Trends and Bos

Question 1

What are trends? Why do they work?

Answer 1

They are a pattern that tell us exactly where the market is headed.

They works because markets move off of momentum therefore once a market starts trending in one way it is most likely going to continue in that direction. When the market structure shifts, its most likely going to start trending in a different way.

Question 2

Describe what we can see in an uptrend.
Describe what we can see in a downtrend.
Describe what we see when there’s no trend.

Answer 2

We can see higher highs and higher lows in an uptrend

We see lower highs and lower lows in a downtrend

When there’s no trend, we see consolidation. There are no higher highs or higher lows.

Question 3

How does identifying a trend help us trade?

Answer 3

It helps us trade by telling us in which direction to place our trade in. If momentum is pushing price up and creating an uptrend, you wouldnt take a short would you.

Follow the trend. Follow momentum.

Question 4

Why is it best to avoid “catching a retracement?”

Answer 4

This is because you dont know how far or how deep that retracement will go. We can get bigh retracements and small retracements.

Question 5

Why is it important to identify overarching trends?

Answer 5

Because trends of a higher time frame hold more power. If the 4hour trend is bearish but the 15m trend just broke structure, that could just be a retracement on a 4hour. The overarching trend is still bearish and that is the more important one.

A lower time frame may show a Bos, but make sure to always check how the price and graph looks on the higher time frame in order to see how the market may be moving as a whole.

Question 6

How do we use smaller time frame trends in conjunction with overarching trends?

Answer 6

We want the trends in both time frames to be the same and then we can scale down to the shorter time frames to get an optimised entry. We want to catch the large time frame moves ON the smaller time frame.

Answer 7

Lower time frames should be used in confluence with the higher time frames. identify what the higher time frame wants to do then optimise an entry to ride the next wave that comes. These are high risk reward, high probability trades.

Answer 8

We have to trade off of momentum. Off of strong trends. Trading against the trend is never a good idea.

Question 9

What makes up a high?

What makes up a low?

Answer 9

A move up then a move down.

A move down then a move up.

Answer 10

When we are looking for highs and lows, we use the wicks.
When we are looking for Bos, we are looking for the candle closing above / below this wick.

Answer 11

The high doesn’t have to strictly be off the up candle. The high can be off the wick of the down candle.

Answer 12

ITS ONLY A BREAK OF STRUCTURE IF A CANDLE CLOSES ABOVE A HIGH OR BELOW A LOW!

Answer 13

A break of structure to the upside is when we have identified a current downtrend (lower highs and lower lows), then an up candle closes above the highest point of the most recent high (move up move down)

A break of structure to the downside is when we have an uptrend and then we see the most recent low get taken out.

Question 14

Why is patience important when looking for a Bos.

Answer 14

We have to WAIT for the candle to CLOSE above / below the high / low. We need to lower our risk by allowing the candle to close thus giving us confirmation of Bos

Question 15

What is a lower low / higher high

Answer 15

A lower low is a low (move down then move up) that is lower than the last low that had formed. Vice versa for a higher high. These allow us to identify a ttrend.

Question 16

What is not a Bos that a lot of people get faked out by (this is a Bos)

Answer 16

A lot of people get faked out by a wick going above previous highs or below previous lows. But they should actaully be looking at the candle close.

If no candle closes below the most recent low in an uptrend, and it just looks a bit choppy or its pulling back a bit, dont just assume its a Bos. It isnt and will not be until a candle closes below the most recent low.

Question 17

Why dont we need to look at previous lows wthat go lower than the most recent low (in an uptrend of vice versa for a downtrend)

Answer 17

That is because market structure was never broken if a new low was made (thats just a higher low and that is in lign with the uptrend we are looking at). That is why only the most recent low / high that has formed is most important.

Question 18

Why do we need to be careful with timeframes when looking at a Bos

Answer 18

because sometimes you’ll look at the 30 min time frame(or any lower time frame) and looks like there’s a break in structure. but if you go to the higher time frames like a day or even a week, you may see that its just a retracement.

Its just how price works

Question 19

Give an example of how higher time frame

Answer 19

If a 15m / 1 hour timeframes are showing bearish trend confirmations, a 5m BoS is most likely going to be a retracement. And most likely that retracement is going to hit an imbalance and then continue its orignal trend.

this is one example of how higher time frame has more power (more influence over overall price movement)

we can also use our understanding of the higher time frames price action to understand what the lower time frame price action is showing us e.g. If the 15m and the 1 hour is showing bearish confirmation (break of structure to the downside), then a BoS to the upside on a 5 min is telling you that we are getting a retrace.