COMPLETE WEBINAR RECORDING: https://blog.quantinsti.com/introduction-price-action-trading-webinar-18-october-2022/ --------------------------------------------- This session introduces you to the skill of trading without using technical indicators by understanding the price behaviour. It covers several important price action trading tools such as supply and demand analysis, patterns, pivot points, etc. --------------------------------------------- Overview: - Need for price action trading - Fundamentals of price action trading - Tools of price action trading - Backtesting and evaluating price action trading strategies - Automating price action trading - Interactive Q&A ---------------------------------------------About the Speaker: Varun Kumar Pothula (Quantitative Analyst at QuantInsti) Varun holds a Masters degree in Financial Engineering. He has experience working as a trader, a global macro analyst, and also an algo trading strategist. Currently, working in the Content & Research Team at QuantInsti as a Quantitative Analyst, his contributions help in creating offerings for learners in the domain of algorithmic & quantitative trading. --------------------------------------------- Link to our Blog: https://blog.quantinsti.com/ Like us on Facebook @ https://www.facebook.com/quantinsti/ Follow us on Twitter @ https://twitter.com/QuantInsti Follow us on LinkedIn @ https://www.linkedin.com/school/quantinsti/ Follow us on Instagram @ https://www.instagram.com/quantinstian/ E-mail us @ sales@quantinsti.com ----------------------------------------- #priceaction #priceactiontrading #technicalanalysis #chart #chartpatterns #pivotpoints #technicalindicators

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Introduction to
Price Action Trading
Varun Kumar Pothula
(Quantitative Analyst at QuantInsti)

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● Basics of price action trading
● Tools of price action trading
● Chart patterns
● Pivot Points
Key Takeaways

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Process of studying basic price behaviour across time to make trading decisions
○ No technical indicators involved
○ Popular among retail traders
○ Intraday trading and swing trading
Price Action Trading

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Example
90
80
120
81
119
80
82

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Example
90
80
120
81
119
80
Buy ?
Sell ?
82

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● Supply and Demand Analysis
● Support and Resistance
● Chart Patterns
● Pivot points
PAT - Tools

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Supply and Demand Analysis

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Price Action
$100
$200

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Price Action
$100
$200
$125
$175
$150
$115
$120
$160
Imbalance in supply and demand forces

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Supply
● Sell orders
● Buy orders < Sell orders
● Sellers are dominant
● Decline in prices
Demand
● Buy orders
● Buy orders > Sell orders
● Buyers are dominant
● Increase in prices
Supply and Demand

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Supply and Demand Analysis

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Supply and Demand Analysis

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Supply and Demand Analysis
Sellers

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Supply and Demand Analysis
Supply Zone

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Supply and Demand Analysis
Buyers

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Supply and Demand Analysis
Demand Zone

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Supply and Demand Analysis
Demand Zone
Supply Zone

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Trades
Trade-1: Buy
Trade-1: Sell Trade-2: Sell
Trade-2: Buy

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Support and Resistance

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Support and Resistance

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Support and Resistance
Resistance

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Support and Resistance
Support

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Chart Patterns

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Chart Patterns
Demand Zone
Supply Zone

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Chart Patterns

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Chart Patterns
Reversal Patterns Continuation Patterns

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Patterns Patterns

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Reversal Patterns
Bearish Reversal Bullish Reversal

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Bearish Reversal Patterns
Bearish Reversal Pattern
Uptrend Trend
Reversal
Signals a supply zone and indicates a possible reversal of the uptrend

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Bearish Reversal Patterns
Top-1
NECKLINE
Top-2 Top-3
Head and Shoulders Double Top Triple Top

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Bullish Reversal Patterns
Bullish Reversal Pattern
Downtrend Trend
Reversal
Signals a demand zone and indicates a possible reversal of the downtrend

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Bullish Reversal Patterns
NECKLINE
Bottom-2 Bottom-3
Bottom-1
Inverse Head and Shoulders Double Bottom Triple Bottom

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Continuation Patterns
Continuation Pattern
Uptrend
Uptrend
In an uptrend, a continuation pattern signals the
formation of a demand zone and indicates the
continuation of the uptrend

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Continuation Patterns
Bull Flag Pennant Ascending Triangle

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Continuation Patterns
Continuation Pattern
Downtrend
Downtrend
In an downtrend, a continuation pattern
signals the formation of a supply zone and
indicates the continuation of the
downtrend

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Continuation Patterns
Bear Flag Pennant Descending Triangle

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Patterns - Price Action

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HH
HH
HH
HH
Patterns- Example

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HH
HH
HH
HH
LH
Patterns- Example

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HH
HH
HH
HH
Patterns- Example

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HH
HH
HH
HH
LH
Patterns- Example

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Head And Shoulders
HH
HH
HH
HH
LH
HEAD
LEFT SHOULDER RIGHT SHOULDER
UPTREND
NECKLINE
DOWNTREND

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● Indicates weakness in an uptrend
● Possible reversal of an uptrend
Head And Shoulders

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HEAD
LEFT SHOULDER RIGHT SHOULDER
UPTREND
NECKLINE
DOWNTREND
Lower High Indicating Weakness in an uptrend
Breakout of Support Indicates Strength of Sellers
Price Action

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UPTREND
NECKLINE
Stop-Loss Above the Right Shoulder
Enter short at breakout of the neckline
SL
Entry
H
TAKE PROFIT
H
Trading Head and Shoulders Pattern

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Pivot Points

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Pivot Points are significant levels used to determine directional
movement and potential support/resistance levels.
Pivot Points

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Calculation of Pivot Points

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Calculation of Pivot Points

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Calculation of Pivot Points

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● Leading indicator
→ Has predictive power
● Helps to identify support and resistance levels in advance
→ Can be used for planning entries and exits
Benefits of Using Pivot Points

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● Traditional
● Woodies
● Camarilla
● Fibonacci
Different Kinds of Pivot Points

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Woodies Pivots
PP = (High + Low + 2*Close) / 4
R1 = (2 * P) - Low
R2 = P + (High - Low)
R3 = High + 2 *(P - Low)
S1 = (2 * P) - High
S2 = P - (High - Low)
S3 = Low - 2* (High - P)
Traditional Pivots
P = (High + Low + Close) / 3
R1 = (2 * P) - Low
R2 = P + (High - Low)
R3 = P + 2 * (High - Low)
S1 = (2 * P) - High
S2 = P - (High - Low)
S3 = P - 2 * (High - Low)
Different Kinds of Pivot Points

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L1 = Close - Range * (1.1 / 12)
L2 = Close - Range * (1.1 / 6)
L3 = Close - Range * (1.1 / 4)
L4 = Close - Range * (1.1 / 2)
L5 = Close - (H5 - Close)
L6 = Close - (H6 - Close)
H1 = Close + Range * (1.1 / 12)
H2 = Close + Range * (1.1 / 6)
H3 = Close + Range * (1.1 / 4)
H4 = Close + Range * (1.1 / 2)
H5 = Close * (High/Low)
H6 = H5 + 1.168 * (H5 - H4)
P = (High + Low + Close) / 3
Camarilla Pivots

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R1
R2
R3
S1
S2
S3
P
R6
R5
R4
R1, R2, R3
S1, S2, S3
P
S4
S5
S6
Woodies vs Camarilla Pivots
Weekly
Intraday

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● Calculated using Fibonacci series
● 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144…….
○ 0 + 1 = 1
○ 1 + 1 = 2
○ 1 + 2 = 3
○ 2 + 3 = 5
● Fibonacci ratios → 23.6%, 38.2%, 50%, 61.8%, and 100%
Fibonacci Pivots

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0,
21 / 34 = 61.8%
34 / 55 = 61.8%
55 / 89 = 61.8%
Fibonacci Ratios

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0,
21 / 55 = 38.1%
34 / 89 = 38.2%
55 / 144 = 38.2%
Fibonacci Ratios

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0,
21 / 89 = 23.6%
34 / 144 = 23.6%
55 / 233 = 23.6%
Fibonacci Ratios

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Fibonacci Ratios

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Fibonacci Ratios

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Fibonacci Ratios

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Fibonacci Ratios

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Complete Webinar Recording

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