Ifmyante

Compression

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 Intro 2

Credits and resources

Please remember that the charts and the concepts presented here are just a quick introdution to Price Action. You can consider all this as a brie introduction
to a bigger story, a story that we know as Price Action. I you wonna learn more about Compression, about Price Action, visit the Red Empire threads on
Forexactory.

Price is everything TIPS

click on this

Price is everything Chat Room symbol to see

multimedia contents.

Romancing the price

and pay attention to this great resource:

A NEW USEFUL SITE FOR TRADERS
WHIT A COMPLETE TRADING COURSE FROM IFMYANTE
NOE: All the credit goes to I ,R ,H , , and the other great people who have contributed; on the other hand, all errors are mine,
so ell ree to pm me on Forexactory i you nd mistakes, bugs, or i you have suggestions or ideas.
Abbreviation
A - as a prex - Ascending
AA- Adam and Adam
ACH - Ascending Channel
AE - Adam and Eve
AWG - Ascending wedge
BE - Break even
BE - As a prex - Bearish, exam-
ple: BEACH - Bearish ascending
channel
BEB - Bearish engulng outside
bar
BEFL - Bearag
BH - Bar highs
BNR - Bump and run
BO - Breakout
BOPA - Breakout, pullback and
advance
BOPB - Breakout + pullback
BR - as a prex - Broadening
BRN - Big round number
BU - As a prex - Bullish
BUB - Bullish engulng outside
bar
BUFL - Bullag
CH - Channel
CN - Continuation
CP - Compression
CWH - Cup with handle
D - Demand
DBB - Double Bottom
DBD - Drop base drop, descen-
ding pole ag pole
DBR - Drop base rally
DBHLC - Double Bar high lower
close
DBLHC - Double Bar low higher
close
DB - Double top
D1 - Daily
DD - Drawdown
DM - Diamond
DIV - Divergence
DS - Daily supply
DS - as a prex- descending
DSCH - Descending channel
DSWG - Descending wedge
DL - Demand trend line
EA - Eve and Adam
EE - Eve and Eve
EX - Exhaustion
FL - Flag / Consolidation
FO - Fakeout
FA - First trouble area
FB - First time back. Followed
by 2B, 3B etc.
HB - Horn Bottoms
HNS - Head and shoulders
H - Horn tops
HF - Higher timerame
HFL - High and tight ag (ama-
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zing results!) SRF - SR Flip
IB - Inside bar SL - Supply trend line
Ib4 - Inside 4 bar that is the smal- G - arget
lest bar o the previous 3 bars L - rend line
ILR - Island reversal P - ake prot
INV - Inverted PP - ake partial prot
LIL - Long island R - riangle
LF - Lower timerame - ouch trade
M1 - 1 minute WB - weezer bottoms
M2 and so on W - weezer tops
MMD - Measured move down W1 - Weekly
MMU - Measured move up WD - Weekly Demand
MN - Monthly WG - Wedge
PA - Price action
PB - Pin bar
PFP - Pole, ag, pole
PIE - Price Is Everything thread
PPZ - Price pivot zone
RN - Round number
RBD - Rally base drop
RBR - Rally base rally, ascending
pole ag pole
R - Retrace/Retracement
RP - Romancing the Price
thread
RV - Reversal
S - Supply
Shampoo - see HNS
SL - Stoploss
SR - Support/resistance
Ante 4

Party*

o understand exactly a scenario, or indeed to read any situation at all on the charts, past present or uture,you should look or a certain set o clues.

General: HF. Know where price is coming rom and going to, and the PA past and present in all the Fs, rom the Monthly down.

Specic: At the zones you want to trade, look to

Past: study the zone in all Fs, down to M1 ask yoursel

Where were the decisions made? Clean S/D? Mark these lines. No clean S/D? - compressed zone
Did price really shoot away orm the zone, or did it CP away?

Did the zone itsel react at the right place? Look beyond the zone urther into the past. S ee what it reacted to. Was there a better S/D nearby that price
wants to visit? Tis explains many akeouts.

Present: Approach. How is price returning to the zone?

Where's the nearest ag in the F you want to trade? Tis is your tg1 in this F. Flags in the LFs? What does PA tell you?
Has price tested the last ag on approach? (good sign)
Has price compressed into the zone in this F or LFs? (good sign)
Is there big news on the way? Has there just been big news?

Reaction: In LF, does price react violently to the rst decision point? Does it quickly engul the nearest S/D? (good sign)
Does price simply CP away? Maybe it wants to go to the ne xt decision point
I the rst decision point breaks, watch the signs on approach to the next, and, o course, reaction.

* Past, Approach, Reaction, Tank You!

Compression 5

denition by Ifmyante

We talk aboutcompression when price taking out last decision point and the orders that where lef there.
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Compression 7

charts
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Compression 16

an explanation by Red*

Lets put an end to whats compression ( otherwise known as a nishing triangle ) and what not compression. Noticed some conusing comments and charts
lately with regards to compression. So, below is an entry rom the past to clearly identiy the PA
Firstly, we look lef and notice a supply zone - supply zone identied simply by noticing prices ell hard rom there beore, thereore sellers exceed buyers.
Now we wait or PRICE ARRIVAL

* As i know,Red was the rst who have talked about CP, so all the credits goes to him . Ten, why dont put his charts rstly ? Because his audience on PIE was generally skilled, he was
talking to expert t raders, that dont need so much explanations. On the other hands, the charts o Imyante and the charts presented here are more noob proo, so study on them beore
all. In detail, seems that the spiking is the most complicated part o the story or inexperienced trader. Where the hell are the spikes ? I dont see any spikes on your chart was my rst
question to Imyante; well, remember that you have to understand the dynamics o price in LF that produces the spikes on the HF, and never ever orget that candles are just a repre-
sentation o what happened to price over a given time - your broker time, not the PA itsel, so always looks at the dynamics o the PA, and remember what CP represent: price taking out
last decision point and the orders that where lef t here.
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.......... ok, now price arrival to zone. But notice the manner in which it approaches - its spiking south WHILS RISING .......... what does this mean?
Rising to nd supply, spiking south is doing several things @ the same time. Prices are nding small pockets o demand and testing them to rise to supply. So,
as its spiking south its also consuming those small pockets o demand thereore the path south is begin cleared o demand @ the same time!
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PA watch and entry, ok now look @ the result. Notice how the bears that dropped through the compressed zone are large and clean suggesting no demand
or resistance, reason? - the demand was already consumed by the SPIKING SOUH ON APPROACH O SUPPLY ZONE ............. this is why l have
stated ofen - PRICES HINK AHEAD OF IME, prices already decided to turn because prices cleared the zone o demand by spiking south beore they
reached supply clearing the path south or the bears........... so there it is.
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another example - some o you have been conusing ags or compression. Why does a BULLFLAG DIP? Its dipping to consume sellers @ a given level, once
the sellers have been consumed, the ag is complete and prices can advance - no mystery. Ten prices leave the ag to advance, then once prices reached
supply, the approach to the zone there was compression, so l sold it
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Compression 23

a video by Ifmyante

A quick video on CP and the importance o nding the Drop Base Rally that creates an SR ip.
Compression 24

study on breackout by Tyoon

Price compresses up/down then pulls back rom hitting a resistance/support|sup/dem and balances out beore an advance in the compressed direction.
Te res/sup|sup/dem usually comes rom a higher F.. this would normally make me biased or a reversal.. but when you watch the PA unold you see that
actually price wants to carry on.. also keeping in mind o where price came rom. For example, i price has only just lef a 4H demand zone and it hits 30M
resistance.. the likely scenario here is that the 4H demand is more powerul and will break the 30M resistance.
Tese are some structures that I have ound to have happened in example o this scenario.
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A note o I : I price ags atop a cp zone, nothing is valid 'til the ag breaks, one way or the other.
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[22 May 2012]