There is never a clear path for us in life and just as in life the same is true for price action on the charts. There is never a clear path for price to move from one location to another. There are obstacles all over the place. Some of those obstacles are small and price has no issue running over them and some are big enough to cause price to stall before continuing on and then there are some so big that price must reverse from them and head in the opposite direction. We all know what it’s like to come into these obstacles.
When doing chart analysis we always have to be aware of the obstacles that price will face against and we have to know what dangers they will cause for price. Will it end prices journey in a certain direction or will it cause only a slight setback? What do these obstacles look like? They are supply/demand zones, they are trend lines and they are bullish and bearish engulfs. What do I mean by this? When you understand that everything on the chart moves based on what is happening to the left of the chart, then you start to understand why price is moving the way it is. It’s truly remarkable and is 100% true, PRICE MOVES BASED ON WHAT TOOK PLACE IN THE PAST AT THE EXACT SAME PRICE!
So look left and what is there, a zone? Might get a drop from that supply, or maybe that supply will be removed and price will head higher. There are explanations for why price does what it does but it comes down to you asking the right questions of yourself. This is the power of the Observation Journals as they break down the moves of the markets in detail and pointing out the details of what is taking place so you can follow along with why price is doing what it is. Sometimes trend lines are respected and sometimes they’re not, sometimes you make money in the casino and sometimes you don’t. The power is in knowing why and is it predictable? I am here to tell you that IT IS PREDICTABLE!
Kevin Araujo