Stage #3: The Distribution Stage The Distribution Stage occurs after a rise in price, and it looks like a range market in an uptrend. Here are the things to look for: Occurs after the price have risen over the last 5 months or more (on Daily timeframe) It looks like a range market with obvious Support and Resistance areas in an uptrend The 200-day Moving Average is flattening out The price whips back and forth around the 200-day Moving Average It looks something like this At this point, the market is still in equilibrium with both buyers and sellers on equal footing. However, the tide is turned if the price breaks below Support and thats where we enter the final stage 16 THE ULTIMATE GUIDE TO PRICE ACTION TRADING

Stage #4: The Declining Stage The Declining Stage is a downtrend with a series of lower highs and lows. Here are the things to look for: Occurs after the price breaks out of Support in a Distribution stage You see a series of lower highs and lows The price is below the 200-day Moving Average The 200-day Moving Average is starting to point lower An example And if you have any trouble trying to identify the direction of the trend, then go watch this training Now you might be thinking 17 THE ULTIMATE GUIDE TO PRICE ACTION TRADING Whats the point of learning the 4 stages of the market? Heres the thing: If you can recognize the current stage of the market, then you can adopt the appropriate trading strategy to trade it. Heres how If the market is in an Advancing Stage, then you want to be a buyer (not a seller). This means you can look to buy breakouts or pullbacks. An example:

Or If the market is in a Distribution stage, then you know theres a huge potential downside if the price breaks below Support. This means you can look to short the breakdown of Support or wait for the breakdown to occur, then sell on the pullback. 18 THE ULTIMATE GUIDE TO PRICE ACTION TRADING Now once youve understood the 4 stages of the market, then youll know which Price Action Trading strategies to use in a given market condition and youll never be lost again. 19 THE ULTIMATE GUIDE TO PRICE ACTION TRADING The secret to reading Candlestick Patterns How to time your trading entries with deadly accuracy

At this point: Youve learned the big picture of Price Action Trading. You know where to enter your trades (Support and Resistance) and what you should do in different market conditions (the 4 stages of the market). But theres still one part of the puzzle missing, and thats when to enter a trade. So, thats where candlestick patterns come into play. Lets dive in What is a candlestick pattern and how does it work? A candlestick pattern has 4 data points: Open The opening price High The highest price over a fixed time period Low The lowest price over a fixed time period Close The closing price Heres what I mean: 20 THE ULTIMATE GUIDE TO PRICE ACTION TRADING For a Bullish candle, the open is always below the close. And for a Bearish candle, the open is always above the close. Next, youll learn a few powerful candlestick patterns to help you better time your entries Hammer Shooting Star Bullish Engulfing Pattern Bearish Engulfing Pattern Ill explain