Engulf
PA; ENGULF; SPACE to trade to unhit target(s), engulf reaction
Engulf
If you're not one to simply trade on the touch
of a zone, but would rather wait for confirmation that price has rejected,
there are some brilliant PA patterns you can look for before you enter a trade.
The best ones we'll cover involve an Engulf
The best ones we'll cover involve an Engulf
This is a very powerful sign that price is on
the turn. They say that a trend is a succession of
LL's and HH's, or vice versa, so if you get a Lower Low from Supply, it's a
great first sign that the uptrend may be over, and of course flip the scenario
for an HH from Demand.
If you didn't have the patience to wait for
that engulf, see the Lower timeframe for another lovely engulf showing the way
much earlier!
Can
you trade an engulf as a breakout trade?
Well,
yes, but price very often retraces after the engulf, to confuse the breakout
traders and hit their stop losses, creating more orders to take the other side
of the big money's new direction trades.
This
means that the stop loss would,
in most cases, still need to be beyond the original zone.
Here's
a video about the engulf
So,
in essence, it's as simple as this
ENGULF
RBD-SetUP:
1. Look at HTF high-interest zone,
BUT: wait for the price to RE_ACT
2. Wait for the price to establish a
fresh RBD level in the HTF-Highinterestzone + AN ENGULF of an important level
below it. Purpose: to make the set-up VALID
3. Enter the trade on the
fresh-established RBD level.
Sunny replied: All I need to know is
that there is an interest to sell at this supply or buy at this demand, WHICH
IS CONFIRMED BY ENGULF. When the price comes into supply/demand of HTF, I
switch to M15/30 TF to look for swing points. when the series of HH and HLs is
broken, I know, this is the time for me to get in.
Another
"wait-for-engulf-of-previous-swing-strategy" lesson: http://readthemarket.com/index.php/forum/journals/1577-les-paul-s-journal?start=50#17436
Why set-up fails: http://readthemarket.com/index.php/forum/journals/1577-les-paul-s-journal?start=75#17858
Infest is saying:
focus on the quality of the engulf
set-ups of zones/swings. donot focus on very LTF because they are the hardest.
price always builds up from HTF. If we look for setups in m15, we have to know
where we are in D, H4, H1.
as long as a level not broken, it is
perfectly Valid, dont expect something to happen, just see what happens and
trade it.
When price hits a zone, switch to
m15, find the points where price went after hitting a zone and turned to
continue in the direction of original move. Take the low, and wait for this to
be engulfed after price made a HH. if low not engulfed, DONT SELL!
What
can be engulfed: a FL, a Key-level, a FTR. When either of these are engulfed
price might go to the origin of the move. An FL should be a pause after an (extended)
drop or rise of the price.
Engulf Vs FO, Swap zone
H: "the best engulf is an
engulf of an FTR that previously engulfed an important zone."
by PTP: If price heads down
after the reap (reaching target), from higher up, then I take notice for price
possibly moving to the next stack of orders below then"ftr".
Swapzone by H: http://readthemarket.com/index.php/forum/journals/2282-h-s-trading-journal?start=150#45481
In a scenario where there is a valid
engulf, I should look for any S/R flip level that may be in the way of price
reaching the origin of the engulf. If there is a S/R flip zone in the way,
price may bounce from that zone instead of fully returning to the origin of the
engulf. Supply/demand zones that were ignored as price was forming the engulf
should also be watched as price approaches the area on return.
(self-interpret)::::Where there is a
valid engulfed back away from the engulfed out, look for potential S/R
fliplevel that prevents price reaching the origin of the engulf-back. S/D zones
that *WERE* ignored as price was engulfing past them, should be watched as
Price approaches them on return-retrace.
(jurij) The origin is a level where
an important decision was made (new transaction, new decision, FL).
And to asses the importance of a DP
I think we have to consider multiple things as swap zones (or S/R flips),
previous FLs and symmetry (including QMs).
I also think there's no fixed rule
like "first engulf of a move up" because in the end what moves or
holds the market are orders and if there's a wall of orders before a LTF origin
FTR, price won't get there unless this barrier (important area like swap) is
broken.
But could be wrong, it is just what
I observed from the charts.
I'm coming more and more to the
conclusion that there's really one origin and it is the true supply/demand FL
after a swap zone break (aligned aka swapped FL).
Sometimes it is hard to know if
price is forming a FO or EG...but if a possible FO occurs @ the target for the engulf
above, and price engulfs the true supply level, we can be pretty sure which PA
represents the FO and which PA represents the Engulf. Once we know this, if the
target for the engulf that broke true supply is an ORFL, we can wait for a deep
RT to the FTR that forms after the EG of the DP to FO.
Engulf by Peds via Salivan: http://readthemarket.com/index.php/forum/journals/2517-the-art-of-war?start=200#53067
WHen see ENG: ask "???DOES THIS
ENGULF MAKE SENSE??" "Did price engulf DP or key level, or into a
S/D?" "Look at origin of engulf, does the origin come from HTF S/D?
if the origin fails to reach S/D then there is potential FO."
"does this engulf make
sense?" By that I mean look at the history around where price engulfed.
Did it engulf into a DP or a key level? Did it engulf into supply/demand. Also,
look where the source of the engulf came from, was it coming from a HTF
supply/demand level or has it failed yet to reach one? All these things should
give you a heads up on a potential FO.
For example, if price is engulfing
south, but price has yet to come off a significant level of supply, it makes
sense to see a FO to help push price to higher levels. Something that looks like
it may be currently happening on EU.
if price ENGULF the DP then we
will go to an other DP .
Master Harry says :
just keep in mind not all kinks are
decision points.. or maybe they are but you will get lost like that because
they are too many. maybe instead focus on the ones that broke something like a
previous high/low or such.
Engulf shows Lack or exhaustion of
orders. Thus to spot meaningful engulfs one must be able to spot significant PA
zones/levels i.e. Significant FLs/ FTRs/ SD Zones first !
i think most of the reaction as FTB
in to the source of ENG is FO .
PA on the way to our interest zone
is telling us not to short
http://readthemarket.com/index.php/en/forum/trading-articles-discussions/1708-engulf?start=200#38377
demands/supplies tested on price's
way? are there still fresh DPs?
http://readthemarket.com/index.php/en/forum/trading-articles-discussions/1708-engulf?start=225#38449
- look for clear and fresh DPs to
ENG - FTRs, some are just more clear than others
- approach on LTFs
- look for big decisions change - I
mean if there is a strong pole up, and after that the base of this pole is
broken and pole in opposite direction is created then it is a big decision
change
http://readthemarket.com/index.php/en/forum/trading-articles-discussions/1708-engulf?start=175#27485
Good telltale sign that a level will
hold is COMPRESSION, I strongly recommend you to do your homework on it :-).
If the price does not approach SUPPY
/ DEMAND in a compressed way, then you should wait for confirmation in the form
of the engulf of last demand on the way up or last supply on the way down. This
will give you a hint that price really wanna turn. And for me, personally, this
is not enough. I like to wait for the first FTR, then it is usually a good
trade upon return.
Whiteout via Sali: “The main point is to find decision point and
assign the right value to them, that's why you wonna see how that point will
react in the future.”
we know
that all the market is DP,all the market is FTR,all the market is supply &
demand, but each one has it's own value, find the most valuable one, those that break a valuable barrier are the valuable
DPs. but
simply we look for those areas where some decision made to break a barrier
(swing H/L) in a firm form, in that the FTB to that DP has not happened. this what I
use in all my trades. we know what FTR is
,what FTB is ,what DP is ,but we must know why price is here also it is more
important .
If Price ENG an ignored S, it must
reach to Demand (DP), and if price ENG an ignored D, it must reach to S (DP).
The point here is to “find the most important ignored S/D”.
Know the difference between ignored S/D and S/D. DP is the S/D.
Know the difference between ignored S/D and S/D. DP is the S/D.
(Marcel)
the big box is a flag limit. an ftr inside an ftr, thus beeing of less importance than then low, but still relevant
the big box is a flag limit. an ftr inside an ftr, thus beeing of less importance than then low, but still relevant
you can but ingore and focus and the low only on higher scales
a break of the flag limit, will make a new flag of relevance, but
so will the break of the low. The flag made after the break of the low will
again be more important, as it broke something of bigger value. It beeng bigger
you can check in a simple manner, by zooming your chart out and having a look
at what higher scales tell you
If so
looking for the engulf of these upper limit flags or lower limit means that it
is an indication that the remaining orders are no longer their and price can go
higher or lower depending on the direction of price into the zone?
(kuramamy) Always do this. Locate a swing high or swing low. Put horizontal
line at the sharp corner. look left and find the reasons.
(FXYogi) dont be scared. remember this, price will look very bullish
when want to turn down . very bearish when want to turn up. I know its scary to
pull the trigger. because we are trained the other way. i hv seen traders
write, "trade what you see", and "if green buy red sell".
Total nonsense.
Train your brain other way. if market is very bearish look for buy opportunity. very bullish look for sell opportunity.
Train your brain other way. if market is very bearish look for buy opportunity. very bullish look for sell opportunity.
Absolutely!
I'd be quite wary of selling if it weren't on a strong push up past Supply, or
buying without a strong push down
Hi
If, Most of the time i have seen FTR gets engulfed and
touches zone (source of engulf) and after that goes in opposite direction. So I think its Fake out of FTR zone. But I didnt understand your statement could u pls
explain
I
really can't explain without explaining the exact rules of the market. As you
can understand, if I did that here, they would soon change! Suffice it to say that had that 
(IF) You've spotted something very important there!! That certainly is one of the target options for price.You'll usually find some FL there, no matter how small, which can turn price. Ask yourself "Why didn't that FO level get respected on the way down?", and you'll understand its significance on the way back up
(FXY) orders orders . i often tell the people , swap is stronger than the normal. To increase win rate , dont take directly demand or supply. wait for it to swap
http://www.forexfactory.com/showthread.php?p=7640023#post7640023
(FXY) You have taken the first step for proper supply demand trading.And you can see where Sam Seiden fails.There is no such thing as DBD first of all. Next time when you see a DBD , you should be looking whether that has broken anything to the left.
really been an engulf, it could not have been
a fakeout. It could only have been a signal engulf. Random
fakeouts do not happen!
(FXY) I understand what you mean. But first important point is
not to take a trade in the middle of nowhere. Otherwise blowout is near. Wait
till it gets to the extreme and take the trade. Even if i put the line, FL has
to be marked as shown below chart see green box. Now within a FL there are sub
FL which may turn the price. therefore you shouldn't short near there
(Charvo) thanks for your input, yes, what you convey is in fact what
i'm asking if： we may trade within a flag, but at the edge
(FL) of the flag, instead of in the middle of a flag. one thing i
guess is that IF's flag concept has evolved beyond traditional flag. his flag
seems "larger" than traditional flag
(IF)
Have a look at price as it approached my sell.
Think of the hope caused before it, and then the pain.
Then, with the knowledge of the set of orders there, you'll see why I sold.
The PA to hold it came soon after
Think of the hope caused before it, and then the pain.
Then, with the knowledge of the set of orders there, you'll see why I sold.
The PA to hold it came soon after
Yup!
There were clean orders, as marked on the chart as MPL of first engulf
There were clean orders, as marked on the chart as MPL of first engulf
MPL
is the Maximum Pain Level.
SAS is Scalp and See
SAS is Scalp and See
(IF)
When the market leaves its chin exposed, there's one thought which should
always spring to mind: Hit it!
The orders were there for the taking, and their target was a few pips below, so the chin was exposed
The orders were there for the taking, and their target was a few pips below, so the chin was exposed
ORIGIN
https://readthemarket.com/index.php/en/forum/classroom-and-trading-room/2672-dissection-room?start=25#56824
(Jur) Saying price goes from FL to FL really means from true supply/demand to
next true supply/demand.
A true supply is
created on new decision (for example new origin of a move down from a current
high).
But then a true
supply/demand is also created when an opposing transaction of orders is
executed on break of a previous one (new decision, new FL), meaning FL =
origin.
Because of lower
scales which have their own decisions (FLs) I think it is important to find out
which one is the next FL (origin) once a specific FL breaks, because it could
be very wrong to consider a lower scale origin for a higher scale (more
important) FL engulf.
Looking at these
charts, are they any hints for this?
TARGETS
https://www.readthemarket.com/index.php/en/forum/journals/1523-if?start=775#30835If price reaches its target and then engulfs back in, a reversal has occurred - price will now have a target within the pole that took it to where it turned, so why not trade it back to that TG? If it's not the ultimate target which has been hit (PA in an HTF has told you that it has further to go), and you only like to trade the big moves in the HTFs, then there's no need to take the definite pips on offer here, as it obviously isn't part of your trade plan.
https://www.readthemarket.com/index.php/en/forum/journals/1523-if?start=850#35494
There are just a few targets for price, and the QM level is a big one.
Certainly we need to get PA for entry before or once it's hit.
If it breaks, then the same level can have the opposite effect on return
https://www.readthemarket.com/index.php/en/forum/journals/1523-if?start=900#36470
Just remember; trading is not an art; it is a science.
It's not the least bit subjective, and nothing is random.
Keep watching how FLs shift around the screen, and someday you'll be able to profit from what you've learned
ORDERS: https://www.readthemarket.com/index.php/en/forum/journals/1523-if?start=900#36632
Long ago I gave up on the idea that the orders have literally been lying there since the move was made.
In the short term, sure it may be the case, but in the very long term, I think probably not.
That point is moot, however, as the orders tend to get put there before price arrives again.
When the ITs make trade plans, they look for levels to work from and to. They don't just target the middle of space to take profits and turn; they look for a place with history.
Any IT worth his salt will always know where the main mover is taking price to.
It's simply a club. Don't forget that!
1. The leading IT engulfed price back up into the range (engulfed V), showing he was taking price up to the last FL above (U)
2. The other ITs, who had been short from high above, saw that price had turned, and wanted out of their shorts and into long positions.
So they sold against the retail breakout long trades
They will have Faked Out below a ltf demand (not visible in this tf), scaring the BO buyers into selling at a loss, and enticing BO sellers, giving them lots to buy
against and go net long.
3. A marker was set for future use
4. They turned price before the target, creating a supply which could be broken later
5. Price had been dropping for some time, attracting lots of retail sellers; the IT's were eating these up bit by bit. It was obvious to the more savvy of the retailers that price was heading for W. So the natural thing to do was turn price before the tg, creating a demand to be faked later. They buy heavily, taking all the herd's sells and shooting price back up.
6. They removed their pending orders at 4, allowing price to break supply. All the short retailers freak out and start closing by buying. This allows the ITs to sell to them, beginning the process of going from long to short.
7. They begin to flag price downwards, adding little shorts as they create LLs and LHs. This of course means a downtrend to the retailers, so the retailers begin selling too
8. The Its want to be the only sellers, so they buy heavy into Supply (U) shaking out the retail sellers and enticing BO buyers, all giving them more to sell to
The retailers are getting frustrated by now. In the chop, there are lots of losers buying and selling all over the place, taking revenge trade after revenge trade. With prices still making HHs and HLs though, very many are still buying
Savvy SD retailers, however, are selling at 8, putting their stops above (U) (poor beggars!). As price rises through supply, these SD retailers are adding to their shorts, delighted to get even better prices, and the ITs are happy to let them do so, because at
9. The ITs have either once again removed their pending short orders in Supply, or have used them to tentatively buy against. By adding different sizes of orders, they can now feel, by how price reacts to their orders, who's in the market with them. They feel when the selling pressure has dropped, and take this opportunity to buy just enough to break the supply.
This hits the savvy SD retailers' stops and entices tons of BO buys, giving them masses of buyers for the sells they're ready to make. They're now heavily short.
10. They take some profit, creating a demand to be broken later
11. It's important that they bewilder every retailer out there; tire them out completely so they have no idea what they're doing. So they retrace price back up, breaking LTF supplies as they go, attracting more buyers. Price hasn't engulfed anything south yet, so the once savvy SD retailers are buying too, trying to reclaim their losses. The ITs are selling to them in bits, until they feel the buyers have dwindled enough for them to put in their next set of big shorts, breaking 10 at 12.
They buyers stops have hit, and the remaining BO sellers are getting in, giving the ITs a breather. They're heavily short, and happy.
13. We're at the SR of 4. ITs take a little profit, bouncing price up a bit, breaking a LTF supply. This gets the retail sellers out, offering more buys for the IT to sell to
14. It's the same story as 6 and 9
15. The FO to the Demand of the FL. It would be remiss of any IT not to take full advantage of all the shorts on offer here, and cause some midrange mayhem!
16. The engulf - time to flag
17. Create Supply before tg to be broken later
18. Inverse of 17
19. Chop for some confusion now and levels to be broken later
20. Sell to the BO buyers and SD sellers' stops
21. Lots more easy BO and stop orders to be snatched up. This is real fun for the ITs, and is having little effect on their overall position size in the big picture, until they want it to!
22. Catches lots more of the usual losers and fills the range
BUT we always need to know the full story of price.
If C was a break of an even more important zone, the break of B may easily have simply been the obligatory FO
https://www.readthemarket.com/index.php/en/forum/journals/1523-if?start=1350#44037
THE SELL TIMING CAN'T BE SEEN IN HINDSIGHT. YOU MUST BE THERE TO WATCH PRICE VIBRATE. YOU GET A FEELING FOR THE ABSORPTION OF THE LAST OF THE BUYERS AND STOPS. ONCE PRICE PAUSES, YOU KNOW THAT THE ITs HAVE JUST PUT IN MORE SELLS THAN THERE STOPS AND BUY ORDERS. THAT's WHEN WE SELL!
TTF: Engulf rules for now: https://readthemarket.com/index.php/en/forum/journals/2277-ttf-s-trading-log?start=25#45335
- Engulf of last source that made the recent HH or LL
-Engulf stops inside empty space. For me this is :
1) In the middle of a pole
2) In the middle of a FL/ compression etc
This must mean inside a PAZ.
So maybe a FO is an engulf that doesn't pierce the last PAZ that is reached. But what about the PAZs it travelled thorugh before?
https://readthemarket.com/index.php/en/forum/journals/1523-if?start=2425#62017
IF: Once price breaks into a flag, it may or may not be PA.
Should it not reach the next LS kink, then it's PA.
If it does, it's not.
Wherever there's space to the next target, there's PA
https://readthemarket.com/index.php/en/forum/journals/1523-if?start=2450#62110
Gslao: I recall IF answering another student about the same question you had on "I have a very very hard time finding space, engulf not hitting its target.". Yes, we need to find space otherwise, there is no trade. If it was easy to find space, then everyone would become a successful trader overnight. The ITs will not make it easy and obvious.
https://readthemarket.com/index.php/en/forum/journals/1523-if?start=2475#62114
Gslao: Here is a quote from IF. " The longer I trade, the fewer trades I take. If it's not begging to be traded, I am not interested. There are lots of dead certain trades out there, each offering great returns. These can easily be missed while sweating the outcome of marginal trades."
For me, I prepare my trade plan a week in advance and look at the higher time frame down to the lower time frame to determine the IT price direction. I keep my pairs to a maximum of 4. This helps me focus and maximize my entry. Otherwise, I will end up missing the big trades.
https://readthemarket.com/index.php/en/forum/journals/1523-if?start=2475#62124
E: The
further I stroll down this path, it becomes apparent that less is more.
Imagine for a minute, watching 20 plus pairs and trading for limited R.
How stressed and tired would you become.
On the flip side only watching a few pairs with low spread, waiting for those beautiful areas that are a monthly kink that are only a few pips wide. You then find a marvelous mpl within it with clean orders just begging to be taken. We then see the eg of the opposing FL into space on the monthly and it returns to our kink and mpl. The R can be phenominal.
The necessity to trade everyday feel the thrilland be in and out of trades is akin to modus operandi of the gambler.
RETRACES
IF: "Is there any way to know how far will the retrace will happen after the break of the level?"
No.It can retrace to any set of clean orders in the zone it's traveled through.
Ideally it will travel all the way back for a QM at the MPL, or even break the H/L for a DM, but it often only retraces a short way, leaving the clean orders beyond for later.
At each minor level it retraces to, we can take confirmed LTF trades, taking some profits to cover losses, letting some run to the HTF target, should this be the depth of the RT
CURVE FITTING
https://readthemarket.com/index.php/en/forum/homework-dbr-and-rbd/2940-dbr-and-rbd-please-do-comment-as-i-would-like-to-know-my-gap#65386IF: Curve fitting here, is, as Rinehart put it, beginning with the reactions to find the reactors.
ENGULF REACTION
Just know they've got orders to fill at a level, watch them fill some on approach (CP), see the momentum, and watch them come back to fill more orders 'til they've had their fill.
https://readthemarket.com/index.php/en/forum/journals/1523-if?start=50#12961
This perhaps should be the first thing that anybody ever reads regarding trading:
We're always looking for signs of what the big guys are doing at significant areas, and if we don't see what they're doing, there's no trade
So, on approach, if we see the big guys trying to hide their orders in the market, we see compression, and can feel pretty sure of their intentions - to get in as many orders as they can before the turn
If we don't see this, we can be pretty sure that it won't just turn immediately, as there usually won't be enough orders against them to fill all the orders they must fill.
This is why we wait for an engulf. This shows their intention to reverse price. Then we watch them trying to hide their orders in the market on a retrace, ready to take price to the origin of the move
Loving to trade from correlations, I'm usually much happier to wait for the second setup which occurred when all the ducks were lined up
https://readthemarket.com/index.php/en/forum/journals/1523-if?start=100#14723
Price got very bullish into the FTR - this made it look great for trapping buyers on a break of the FTR. So I sold, aware of the FO zone just above FTR.
When i opened the chart, i saw price had faked, cancaned, and rt-ed to the cancan supply and still had space to move down, and since we were in great S anyway the sell was easy.
https://readthemarket.com/index.php/en/forum/journals/1523-if?start=125#15453
We look for engulfs of important decision points. The engulfs are strengthened by FTRs, putting caps on price. Basically it's all as simple as that :)
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