Questions on Chart Analysis?

[Francis Aneke]

I really want to understand the market and what happens inside it using chart, because without understanding your chart you have not begun.....I have read some books that have given me insights but I feel like traders in this forum can equally be of good help...so I have these questions here (though it may look some how, but that's how serious I want to understand the market though charts, just like many gurus out there).
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Letters on the charts are point of long entry and short.

Which point on the chart (Point A B C D E F G H I J K L) are suitable for smart traders to take long or short position.
{The remainder of the questions are down}

1. Which point would the longs exit to maximize profit (closer to their entry point?).

2. Which point would one take a long and be trapped in the market (and made loss)

3. Which points are best to take shorts hoping to cover at the next point of swing H/L?

4. Which points are best to take Longs hoping to cover at the next point of swing H/L?

5. Which Points can a short trader at point "I" break-even having made a wrong entry?

6. Which point can a losing long trader exit to regain profit; at what point is that long trader started losing initially.

7. Traders in a long position that didn’t take profit at point A, if opportunity calls again, which other point they can take profit (via a sell order)

8. A trader who took long or short at point A; how would he profit

9. A trader who took long or short at point C; how would he profit

10. Finally, what does it mean to cover a position (long or short)?

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All questions should be backed up by explanations, please (It's not an order but I am begging with high respect...)

 

[Bordux]

Hello Francis Aneke. For your intelligence, I'm not claimin g to be the best trader there is, but I have performed a simple price action, support and resistance based technical analysis to try and answer at least some of your questions. I don't know what strategy you use but I have based my answers on the way I would trade.

First off I have identified key support (1.4600) and resistance (1.4440) levels which in your given situation seem to be the most relevant to base your trading ideas. To answer your first question, the smartest trades to take are situation at the key levels. In this example, you may want to consider trades that are pointing down off of resistance levels. So, the trades A, C, D, F, G, H seem the best to consider shorting. The next thing you want to look at this level is price action; points A, F show the best, in my opinion, entry opportunities simply because there are well defined pin bar formations rejecting the resistance level. A smart trader in these situations would profit by placing SL ABOVE the resistance level and TP just before next support level. The point C doesn't give the best signal for shorting as it hasn't shown any incoming bearish moves as it hasn't reached the level yet. Points D, G and H may be considered but they are not the best. Needless to say point E is least favorable because it's not situation on any key S/R level, price action is rather consolidated and yields no price action patters.

On to the other side, the situation is rather similar; points J and K seem to be the most promising for long positions as they clearly penetrate (false break) the key support level and points I and L can also be considered.

Now, onto the series of questions:

1. If you take any long position off of support level, you should be looking to exiting the trade at next relevant resistance level in order to extract all those pips from long positions.

2. It's difficult to answer this question without knowing where your SL orders would be placed. If you take a safer approach and place SL way below support level, you might avoid a loss, on the contrary, if your SL is placed right on the level, you risk making a loss if you took long positions on I or J points.

3. Not sure how to comment this.

4. Not sure how to comment this.

5. Not sure how to comment this, but as a general rule of thumb you should general NOT take short positions if you can see that the price action is clearly sitting on support level. On the flip side, you shouldn't take long positions right below resistance level.

6. Not sure how to comment this.

7. Traders should look for shorting opportunities on the retest of the resistance level as point A clearly identified a valid level.

8. It all comes down to how you trade and how you manage a trade, however, If you take a short position at point A, you should generally put a SL, to be safe, just above the resistance level and exit the trade at the next valid support level, where price is likely to change direction.

9. Same answer as 8.

10. Not sure how to comment this.


Unfortunately I couldn't cover all of the questions, but I have tried to answer them to the best of my ability. I hope it helps to understand charts better.

 

[Francis Aneke]

Oh dear Bordux, thanks very much to make out time to answer my question..even to the extent of drawing the S/R for more clarity. Even though you couldn't answer all, you did more than all.

Now I know where to take short and to take long.
Even at point B is also a nice place to take long and maximize profit, having formed a piercing pattern which the bullish reversal was confirmed by the third green candle opening right above the piercing pattern.

You did also great by pointing out that you don't take shorts at Supports level as their is a high tendency of retest and pullback into the trend as in point I J K......

You covered a lot for me...Thanks.

 

[dkami]

To be honest I don't see any trading opportunities in the chart you provided!

1) price seems to be ranging, going sideways (lower lows then higher highs) never trade a ranging market, you will get cut to pieces!

 

[iMusingKiMi]

To be honest I don't see any trading opportunities in the chart you provided!

1) price seems to be ranging, going sideways (lower lows then higher highs) never trade a ranging market, you will get cut to pieces!

Absolutely agree. Most trader profit on trend, but when comes to ranging, they doesn't have any patience on it and give all those profit back.