Banu_Trader

If you can identify a trending market, it will be easy for you to trade it,
if it is a bullish market, you will look for a buying opportunity, because
you have to trade with the trend, and if the market is bearish, you have
to look for a selling opportunity.
But the question is what is the right time to enter a trending market?
Trending markets are characterized by two important moves, the first
move is called, the impulsive move, and the second one is called the
retracement move.
See the example below to understand what i’m talking about.As you can see, the market is making higher highs and higher lows
which indicates a bullish market, if you see this market you will think
of buying. But as you can see the market is making two different
moves, the first move is an impulsive move, and the second one is a
pullback or a retracement move. (corrective move)
Professional traders understand how trending markets move; they
always buy at the beginning of an impulsive move and take profits at
the end of it.
This is the reason why the market makes an impulsive move in the
direction of the trend and retraces before it makes another impulsive
move.
If you are aware of how trending markets move, you will know that the
best place to buy is at the beginning of an impulsive move, traders who
buy an uptrend market at the beginning of a retracement move, they
got caught by professional traders, and they don’t understand why the
market hint their stop loss before moving in the predicted direction.
See another example of a bearish trend.

The illustration above shows a downtrend market, as you can see the

best trading decision is to sell the market at the beginning of an
impulsive move.
If you try to sell in the retracement move, you will be trapped by
professional traders, and you will lose your trade.
Now we know how to identify downtrends and uptrends, and how to
differentiate between an impulsive move, and a retracement move.
This is very important for you as a price action trader to know.
BUT the most important question is how to identify the beginning of
the impulsive move to enter the market in the right time with
professional traders, and avoid being trapped by the retracement
move?
To predict the beginning of the impulsive move in a trending market,
you have to master drawing support and resistance levels.
So, what are support and resistance levels and how to draw them on
our charts? this is what we will see in the next chapter.

Support and resistance are proven areas where buyers and sellers find
some of equilibrium, they are major turning points in the market.
Support and resistance levels are formed when price reverses and
change direction, and price will often respect these support and
resistance levels, in other words, they tend to contain price movement
until of course price breaks through them.
In trending markets, support and resistance are formed from swing
points. in an uptrend the previous swing point acts as a support level,
and in a downtrend the old swing point acts as a resistance level.See the example below to learn more

support level after the breakout.
When the market makes the retracement move it respects the
previous swing point (support level) which will represent the beginning
of another impulsive move.
As you can see, when the market tests the previous swing point
(support level) it goes up again.
By drawing a support level in an uptrend market, we can predict when
the next impulsive move will take place.
Let’s see another example of a downtrend market.The market makes an impulsive move. If you understand how price
action act in a trending market, you will predict with high accuracy
when the next impulsive move will begin.
Another way to catch the beginning of an impulsive move is by drawing
trend lines.
This is another technical skill that you have to learn if you want to
identify key linear support and resistance level.
Let me explain you first what do trend lines mean?
Quite often when the market is on the move making new swing highs
and lows, price will tend to respect a linear level which is identified as
a trend line.
Bullish markets will tend to create a linear support level, and bearish
markets will form a linear resistance level.