Learn a Free Price Action Filtering Method: Beware Large Candles

In the beginning of this video, John Paul says he’s going to show something that many traders do not realize when it comes to price action. He soon applies his Atlas Line indicator to a chart and describes conditions related to the Long Atlas Line signal. The ATR indicator with a period value of four showed an ATR value of three at that point in time. Thus, the profit target was three points. He seems to indicate this profit target was reached with a large green arrow pointing up and to the right, roughly characterizing the increase in price seen over eight bars. He said the overall move was up to 10 points, but that was not the actual goal (three points was the goal).

Moving along, he next shows the Trade Scalper on the same chart; a 5-minute chart. He says a 5-minute chart is acceptable for scalping, though the exact conditions are not disclosed. At around the 2:00 mark, he zooms out, allowing viewers to see a number of Trade Scalper signals for the given day.

Next, he returns to the main point of the video, price action trading. He describes the relative normalcy of candle appearance and groupings. He cautions trading in proximity to large candles. These large candles may indicate the end of a bullish or bearish move or pattern. He says the last push, up or down, in the form of a candle, may well exhaust price action without further continuation of the move.

What does that mean for you? When a big candle appears, if you were about to place a trade, you may want to reconsider. There may be a reversal or chop. At around 5:00, you’ll see what can happen after a big candle, which would spell trouble for many traders. Considering this teaching a free price action trading method that you can use as a filter for any trading method.