading range. Instead of a bear follow through after 3 big bear bars, there was a series of bull bars above the ema with lower tails, indicating that buyers were coming in. With some way to go to the prior high or range top, there could be more upward movement. Price was also above the ema for some time.
2) After the prior bullish push consisting of 6x bull bars, bear bars started to appear. With such strong bullish movement, there could be another move up after price pulls back to the ema. There was a H2 setup at the ema. This was also a small ascending triangle above the ema.
3) After the breakout to a new high, there was a TTR above the ema and breakout level. This could be a breakout pullback or a flag. As the TTR drifted towards the ema, there was another H2 setup.
4) Price went up again. This time, it was in a tighter bull channel. There were 3 pushes up and a bear wedge shape. However, the bull strength was strong. Price was always above the ema, the pullbacks were small, the bars and tails were small and they were mostly bullish. Shorting was a low probability trade. It could be considered only at or above the range extreme and if there was a strong break of the bull trend line followed by a pullback.
1) The bear trend was strong. The pullbacks were small and price was always below the ema. The bars were small and had small tails. There was not much overlap between the bars.
2) After forming a range below the ema, there was a big bar up which broke the bear trend line. The first trend line break in a strong trend would likely lead to a continuation of the trend. This was also the first ema gap high. A double top formed several bars later above the ema.
3) After the trend line break, price started to fall back for a test of the prior extreme low before either a reversal or trend continuation. At this point, there was a TTR below the ema following a first leg down. This was a bear flag below the ema. There was also ample space for a second leg before reaching the prior extreme low.
1) Price had large bars and tails with lots of overlap. There was a failed bull breakout spike and price fell back sharply. This was trading range behavior.
2) There was then a failed bear breakout spike which went below the prior low. The breakout also failed and a bull reversal bar formed instead.
3) Price formed another bull swing. There was a bull reversal bar above the ema. This could be the start of the 2nd leg up and there was ample space from the ema to the prior high.
1) There was a 2 legged bull spike up from the market open. This could be a bull spike and channel or a bull swing in a trading range.
2) Price fell from the spike and formed a TTR at the ema. It was still unclear whether a channel would form or price would form a trading range.
3) There was a bear bar down past the prior bull spike. At this point, a bull channel formation looked unlikely and a trading range could be the next outcome. Need to watch for the formation of a bull leg.
4) Price went up but did not show bullish strength. In fact, it stalled just below the ema forming a TTR below the ema. At this point, instead of price going back up in a range, there could be a bear breakout.
5) There was a bear breakout followed by a pullback and another TTR below the ema. This was a pause before price went down further.
Price is in a trading range. In the bull swing up to the range resistance, there was a tight trading range above the ema and just below the range top. The TTR consisted of a tight cluster of bars with slightly higher lows. It could be a small ascending triangle too.
Additionally, there was a failed bull breakout bar which ended up as a doji with a long upper tail. However, there was no bear follow through from the failed bull break out.
