Home Trading Strategies Price Action Trading: The Power Of Line Charts Ignored By Most Traders

Price Action Trading: The Power Of Line Charts Ignored By Most Traders

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Price Action Trading: The Power Of Line Charts Ignored By Most Traders

hey hey what’s up what’s up my friend so in today’s training Ryan I’m gonna share with you the power of line chance you’ll discover you know what is line chance and how it really works the hidden benefits right of line charts that nobody tells you and finally I will also discuss about when to use line charts when not to use it how to use it and why so much much more right to be covered in today’s training but if this is the first time you’re watching this video please hit the thumbs up button and subscribe to my youtube channel this way you’ll always be updated whenever I publish a new video so good let’s get started so first thing first okay so this is a typical chart that you are probably familiar with right it’s what we call candlestick chart okay and you can see that candlestick Chan right it is a it can be overwhelming to a new trader you know if all these lines flying up and down different colors okay so line chart pretty much right fix this simplicity out of it okay so for a line chart right what I want to do is that if you are using trading view just go to this icon over here click and go to line and this whole thing right it changes into a line chart okay and the beauty of line chart is that it removes a lot of the data points that you seen earlier right so for candlestick pattern right you have the open the high the low and a close for a typical line chart we only deal with the closing price so this is why if you only have one data point which is the closing price and if you connect you know the closing price altogether you get a line on your chart so for trading view right a little feature they have is that you can choose the type of price you are a user so by default is the closing price but that’s not to say you can just open the high the low the close or a high plus low / – yada yada right but for default line charts all right most people go with the closing price and that’s what I’ll use in this example so when you see a line chatter and the first thing that stands out to you what is it tell me tell me my friends you should realize that a line chart it highlights out do you write the key levels the key points in the market because when you look at this chat now the line chart you know there’s a few levels that stick out like a like a saw so I to me right if it is highs this over here here this this it just sticks out just like that right this one over here here here here and here and when this level sticks out you know in your face right what this does for you is the amix drawing your support resistance drawing your trend lines a whole lot easier right because these are just a few levels that you know that you must be focusing on because these are the most obvious levels so with that said let me just draw you know support resistance right using line charts okay so what I’m seeing over here is that this is a level right possibly this market respects it okay let me just change this to black okay then it’s another one over here okay I would say there’s another one over here possibly and I see that you know numerous lower highs maybe we could get a trendline let’s try this trend line here okay and connect up higher right possibly yep we can see we have a number of tests right one test one test two three and four over here there but something like that right it’s not the the most exact one but this is just an example to show you how when you change right from candlestick chart to line chart you know levels all right support resistance just become a lot easier to draw because there’s only a few levels that you realize that really matters on a chart right so to make a life easier sumo as well to zoom on the chart to see the big picture okay one more right pound dollar let’s see how this one works right so for pound dollar what I’ll do is again horizontal line okay this is the most obvious one this one here what else come on tell me this one here okay this one here all right and they get it right pound dollar I these are obviously the most important levels right at least on base on the weekly time frame okay so one more final example let’s try a New Zealand Swiss franc that’s good daily time frame this time wrong this time wrong again I like to zoom out daily time frame again right basic basic technique analysis right so for existence trendline if you’re not a little how to draw support resistance right I have a support resistance video in the description click on it check it out and your lengthy so-called exact science right away I draw my levels so okay this is how I would draw this right I like to connect the most number of just for this one is one two three and four right so this I would say so it’s a level that I want on my chance because the market has you know bounced of it repeatedly not a one over here okay and over here it seems like we could get another one here multiple tests as well I can see multiple tests over here as resistance resistance resistance them previously was support support support resistance okay definitely a level at one of my chance and then I see you know a series of lower highs right this tells me that possibly I could draw a trendline as well so I just connect it right all the way backwards and see how many how much how many touches I can get okay so in this case I possibly would have to shift this one slightly like this day ahead right I have something like a trendline over here as well in fact I just control C control V right possibly get this lower portion as well there’s a lower channel part of the trendline so yeah big heavier and this is how I would draw my levels to key areas for New Zealand she’s pregnant by now I hope you can see that the power of line charts are in d clatters everything and help you focus right really to zoom in on the key levels that matter so now besides you know drawing support resistance besides drawing trend lines you know what is a line cuts useful for if you ask me right for those of you who are familiar with classical cutting patterns right now here in Shoulders pattern triple top ascending triangle descending triangle again line charts right make your life easier when you’re spotting such patterns for example Bitcoin okay I’m just a Bitcoin I’m just you know zoom in and share with you some patterns that I I see R I using the line chart so you know an ascending triangle or descending triangle pretty much it’s just a series of higher lows or lower highs in this case you can see that a series of lower highs over here for this Bitcoin chart right low high low high low behind low high this is what we call a descending triangle this is a sign of weakness telling you that the sellers are they’re able to push a price lower lower lower and lower and the buyers are idea have difficulty you know holding up higher prices you can see the first time they push up they push up this much right pretty strong second IV got weaker that time they push it up even weaker the fourth time even weaker the fifth time is pretty much non-existent and you’re pretty much a deep okay so eventually the price broke down right and that’s where we’ve got another classical chatting pad and can you spot it again let me just zoom in and you can see that it’s somewhat like a ascending triangle all right now I have a series of higher lows coming in to resistance right classical shutting patterns right now we have a breakout price heads up higher okay so again this ascending triangle is not difficult to spot and the idea behind it is that you can see that buyers are willing to push the prices higher higher and higher okay then the sellers alright they have difficulty no holding down the price if first time they push the price down lower went down this much second time went on this much time right pretty much you know no more strength left then you know price you know broke out of it okay so let’s see we can see anymore over here again the same pattern right can you see can you see the descending triangle let me give you five seconds one two five okay so it’s over here lower highs into support right series of lower highs into support right so this is again another descending triangle pattern so I hope you can see that now you know lines as they are useful for you as well right to identify you know patterns in the market so of course classical chair patterns are is just one type of pattern there’s another type of pattern that I really like is what I call the falls break where price no breaks out above the previous high or loose right only to reverse back in the opposite direction so it’s something like this right price let’s say goes up comes on all the way back down it swings up all the way up through highs over here it collapse down lower again so you can imagine that traders who buy at this highs right now they are trap right if you buy this highs in the market reverse right you are clearly clearly right in the radar it’s gonna be painful for you so this is what I call the Falls break where price breaks above the previous high right and then do a sudden reversal okay the same concept can be sitt for the same right for the laws as well price break down lower only to make a strong reversal up higher so when you use a line chart right this again right becomes pretty easy to spot right so let me share with you if you wrote pound and by the way right if you are watching this video right now and you really enjoy it you’d like to learn more about you know price action trading I have a gift for you right just go down to my website okay trading with Rana calm the Ling is on top over here there you go okay just good not to my website trading with Rana calm you just scroll down a little bit right I got this guy over here for you it’s called the price action trading the ultimate guide to price action trading just click the orange button over here right and I’ll send it to your email for free right so this will take you even deeper into price action trading right not line chat buy more candlestick patterns support resistance you know and much much more so this is a guide it’s free code onto my website download it right if you if you already have it Congrats right I hope you find value out of it so moving on okay we were talking about the falls break so how does it look like so let me just zoom out the charts the K this is Europe out okay I hope you can see this already you rope out and make this highs over here right and you look here the price reverse at this level this is 93 said level why is that right if you look left right we have this swing high over here price it made a false break at this high so price basically you know took out liquidity at this highs okay and then did a sudden reversal down lower so you can mail it traders who buy the breakouts right they are now trapped they are now stuck in the red ok so this is what I call a false break setup so whenever price right he has made a huge move right very quickly right and it takes out a very significant level and the first thing that you know pay attention to is to ask yourself right will the level hole or will it break because if a level is going to hole right what tends to happen is that the market has to consolidate right forms into a tight range like a blue flag pattern telling you that you know there are buyers willing to support this higher prices but if the level right is not going to hole right what happens is that within the next one to can knows the market would do a quick three hundred eighty degree reversal a closed lower aggressively lower right below the highs right and this is what happened over here this is what we call what I call a false break other traders might have you know different tell me not terminology for it same for here right this is a key level price comes down lower and then it falls break now closing back again above this area of support same for here at this level price comes down on do this lows right did a Falls break and then rally back up higher okay so this is a follows break a pattern you can see this of course on candlestick chart no problem with that right it looks pretty much like this it looks like this over here okay but again with line shot it kind of you know make your life easier it only shows you the the point that thing right like you know what else the year sir I just the point that stuff that sticks up okay add another protein right this is what I learned from Adam Grimes right now I think because he actually came up with the term of falls break I think I think it’s a mic remember if it’s him okay but one thing I learned from him is that he mentioned right the falls break right to find out whether the rejection is strong or weak you want to pay attention right to the the angle of the rejection right the steeper angle right the better it is so if you look at this example over here the angle of the rejection is very strong you see where i zoom in right there and go over here it comes up and then bang because we checked that pretty strongly already the angle this is the angle I’m referring to the angle of this light the angle okay so if the angle is something like that right then it clearly this price rejection this angle it’s not as strong compared to this steeper angle that you see over here so the steeper angle riding is stronger the price rejection look at this one over here this angle right it’s almost like a rocket no pointing up higher almost vertical line pointing up higher this is another sign of strong rejection okay so pay attention to the angle as well the steeper angle the better it is okay so moving on right one more example at in Aussie Canadian you can see as well same thing right when it comes to the the Falls brick setup right this is the highs price comes up higher right and it hits down lower again this I want this I just took up this previous high marginally okay let’s see if we have any more example all right another warning over here as well okay this one over here thinking of this loss and this loss as well okay so you kind of get my my point right where you use line shots it makes your life easier to identify patterns and one final thing I only talk about about patterns is that sometimes rightly patterns right doesn’t have a name for it for example I was looking at this SMB chat over here and notice that there’s also a patent on this market okay I don’t have this term for this particular pattern but let me share with you you know what I found I noticed that whenever the S&P 500 right it makes a pullback okay so according to textbook you know that pull backs you know always look like that right pulls back goes up higher pulls back then it goes up higher but for the SMP 500 the pullback is a bit different in the sense that it tends to pull back make another move lower before it rarely higher so for example it looks like this goes up pulls back make another move right tripping out traders who are shutting the loose to trap that and then it goes up higher comes back trip the lows again there it goes up higher okay so if you look at this chart right you see what I mean so look at this SMP 500 okay this is what I mean market pulls back okay trip again right near the low steady release comes back down trips the low very rallies comes back down this trip this low and very rarely so you can see you know this phenomenon on the SMP 500 happen in quite a number of times this is the first pullback it trips the load the swing low then in rallies this one over here again you can see again it’s a happening a number of time pulls back this one trips the low then it went down even lower before it really higher so you see that when you have a line shut on your chance right it becomes clearer like patterns are easier to identify so when you have line shots are again right this type of a price action right becomes easier on the eyes to spot I’m not saying you can spot this on candlestick chats yes you can but with line shot since you’re only dealing with the closing price things that become clear like you know x-rays zoom wow so clear okay so with that said all right let’s do a quick analysis right so pros and cons of line shots right before I conclude this video I want to share with you what are the pros and cons of line chatter of course this is not the Holy Grail nothing is so I just want to share with you know when to use it how to use it and when you know you do want to use it first and foremost right the benefit of line charts is that in declutter your chance or I only show you the closing price shows you the most obvious levels and that helps you identify key levels to draw support resistance to draw your trend lines identify patterns in the market as well where is it classical chart patterns hidden patterns or the Falls a brick pattern of course the downside is that line chance it nor the weeks right ignore the highest nor the lows and then write to me is part of the story in the markets and if you ignore that that Padre it’s like ignoring a message from the market and to me right that is important as well okay so I would say line chance right they are not useful especially if you want to trade let’s say a breakup using a buy stop order or a sell stop order right especially if you place your stop order let’s say above the highs of a candle or below the loss of a candle because it might get you into a trick too early right even though the market hasn’t really pricked out yet I know that sounds confusing so let me give you an example so if you look at this one over here Bitcoin all right let’s say we look at a typical candlestick chart okay and let’s say we are looking to sell the breakdown of this loss okay this is this this loss right so we put in let’s say this line over here let’s say it’s a red line so if the let’s put it to rate okay so this way rate of pain right this way we know that if the price were to hit this pink line over here we know that the market has break below this loss and we want to shot the breakdown however if you look at a line chart you would realize that your low is actually at this point over here let’s change it is to blue and if you want to sell and this I mean this changes to black right if you sell at this black line you realize that the price that’s not actually break below the lows of the week yet so you get my point if you use line charts to you know time your entries especially if you’re using buy stored order or sell stop order right you might enter the trade too early even before the breakout has legitimately occur okay I hope that makes sense and that is not to me one of the downsides of our using line charts but with that said right i I have come towards the end of today’s training I hope you got value out of it or I again quick recap these are the pros and cons of it if you’ve enjoyed this video give me a thumbs up alright subscribe to my youtube channel the link is below hit subscribe and if there’s any topics that you want me to cover in future leave it in the comment section below and I will do my best to help so with that said I wish you good luck and good trading I will talk to you soon you

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