How To Identify Key Levels - All You Need To know

how can you identify the best structures and key levels for you to trade off now so many traders are looking to identify the support and resistance levels the supply and demand levels the pullback levels the levels where price is going to react you to the most the levels where all the orders are sitting at the levels where institutions are planning to trade from now in my personal opinion that's all well and good but if we had the answer to that question then i think by now the majority of us will be using them so in today's video i'm going to share with you three structures that you need to be identifying and how you can place your key levels at the optimum levels to make sure that you're getting the highest probable trades that you can possibly be taking in any market structure now the three criterias you're going to be looking for are trending structures reversal structures and ranging structures now i'm not saying this is a holy grail you will need to back test this but what i can assure you is by the end of this video you will have a much better idea where your key levels should be trading from and the probability that your win rate or your success at taking your trades at these levels with the best possible opportunity of winning them will increase so stick around and let's take a look at the charts so we just mentioned there are three structures that you're going to be looking at when looking to take a trade the first structures you're going to be looking at is trending structures the second structures you're going to be looking at are reversal structures and then the final structures are ranging structures so the answer to what you're looking for here is where do we place our key levels what are the optimal key levels in these three scenarios here well let's first take a look at trending structures you can clearly see here that this is a downtrend so the market is trending to the downside now a lot of you use trend lines and you look for price to pull back to the trend lines retest them and then look for a potential trade where maybe get a pin bar engulfing candle you know whatever patterns you're really looking for and then you're looking to take a trade but in this day and age you probably all know by now that nothing in this business is perfect you cannot rely on a single pattern or a setup to take the highest probable trading setups everything is random and more often than not nothing ever works the way you want it to work but the reason why we have this line here and as i like to call it a brick wall is just to identify that price is trading to the downside now i'm not going to bore you with the basics here but when the trend is moving to the downside we make lower lows lower highs lower lows lower highs now there's two phases to this market structure when it's trending it's push phase and exhaustion phase push phase and exhaustion phase and when we're in an exhaustion phase what we're looking for is identifying marks to eventually look for the continuation that's as simple as it is so the question is when you're looking at this chart where are your key levels well when looking at a trending market there are two key levels that you're going to be working with no matter what the first key level most of you know as the retest level now this is a level in the market where price in a downtrend breaks a structural lower low and then makes a new lower low eventually pulling back into the previous low creating a retest of a broken level the majority of you may know it as support and then create in potential signals to sell the market now a lot of you will see this and say to yourself well as soon as the market comes back here it's time to sell that's not necessarily true more often than not as traders we would love for price just to retest structure and then continue down but in the majority of cases this never happens so what is another very important key level we need to be mindful of well the key level you need to be mindful of is the lower high that creates the new lower low this level is very important because when you look at the market structure after a push phase you have a pullback which is very likely but the area to where it pull backs more often than not may not be the retest level but just a random area in the market so when you start to see a reaction from that level you have to ask yourself why am i getting these wick rejections why is the market not breaking above structure why is it creating a resistance where price all of a sudden looks like it's just stalling for no apparent reason now you probably will be able to gather by by this time once you say once you get let's say three or four wick rejections and engulfing candles that this would probably be where the lower has gonna form but obviously no one knows why it stalls at where it stalls so the next important level will be the previous lower high in this instance reason being when price breaks back into structure majority of traders will see this as a potential reversal or signs that the market is not able to continue pushing down so now they start to say well it's not selling anymore because it didn't re-test so now it's time to sell but this is incorrect the cell structure remains in place until the lower high is broken in a downtrend because if you see this structure if we draw it like so what pattern develops here in a downtrend if the market reacts off this level and then eventually continues down well if we take the key level which is the lower high and then price coming back to this key level we remove this rectangle box more often than not the majority of you will identify this as a double top pattern so the answer to the question here is this especially in a downtrend what are the key levels you need to be working with in order to make sure that you're on the right side of the market and you're taking the highest probability or probable trades that will work in your favor in the long run the first level you're looking at is your retest level and then the second level that you're looking at will be the lower high in a downtrend now the same goes for an uptrend when the market is pushing to the upside you have higher highs higher lows and higher highs the level that the majority of traders will be looking to trade off is going to be the retest level but you must always remember unless the higher low is violated and price decides that it wants to come back to this key level then in theory you are still in a buy biased market you will be looking to identify the double top uh bottom pattern before they're looking for the continuation and that's a rule you must all remember in a downtrend if the lower high is violated that's when you can anticipate a potential reversal and in an uptrend only until the higher low is violated can you anticipate a reversal so that's trending structures let's take a look at one example here we have an example on pound usd now as you can clearly see here the market is trending to the upside so some of the factors we need to consider here is the higher lows that have formed and then what you need to identify is the higher lows that made these higher highs so the structure of this market is here indicated by this push phase exhaustion push phase exhaustion push phase exhaustion now this level stands as being very important as as it may not be as apparent as some of the perfect examples you're looking for but when you drag the data back to the left this whole level here this key level is the higher low that made the higher high now what patterns are you looking for once price makes a higher high well you're looking for price to come back to a key level to re-test that level as the perfect re-test that we just saw in the example so in this example if you're planning to take a trade then you're going to be taking the trade wherever you plan to take it at the wick rejections and golfing candles stop loss below structure and then you target your one to three wristward ratios so this is what we would call the perfect break and re-test and the only key level that's important or the two key levels in this instance that's important to confirm this continued uptrend is the higher low level because it was never violated no matter what happened with this structure it still falls in line with this uptrend and then obviously the break of structure and the re-test which falls in line with the perfect break and re-test now once price makes the higher low or the re-test and a new higher high has been formed that's when this level becomes invalid and then you move your data or your key level to the left and now you will work with the break and re-test level or the higher low that has just made the new higher high that's your perfect break and retest let's take a look an example of a not so perfect breaker retest so the not so perfect break and re-test here is on euro jpy now as we can clearly see with this market structure the key levels that we're going to be working with here is the higher low that has made the lower low then you're going to be looking at how price creates the new higher low so once you get the higher low you move that data to the higher low only once the low low has been made then you have a key level to work with you drag your data to the left once price breaks this structure which is the structural lower low we're then looking for a price to pull back for a retest of that structure and then a continuation as you can clearly see here the perfect break and re-test that we just saw on pound usd did not form but rather what happened price came back into the lower high that made the lower low now you might be saying well price is breaking through it i really need you all to use some logic here and i say that very respectfully if the lower higher the wick rejections are forming just adjust your key level and remember this is an area the point we're trying to make the perfect break and re-test failed there was no wick rejection engulfing candles in decisions to indicate that was a trading opportunity just because price breaks above it it does not mean you're looking for buys you are still respecting the lower high that made the lower low and looking from for trades around this area if given the evidence this is the last chance or time price can get to this level before breaking it and then you start to say well maybe now it's time to look for that reversal so you just take your trade however you plan to take it i really really don't care let's just say you're going for that one to three again and as you can clearly see here with this trade bob is your uncle so that's the first example that we had a look at here trending markets and the two key levels that you should be looking for when looking for trades the next structure is reversal markets now how do you identify a reversal in the market well more often than not i'd be brutally honest with you in an uptrend you will see the market making higher highs higher lows after a higher low you should anticipate a higher high if the price fails to make a new higher high and then as mentioned violate structure you can now start to anticipate a potential reversal to confirm a reversal and to trade a reversal you are looking again for potentially the perfect break and re-test or in these scenarios you are waiting for price to come back to the major key level to show a sign of potentially a triple top or reaction that will then create a new lower high to sell it that's exactly the same as in the trending market to the downside the double bottoms will form the key levels you will work with is the break of the structure to indicate a change in bias and then you would look for a retest and a continuation or the last important level is always going to be the major low where price failed to make the new lower low and then you'll be looking for price to pull back to these levels for a retest or reaction to then see a new higher low to take the trade let's take a look at an example of this on pound cad so as you can clearly see here we had a really nice trending market to the upside price is not creating the most beautiful high highs and higher lows but i think it's very very easy to say that once price starts violating structure and we start seeing strong bullish sentiments here we can anticipate a potential reversal in the market once price creates a higher low we anticipate the higher low and if price starts to fail to break above these structures we now form what i just shared with you which is a double top pattern the double top pattern means nothing until price violates structure creates a new lower high comes back to re-test the broken structure or the major key level and then how you would plan to trade this is looking not to get into the market immediately with an instant trade based on a re-test but to look for evidence and confirmation of price creating a double top in a downtrend and then you are looking to take your entry once given the evidence and again in this instance we'll go for a one to three and as you can clearly see here we have a really nice trading opportunity we gathered the evidence of this reversal with price creating the double top violating structure retesting the previous load that's been broken confirming that level is being strong and creating the pattern which is a double top to look for those cells now for the buying example it's exactly the same you have a downtrend that's breaking previous lows creating lower highs that are not making the new lower lows violating previous structure creating a bullish sentiment retesting the previous structure indicating the price is holding and creating that pattern of a double bottom and those continuations so that's how you will trade a reversal structure and those are the two most important key levels is your retest level and your major high only if looking for sales in a reversal market the final example that we'll take a look at is range in markets it doesn't matter whether the trend is up or the trend is down the two most important key levels that you're going to be looking for is your structural high and your structural low i do not care what anybody says if you're looking for trends within ranges then guess what that's fine with me and that's fine should be fine with you obviously but the point is your safest option when trading ranges are to trade at the major highs for sales and the major lows for buyers we'll take a look at an example here on aussie dollar cad now as you can clearly see here the structure of this market has been bouncing from roof to ceiling that's incorrect from floor to ceiling very beautifully creating prime opportunities to buy and sell this market structure if you want to trade it that is the best option to do what you don't want to do is get involved in looking to sell market structures or buy market structures in the middle of nowhere because a ranger market is clearly identifying that neither buyers or sellers are involved that's the best place or time to trade when price gets back to these key levels here and these key levels here now if you want the honest answer it's better to trade with the trend and use the examples that we've just shared here identifying the brick wall down identifying here break of structures looking for price to create levels and retest levels and then looking for prime opportunities to take trades like this so that's my two pence on key levels here it's really down to you how you apply this but in my personal opinion these are the only key levels that you need to be using in those three scenarios and in those three scenarios in my opinion are the only scenarios you should be looking for trades just to recap here the three scenarios are trending markets the key levels are going to be your retest level and your major lower high in a downtrend for a buy structure your key levels are going to be your retest level or your major higher low in an uptrend for reversal markets your key levels are going to be the break and retest of the major higher low in an uptrend or the major high and in a downtrend your key levels are going to be the retest level of the previous lower high or the major low in an uptrend and for your range of markets your major key levels are going to be the highs and the lows and in the downtrend it will be the highs and the lows so i hope you all found that useful as a always saying make sure you back test 100 trades go and take a look at your charts see the examples i've just illustrated here now i'm not saying this is 100 correct but i'm telling you it works for me it works for a lot of other people and i'm almost guaranteed that you no longer have to have 10 lines on your charts anymore identify your trends identify the structures of the markets draw in those important key levels and just wait patiently for the markets to come to you i hope you've enjoyed this video and if you have smash that like button for me subscribe if you haven't turn on notifications and until next time continue to trust the process

Channel: RockzFX Academy

Views: 384,363

Keywords: how, to, identify, key, levels, all, you, need, know, rockzfx, rocksfx, rockfx, support, resistance, support and resistance, key levels, identify key levels

Id: UIg1U6lKGy8

Length: 18min 46sec (1126 seconds)

Published: Thu Jan 14 2021