Core Price Pattern- How markets roll


Core Price Pattern

You can’t read a story if you don’t know the alphabet. You can’t reliably read the price action if you don’t understand the fundamental way in which the price moves. And it rarely moves in a straight line.

Prices have a high tendency to move in a manner in which it ebbs and flows. They are known as the Impulse-Retracement-Impulse moves.

Be it on weekly charts or minute charts- this pattern would show up. There is no specific explanation for this phenomenon, but still, it happens at all timeframes because this is how a supply or demand deficit plays out. Call it emotions, the order flow of big players who buy/sell in increments, early traders booking profit, or the madness of the crowds. It is how it is.

If you zoom into a perfect looking uptrend/downtrend, you will find Impulse-Retracement-Impulse moves in lower timeframes. It provides more evidence on how a large supply or demand deficit promotes this pattern. And this brings us close to an important observation: that all timeframes are interconnected. No timeframe exists as a standalone, but are zoomed in/ zoomed out pictures of the same price movement.

(In case you don’t know: the frequency with which the chart updates is called its timeframe. Popular timeframes are 1min, 5min, 10min, 15min,30min,1hour, 4hour, 1day, 1week)

For folks who are nerdy about maths, yes, financial markets exhibit fractal nature, where an instance keeps on repeating when you zoom into it. For folks like me, who calculated 17+ 8 on a calculator to be sure during exams, it is still a practical concept to remember.

There are going to be multiple times where you spot opportunities at higher timeframes. Or times when you enter a position only after getting confirmation at lower timeframes.

This basic knowledge about price’s tendency to move in a particular way combined with how timeframes are interconnected will be essential for you to master the concepts ahead.