GANN WAVE

ORDER BLOCK
TRADING

Master Active Trading

With Proven Smart Money Strategies

Frank Miller
 TABLE OF CONTENT

INTRODUCTION
CHAPTER 1: TRADE WITH THE TREND
The importance of trading with the trend
Trading with the trend yet incurring losses
CHAPTER 2: MARKET STRUCTURE, ENTRY STRUCTURE
The correction phase
Sustainable and unsustainable structure of a trend
CHAPTER 3: TRADING ZONES AND TRADING SCENARIOS WITH THE TREND
Trading zones
Congested price zone
Five trading scenarios with the trend
CHAPTER 4: A GUIDE TO GANN WAVES
W.D.Gann and his trading career
How to draw Gann waves
Up bar (up candle)
Down bar (down candle)
Inside bar (inside candle)
Outside bar (outside candle)
A complex case of wave drawing
CHAPTER 5: PIVOT POINTS - THE LANGUAGE OF THE MARKET
The overlooked treasure
Types of Pivot Points
Common misconceptions in determining valuable pivot points
CHAPTER 6: THE STRENGTH OF THE ZONES
Market price traps
Four strength levels of support/resistance
CHAPTER 7: ORDER BLOCK, AND THE TRADE SYSTEM
What is an order block?
Discover the golden zones
Three types of order block
Trading strategy with order block
CHAPTER 8: INTO THE REAL EXAMPLES
Trade example 1: Hunt with the whales
Trade example 2: Find the past traits of whales
Trade example 3: Trading with a natural order block
Trade example 4: How I turned a loss into a profit
Trade example 5, and the advice to the depth of my heart
WHAT IS NEXT?
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 INTRODUCTION

In the fast-paced realm of financial markets, where every tick of the clock holds the promise of opportunity or peril,
the art of trading unveils itself as a dynamic dance between risk and reward. Imagine deciphering the cryptic
language of charts, understanding the ebb and flow of market sentiment, and mastering the strategic maneuvers that
distinguish the successful from the aspiring.
Embark with me on a journey through the intricacies of the market, with some concepts being told for the first time,
and let the trading system gradually unfold before you.
In the financial markets, traders often grapple with distinct pains that echo the challenges of their journey. One of
the most difficult tasks for traders is decoding the nuanced messages the market conveys. Next, the struggle to
commit to and sustain a single trading system poses a significant hurdle, impeding the potential for reaping
consistent profits from the ever-shifting financial landscape. Moreover, the constant threats from the market’s
inherent risks add an element of vulnerability, exacerbating the already intricate decision-making process.
These pains and struggles are not merely theoretical; they resonate with the very heartbeat of traders' experiences.
The frustration of being unable to confidently read the market's signals, the challenge of staying committed to a
chosen strategy, and the anxiety of navigating a landscape where larger forces may exploit vulnerabilities are all too
familiar. It is this intimate understanding of traders' struggles that forms the foundation of our journey together - a
journey that seeks to not only acknowledge these pains but to provide practical solutions and insights that empower
traders to navigate the markets with greater confidence and resilience.
Picture a transformed trading experience, where the intricate dance of financial markets becomes a symphony of
strategy and confidence. As you implement the solutions offered in this book, envision a newfound ability to
decipher the market's messages with clarity and precision. The once elusive trends and patterns now reveal
themselves as readable chapters in a story waiting to be explored. With a commitment to a systematic trading
approach presented in this book, you will find yourself on a path of consistency and stability. The hurdles of
indecision and constant strategy shifts fade away, replaced by a steadfast adherence to a well-defined system. This
transformation is not a distant dream but a tangible reality awaiting those who embrace the strategies and insights
shared in this book. It's a vision of trading where the pains of the past are replaced by the triumphs of a well-
executed plan, and where each trade becomes a step toward financial success and market mastery.
In this comprehensive guide, you will delve into the intricacies of financial trading, gaining insights into the art of
identifying ideal trading zones aligned with market trends, and partly explaining for the losses incurred in the past.
You will explore the nuances of crafting high-probability trades, understanding the ideal market structure, and
recognizing conditions conducive to success. Among the most interesting concepts that I have shared for the first
time with this book are Gann wave plotting and market pivot points, together offering a deep understanding of the
messages embedded in market movements. Also, you will navigate the world of order blocks, unraveling the
narratives they convey and integrating these insights into a complete and systematic trading system. Real-world
trade examples bridge the gap between theory and practice, providing a practical foundation for implementing the
principles and systems laid out in the book.
As the author of this guide, I bring to the table a wealth of expertise and hands-on experience in navigating the
complexities of the market. With a proven track record of successfully implementing the principles outlined in this
book, I offer not just theoretical insights but practical strategies honed through real-world application. My journey in
the financial markets has been marked by a commitment to understanding market dynamics, and this book is a
culmination of years of experience, trial, and refinement. By sharing my insights, I aim to empower readers with the
knowledge and tools needed to navigate the markets confidently and achieve trading mastery.
Before delving into the main part of the book, here are some presumptions that we should collectively agree upon to
avoid any unexpected misunderstandings:

The author assumes that readers possess fundamental trading knowledge, such as opening a trading
account, executing orders, and identifying basic candlestick patterns, etc. If you are not yet proficient
 in these trading tasks, it is advisable to familiarize yourself with them before delving into the content
of this book.
While the systems outlined in this book offer a comprehensive approach, there is no guarantee of a
100% winning rate.
Setups aligned with the system may not appear frequently on trading charts; emphasis is placed on
trade quality instead of trade quantity.
This guide allows flexibility, where readers can combine the presented trading strategy with other
systems to enhance effectiveness. However, it is always advisable to maintain simplicity in combining
trading systems to avoid unnecessary complexity.
Now, if you are ready for the main part of the book, let’s get started.
 CHAPTER 1: TRADE WITH THE TREND

This is a short chapter discussing trend trading. The concepts covered in this chapter may not be novel to you
anymore, but I still want to address them as the foundation of this book. The entire book is organized in a cohesive
order, tightly interlinked, and we will gradually unfold the trading system that I have greatly favored over the years.
Trend trading is the cornerstone and the initial step in my trading system. If you succeed in identifying market
trends, you can avoid 50% of the painful failures in the financial market - a place known for its harshness and not
suited for those lacking discipline. Now, let's embark on the first brick in the journey of building an effective and
systematic trading system.

The importance of trading with the trend

Not everyone entering the financial market is fortunate enough to have guidance from the outset. More often than
not, we find ourselves navigating the intricacies of trading through trial and error, exploring trading methodologies
through popular formulas or seemingly promising indicator systems, often overlooking fundamental knowledge and
basic principles of the market. This tendency frequently leads to less-than-optimistic trading outcomes. Therefore,
whether you are a seasoned or a new trader in the market, let’s embark on a journey starting from the fundamental,
yet crucial, aspects: price action, market structure, and trends.
As you may already be aware, the market manifests in three primary forms: an uptrend, a downtrend, and a non-
trend state (commonly referred to as a sideways market). In an uptrend, the market typically experiences intermittent
downward corrective waves rather than a continuous ascent. Similarly, during a downtrend, the market tends to
exhibit intermittent upward corrective waves amidst its overall descent. In a sideways market, the oscillations in
price movements often maintain a balanced equilibrium.
In trading, we typically seek buying opportunities in an uptrend, selling opportunities in a downtrend, and ideally,
remain on the sidelines during a sideways market. From my experience, only trading in alignment with the
prevailing trend affords our positions the potential for substantial gains and higher profitability. Conversely, trading
within a ranging price zone or against the trend often entails elevated risks and yields diminished returns. Trading
against the trend is as perilous as driving against traffic on a highway. Let’s collectively affirm this perspective
before delving into more pivotal lessons. In the next section, let's explore an unfortunate reality commonly
encountered by traders: correctly identifying the trend but still incurring losses in trading.

Trading with the trend yet incurring losses

In the previous section, we established the critical importance of trading in alignment with the trend. Only by trading
with the trend can our positions achieve a higher win rate, capitalize on extended price movements, and yield greater
profitability. However, it is essential to recognize that trading with the trend does not guarantee profits. Let’s go
over some reasons why losses may occur despite trading in the direction of the trend.
Firstly, it is important to understand that identifying a trend and effectively trading in line with it are entirely distinct
matters. Even if you have determined that the market trend is bullish, failure to pinpoint suitable entry, stop-loss,
and profit-taking levels may expose your positions to the risk of being stopped. Worse yet, the market could reverse
and resume its initial trend after triggering your stop-loss.
Moreover, many novice traders in the financial markets often succumb to emotional impulses. Witnessing a rapid
surge in prices (fueled by forum discussions, media hype, and public enthusiasm), they impulsively engage in
buying or selling at any position without recognizing that the market may be nearing the end of an impulse wave.
This is precisely when the market is poised to potentially form a peak or trough and undergo a reversal. Such
scenarios unfold across all markets, from Forex and stocks to cryptocurrency markets.
Hence, while recognizing the trend is undeniably crucial, equally vital is identifying optimal entry points for high-
profit potential and establishing secure stop-loss as well as suitable profit-taking levels. In the next chapter, we’ll
discuss the trading area in a trending market.
 CHAPTER 2: MARKET STRUCTURE, ENTRY
STRUCTURE

In this chapter, we will delve into new concepts that enhance our clarity when entering a potential trade zone:
resistance zones and sustainable/unsustainable structures. If you find yourself perplexed about a reasonable entry
zone that yields an ideal reward/risk ratio in trading, this chapter provides the answers you are seeking. Particularly,
the entry zones discussed herein (as well as integrated into the trading system later in the book) will be linked to
market structures aimed at creating price barriers with a high probability of success. All these factors contribute to
assisting you in identifying high-probability trades in the market.

The correction phase

Firstly, let's examine the illustrated structures above. The left half of Figure 2.1 depicts the formation of an uptrend.
What signals allow us to identify this? It's because it exhibits higher highs and higher lows, with each high
surpassing the previous one and each low being higher than the preceding one. Conversely, a downtrend (the right
half of the chart) would feature lower highs and lower lows, where each high is lower than the previous one and
each low is lower than the prior low. These characteristic traits of a trend were found years ago under the Down
theory that some of you may have heard.
A trend typically comprises alternating impulse and corrective waves. While impulse waves follow the market trend,
corrective waves move counter to the market trend. In the illustration of an uptrending market, impulse waves are
represented by solid lines propelling the market upward, whereas corrective waves are depicted by descending
dashed lines. In a downtrend, impulse waves are portrayed by solid lines pushing the market downward, while
corrective waves are shown by dashed lines propelling the market upward.
From the start to the end of a corrective wave, we can determine an area known as the retracement zone (or
correction zone). Prices often retreat to this zone before resuming the prevailing trend. Therefore, in an uptrend, we
do not seek buying opportunities when the market is at the end of an upward impulse wave but rather look for
buying opportunities at the end of a corrective wave, precisely when the market returns to this retracement zone.
Similarly, in a downtrend, we do not seek selling opportunities when the market is at the end of a downward impulse
wave but rather look for selling opportunities at the end of a corrective wave when prices return to the retracement
zone. It can be said that this retracement zone is where we should explore trading opportunities in line with the
trend.
To gain a deeper understanding of this concept and learn how to accurately identify the retracement zone, let's turn
our attention to the chart below.

This is the chart of BTC/USDT in the 1-hour time frame. Currently, we are witnessing a downtrend with lower highs
and lower lows.
In a downtrend, the impulse wave (solid line) needs to break through the starting point of the preceding corrective
wave (dashed line). At that moment, the retracement zone (from the beginning to the end of the corrective wave) is
confirmed and becomes a valid reference. Prices are likely to rebound to the contiguous retracement zone before
descending further along the prevailing trend. In this example, we observe three retracement zones, where the first
and second retracement zones are where prices come back for a retest before the market continues its downtrend.
This serves as a typical example of a downtrend, and we can indeed seek trading opportunities within these
retracement zones.
The next example illustrates an uptrend in the Gold prices in the 1-hour timeframe. In this case, we can also observe
that the upward impulse waves have broken through the starting point of the most recent corrective waves, thereby
confirming the retracement zones (the most recent downward waves). This example continues to highlight that a
retracement zone is an ideal resting area where buying interest can regroup before propelling prices in the prevailing
direction. This exemplifies a typical uptrend, and we can actively seek trading opportunities as prices return to these
retracement zones.
So, we have learned what a trend is, the structure of a trend, and why it's advantageous to trade with the trend. We
also know where we should seek trading opportunities within a trend. However, the retracement zone is quite broad,
and relying solely on it doesn't allow us to pinpoint trade entries with optimal entry points, secure stop-loss levels,
and ideal profit-taking points. In the next chapter of the book, we will delve into market trading zones, providing a
clearer perspective on entry points. But before that, let's explore a crucial concept regarding market structure. This
concept will be further addressed in Chapter 6 of the book, with the aim of optimizing entry points: sustainable and
unsustainable structure of a trend.

Sustainable and unsustainable structure of a trend

Sustainable uptrend structure and unsustainable uptrend structure are concepts I've observed and identified during
my trading journey. They rely on principles related to the harmony and support of wave movements, which I'll delve
into more in the chapter discussing resistance levels. For now, I'll provide a brief overview to help you grasp the
idea of structural sustainability, enabling you to navigate potential price traps in the market.
Firstly, let's consider a sustainable structure. Take a look at the chart below illustrating a sustainable structure.
This is a typical illustration of a sustainable uptrend structure, featuring overlapping retracement zones. The market
generates smooth and sequential upward waves, with each wave supporting the subsequent one. Imagine the
retracement zones below as a foundation for the resistance zones above, and the continuous alignment of these
resistance zones serves as a positive signal for the robustness of a wave.
In contrast to a sustainable retracement zone is an unsustainable retracement zone. Let's observe the following
example.
In this example, we have three retracement zones. After the price forms the second impulse wave and confirms the
first correction zone, it proceeds to create a second corrective wave. However, before this corrective wave reaches
the first retracement zone, the price hastily surges upward. Similarly, the third retracement zone does not coincide
with the second one. This indicates the market's impatience and eagerness to push prices higher. While the market
maintains its upward momentum, with the structure of higher highs and higher lows intact, the impulsive behavior of
buyers may pose a risk that these retracement zones might struggle to become robust price barriers in the future.
This represents a fundamental distinction between the two types of structures. Figure 2.6 below illustrates a market
trap that traders may encounter when dealing with an unsustainable structure.
In this scenario, after forming the third upward wave, the market experiences a robust price retracement, piercing
through the third retracement zone established in the market and reaching the second one, where the resistance is
stronger (the second retracement zone coincides with the first one, creating significantly greater resistance level).
However, just when you think the trend is reversing to a downtrend, the market abruptly surges and continues the
existing trend. Quite perplexing, isn't it? Rest assured, this book will assist you in interpreting the market and
determining when a trend is likely to persist and when it may be running out of steam. We will gradually unlock
these mysteries. For now, let's examine a practical example to illustrate the point I am making.
This is the 1-hour chart of Gold, reflecting the market structure. It presents an uptrend, immediately followed by a
corrective wave that breaks through the last defense point of buyers. A downtrend structure forms with lower highs
and lower lows. If you were waiting for the price to retrace to this retracement zone to initiate a sell trade, you might
have incurred a loss. So, why did this happen? Is there an explanation?
In the financial markets, nothing is certain. There are times when our analysis is incredibly sound, logical, and
textbook-perfect, yet the price moves in the opposite direction, hitting the stop-loss. Conversely, there are instances
when we enter a seemingly random trade, deviating from the technical analysis, and it turns out to be profitable.
Hence, this losing trade might simply be a result of unfavorable market conditions and plain bad luck. That's just one
way of saying that the market is relative, with its ups and downs.
In this instance, fortunately, I have sufficient experience to elucidate why a short-selling order in this case would
end up in a loss. Now, let's turn our attention to the uptrend. Do you observe anything? Allow me to delineate the
retracement zone for better visibility.
In this chart, we have three retracement zones. During the third retracement, the price did not reach the second
retracement zone but quickly bounced up and established a new high. This doesn't resemble the sustainable uptrend
structure we studied earlier (where retracement zones tend to overlap). In this case, the third and second retracement
zones are distant and do not overlap. This indicates the impatience, impulsiveness, and instability of the market.
Such uptrend structures are fairly weak and prone to breaking. In other words, the uptrend structure from the second
resistance zone to the third is an unsustainable one. It is this unsustainable uptrend structure that allows the price to
easily break through the third retracement zone during the pullback. And its inherent limitations fail to resist the
market's continued upward trend from point A. This is the dual failure of the third retracement zone, a consequence
of an unsustainable structure.
Let's refrain from discussing whether one should trade during price retracements to unsustainable zones. By now,
you should be able to distinguish the strength of two types of correction zones in an uptrend based on sustainable
and unsustainable structures. You can apply the same principle to downtrends. After a thorough exploration of Gann
waves and market pivot points in the upcoming chapters, I will delve into the four strength levels of a resistance
zone (retracement zone). The strength of a resistance zone is an advanced concept and a crucial factor in my trading
system outlined in this book.
In the next chapter of the book, let's explore the three main trading zones.
 CHAPTER 3: TRADING ZONES AND TRADING
SCENARIOS WITH THE TREND

In this chapter, we will gradually unfold a concept that I refer to as a trading zone. Trading zones refer to areas
within the price correction phase where we will await price reactions before considering an order placement. We
will systematically explore each concept, including one that traders often overlook or do not pay excessive attention
to during trading but plays a crucial role in my trading system. By the end of the chapter, we will delve into five
common trading scenarios, including one that strengthens my favorite trading style throughout this book.

Trading zones

As you're well aware, we need to wait for the price to retrace to the correction zone before seeking trading
opportunities. However, the correction zone can be quite broad. In some cases, prices may only make a shallow
retracement before continuing their upward movement. Conversely, there are instances where prices retrace
significantly before resuming the trend. There are also scenarios where prices only retrace half of the preceding
impulse wave.
Let's take an upward trend for analysis (for a downward trend, the reasoning follows similar principles but in the
opposite direction). It’s familiar for new traders to choose two key areas to consider a buy trade: the previous high
and the previous low of the retracement zone. Given that many may not be adept at reading price action, they often
opt for limit orders. Placing a limit order at the previous high might result in losses if the price retraces to the prior
low. Conversely, setting a limit order at the previous low could lead to missed opportunities if the price only retraces
halfway or returns to the prior high. If a limit order is placed at the previous high, and the stop loss is widened below
the prior low, the reward/risk ratio would clearly be less than ideal for a trade.
Therefore, it is imperative for us to grasp the crucial concept: trading zone.
Trading zones refer to areas that offer potential entry points, helping us synchronize with the trend. They facilitate a
more favorable entry point, reduce stop-loss limits, and, in turn, improve the risk-to-reward ratio.
When the market executes an impulse wave, it leaves behind a retracement zone with numerous trading options, as
illustrated above. Choosing what zone to enter a trade and how to enter a trade depends on each market context and
trading style. In this section, we will mention three primary trading zones. Additionally, we have a highly effective
supplementary trading zone through the integration with order block, which I will elaborate on in the later chapters
of the book. When this supplementary zone appears, it enhances the strength of the primary zone, providing a
stronger and more potent trading zone.
The three trading zones include the previous high, the previous low, and the congested price zone (congested
zone). To delve deeper into this, I will provide some insights into supply and demand in trading. The knowledge of
supply and demand is extensive, with numerous resources available for further exploration. You may refer to my
best-selling book, "Supply and Demand Trading – How To Master The Trading Zones". Within the scope of this
book, aimed at helping you identify and apply my methods, we won't delve too deeply into the supply and demand
theory.
For me, supply and demand imply areas of conflict, domination, and shifts in power between the buying and selling
sides. For instance, at the high zone, conflict arises, and power shifts from buyers to sellers. Sellers dominate and
push prices downward. At the bottom zone, conflict occurs, and power shifts from sellers to buyers. Buyers
overpower and drive prices upward. In sideways markets, buyers and sellers continually contend and dominate each
other's strengths. Buyers demand as much as sellers supply, and sellers need to consume as much as buyers are
willing to absorb. This tug of war results in the accumulation of a significant amount of liquidity and energy in
sideways areas. It appears like a congested area. We call this a congested price zone.
All three zones demonstrate clear conflicts and shifts in strength between buyers and sellers. They encapsulate the
liquidity and energy of the market. Therefore, these zones themselves provide potential resistance capable of altering
the price direction upon retracement.
Next, I'd like to address the congested price zone. While highs and lows can be easily identified, determining
congested price zones requires principles to make the search for trading zones more consistent and convenient. In
the following section, we will explore how to identify a typical congested zone, accompanied by specific illustrative
examples.

Congested price zone

In essence, a congested price zone is also a concept within the supply and demand theory. Although it may appear
small on the chart, its potential to impede the price is not less significant than strong resistance and support zones.
This congested price zone, found in sideways movements within smaller time frames, contains considerable energy
and liquidity from both the buying and selling sides. Its presence indicates a price zone capable of changing the
market trend.
To identify a congested zone, two conditions must be met:
Firstly, the congested zone must consist of three or more consecutive candlesticks.
Secondly, the closing price of each candlestick must fall within the range of the previous candlestick.
Let's explore this with the following illustrative example.

In this chart, A precedes B, and B precedes C. We observe that the closing price of candlestick B is
higher than the highest point of candlestick A, so the closing price of B is outside the range of
candlestick A. As for candlestick C, its closing price is higher than the low of B and lower than the
high of B, so candlestick C has a closing price within the range of the preceding candlestick.

Following this rule, candlestick D also has a closing price within the range of its preceding
candlestick. Subsequently, candlestick E also has a closing price within the range of candlestick D. At
this point, we have met the conditions to form a congested zone, which requires three or more
consecutive candlesticks with closing prices within the range of the preceding one. In this manner, the
congested zone can continue consecutively if subsequent candlesticks continue to have closing prices
within the range of the previous one.
So, when does this congested zone come to an end? It ends when a candlestick appears with a closing price outside
the range of the preceding candlestick. Thus, in this example, we have a congested zone with five consecutive
candlesticks: C, D, E, F, and G.

Next, let's determine the resistance level of this congested zone. We will find the highest closing price and the
lowest closing price among the candles forming the congested zone, and then connect them. In this set of five
candles, candle G has the highest closing price, while candle E has the lowest closing price. Connecting them and
projecting to the right, we have identified the resistance level of the congested zone as shown in the illustration
above.
Now let's delve into a real-life trading example. Firstly, trading with it is similar to trading with other resistance and
support zones. You need to combine it with the knowledge of identifying market structure and trends that I have
shared to increase the success rate. Figure 3.4 presents the AUD/USD chart on the 1-hour time frame. I have marked
the congested zone according to the principles I just explained. Pay attention to peak A. The price retraced to A and
showed a weak upward momentum at A as no candle completely formed above the preceding high (X), making it
suitable for finding selling opportunities here. Peak A indicates that this congested zone, though small, provides a
very strong resistance level. In some cases, we can even use it as a profit-taking target.

Five trading scenarios with the trend

So, we've covered the three main trading zones when prices rebound to a retracement zone and explored the supply-
demand mechanisms at these crucial price levels. In this section, we will outline specific trading scenarios
corresponding to these three main trading zones. We will present up to 5 typical trading scenarios for planning
trades in a trending market. All illustrated examples will be demonstrated within an upward-trending market, and
you can infer the opposite for a down-trending market.
Scenario 1: Prices rebound to the area of the previous low - the end of the previous retracement wave,
forming a new retracement zone.
Scenario 2: Prices rebound to the congested zone. The congested zone is typically within the
retracement zone. Occasionally, it may overlap with the area of the previous high or low, which is
ideal for trading. Such a combination creates a market entry zone with strong resistance.
Scenario 3: Prices rebound to the previous high area - the beginning of the previous retracement,
forming a new retracement zone.

Scenario 4: This is the confluence area of multiple previous highs or congested zones. The consecutive
highs or congested zones create a region with significant resistance. When prices rebound in these
areas, they often encounter fierce resistance from buyers, providing an ideal opportunity for traders to
enter positions. Compared to the resistance zones in scenarios 1-3, the resistance zone in scenario 4 is
more potent, having reacted multiple times to prices in the past. This is an ideal price zone for traders
to plan their trades and seek high-probability trades.
Scenario 5: The last scenario is one that nobody wishes for, but it's crucial to plan for: a trend reversal.
As you know, previous lows are often a source of significant strength for the buying side, with the
potential to bring prices back to the initial trend and establish new highs. Therefore, it can be
considered the last barrier of an upward trend. The reversal of the upward trend is manifested as the
selling side regains strength, breaking through the final barrier of the buying side and forming
downward impulsive waves.
Some of you may wonder why I've included the scenario of a market reversal here, especially when the entry areas
in this case are not yet clear. The truth is, this serves as an illustration of my trading philosophy presented in this
book – consistently reading the market and identifying trends as well as trend reversals to respond flexibly. The
market is inherently unpredictable, and a trader's market analysis must be flexible accordingly. In the final part of
the book, I'll show you how I turn losses into wins by changing how I read market price action.
So, in this chapter, we've pulled back the trading curtain further, with entry positions becoming clearer. However, a
complete trading system needs to incorporate many more factors to optimize entry and exit points and maximize
profits. We will gradually unveil the trading system. The next chapter onward will be the most captivating part of
the book, presenting systematically organized concepts tightly interconnected, commencing with an extremely
effective tool for determining market volatility - Gann waves.
 CHAPTER 4: A GUIDE TO GANN WAVES

In this section, I will guide you in drawing Gann waves. This is the method I combine with the Dow theory to
determine market trends. This approach uses the changing correlation between each consecutive candle to depict the
wave structure. The application of Gann waves is quite effective. I use it to gauge the strength or weakness of
buying and selling forces, the ability to sustain trends, or the potential for reversals. However, like other methods,
I'm not introducing you to any holy grail or secret technique. It also needs to be combined with other factors to
enhance forecasting success. Nevertheless, if you follow the price action philosophy, reading and analyzing price
action through each candle, this is truly a method you cannot ignore. Let's get started.

W.D.Gann and his trading career

William Delbert Gann, or W.D. Gann, was born on June 6, 1878, in Lufkin, Texas. He rose to become a legendary
figure in trading partly due to his unique trading approach.
From an early age, Gann exhibited a huge interest in mathematics and numbers. It was in his twenties that he
discovered stocks and commodities, embarking on his trading journey at the age of 24. Initially facing substantial
financial losses, Gann, born into the impoverished family of a cotton farmer, was driven to enhance his trading
skills. He delved into the search for specific price patterns and mathematical models that would unfold within
distinct time cycles.
In an era dominated by traders immersed in fundamental analysis, Gann introduced a revolutionary theory centered
around technical analysis. This encompassed mathematical principles, three basic principles, and a strong belief in
the idea that past market performance could serve as a predictor of future activity. Gann's meticulous market
research involved assembling a number of charts illustrating daily, weekly, monthly, and yearly prices. What he
discovered during this process would go on to form the cornerstone of his trading strategy - a principle he coined as
"the Law of Vibration."
According to Gann, the Law of Vibration extended beyond natural sciences and found application in financial
markets. His methodological precision allowed him to predict with remarkable accuracy the future landing points of
stock prices once they began their ascent or descent. A notable illustration of his trading prowess occurred when his
law successfully forecasted the stock market crash of 1929. This financial catastrophe, followed by the Great
Depression, had been outlined a full year in advance in Gann's "Annual Stock Forecast”, a newsletter disseminated
to his subscribers.
At the core of his theory were three fundamental principles: pattern, price, and time. Patterns, as per Gann,
manifested universally and represented recurring price formations in any chart. Recognizing these patterns, he
asserted, enabled the forecasting of price movements. Price, the second crucial factor, received special emphasis.
Gann emphasized that traders should diligently observe the price of a stock or asset, as it held insights into market
dynamics. His approach involved scrutinizing the price in relation to previous highs or lows to anticipate future
directions. The third foundational principle, time, held paramount importance. Time cycles, a key focus in Gann's
methodology, revealed the formation, duration, and end of trends.
While it is claimed that WD Gann transformed a modest sum into over $50 million during his trading career, this
figure lacks substantiation. Nevertheless, his trading laws and methods, as evidenced by brokerage statements,
contributed to substantial financial gains, leaving him with an estimated net worth of around $5 million upon his
demise.
In this book, we won't delve into the Gann Theory (if possible, I'll address this topic in another book). Instead, our
focus will be on something direct and more crucial - the method of drawing Gann waves and determining the market
structure as well as market strength through Gann waves. In this book, apart from the wave-drawing method
developed by W.D. Gann, the techniques presented are the result of my exploration, synthesis, and construction
through real-world trading experiences in the financial markets. Nevertheless, since drawing Gann waves remains a
fundamental aspect of my later discoveries regarding market structure, I still want to acknowledge and pay tribute to
his earlier findings in trading.

How to draw Gann waves

I use Gann waves to combine with market structure in order to determine the strength or weakness of buying/selling,
and whether there is a potential reversal. Gann waves stand out in their utilization of the changing correlation
between consecutive candles to illustrate wave structures, reading the market with each candle, one by one.
Consequently, it closely captures the smallest market fluctuations. Therefore, I don't feel the need to go to lower
timeframes for analysis. This is why I believe this method is highly suitable for those who follow price action
strategies. Through the creation of its highs and lows, we gain valuable insights into the market's supportive
direction.
Firstly, to draw Gann waves, you need to distinguish between four types of candles: up bar, down bar, inside bar,
and outside bar.

Up bar (up candle)

An up bar is a candle whose highest price is higher than that of the previous candle, and its lowest price is higher
than the that of the previous candle. You don't need to concern yourself with the color of the candle. An up bar can
still represent a decrease in price; it just needs to satisfy the conditions mentioned above. An up bar marks the
beginning of an uptrend and the end of a downtrend. To draw it, we connect the lowest point to the highest point.

Down bar (down candle)

A down bar is a candle whose highest price is lower than that of the previous candle, and its lowest price is lower
than that of the previous candle. Similar to the up bar, you don't need to pay attention to the color of the candle to
identify a down candle. A down bar can still represent an increase in price; it just needs to satisfy the conditions
stated above. A down bar marks the beginning of a downtrend and the end of an uptrend. To draw it, we connect the
highest point to the lowest point.

Inside bar (inside candle)

An inside bar is a candlestick that does not change the direction of the wave. It entirely falls within the range of the
preceding candle, with its highest price lower than that of the previous candle and its lowest price higher than that of
the previous candle. In this case, the subsequent direction of the wave will depend on the candlestick following the
inside bar, as illustrated in Figure 4.4.
Outside bar (outside candle)

This is a special candlestick as it indicates a breakout at both ends. It has the highest price higher than that of the
previous candle and the lowest price lower than that of the previous candle. There are two scenarios for drawing
waves with the appearance of an outside bar.
Scenario 1: If it occurs within an uptrend, it will continue that uptrend. If it occurs within a downtrend, it will still
continue that downtrend.
Scenario 2: The second scenario of drawing waves with the appearance of an outside bar requires you to pay closer
attention to the candlesticks. As you know, if an outside bar candlestick occurs within an uptrend, it will still
continue that uptrend. However, if it appears at the beginning of an uptrend and has already broken through the
nearest low, it will form a downtrend, and you must draw a downtrend before continuing to draw the new uptrend as
shown in Figure 4.7. Similarly, when an outside bar candlestick appears at the beginning of a downtrend and breaks
above the nearest high, it will form an uptrend, and you must draw that uptrend before continuing to draw the new
downtrend. The reason for drawing these additional lines is that in smaller time frames, the outside bar candlestick
indicates strong downtrends/uptrends that need attention. This is crucial in the process of trend analysis and
evaluation.
Above are some simple cases of drawing waves. In the next section, we will delve into a more complex scenario that
new traders often find confusing.

A complex case of wave drawing

While complex wave drawing cases still rely on the wave drawing rules we learned in the previous section, for those
unfamiliar, they can still be confusing and challenging in some instances. The case below, although not very
common, can be a decisive factor in trading situations when it occurs, making accurate wave drawing crucial.
This is the case of an uptrend with an inside bar. An inside bar will not change the direction of the wave. Therefore,
the wave remains intact. To continue the uptrend, the price needs to break through the highest point where the wave
paused. At this point, we redraw the uptrend represented by solid lines as shown in Figure 4.10.
Note: In the case where the next candle after the inside bar is an outside bar breaking above peak A, the drawing
method remains entirely the same.
However, in case the candle following the inside bar is an up bar that has not yet broken through the highest point
where the wave stopped (peak A), we still maintain the wave (similarly for an outside bar). If before continuing the
upward wave, a down bar appears, we will draw a downward wave, as shown in Figure 4.11. Remember the
information about the down bar: the downward bar marks the beginning of a downward wave and the end of an
upward wave.
Now you have a clear understanding of the four types of candles as well as the rules for drawing Gann waves, right?
Figure 4.12 illustrates a real chart fully drawn with Gann waves according to the introduced principles.

Now that we have a chart depicting the wave path quite detailedly, the next step is to understand how to gauge
market momentum and assess trends. This is the core and most crucial part of applying Gann waves to real trading.
From the next chapter onwards, we will delve into exploring and applying an extremely important concept in trading
with Gann waves after completing the wave drawing phase.
 CHAPTER 5: PIVOT POINTS - THE LANGUAGE
OF THE MARKET

In the previous chapter, we learned about the one indispensable concept in my trading system: Gann waves. In this
chapter, we will delve into an extremely important concept in reading market structure and determining trends: pivot
points. As Gann waves form the basis for identifying pivot points, ensure you are proficient in drawing Gann waves
before proceeding with this section. If you misidentify or overlook waves when drawing, the market context will be
entirely different, leading to unreliable analyses and potential trading risks. Therefore, if you haven't mastered wave
drawing, I recommend revisiting the previous chapter and practicing drawing waves before delving into the content
of this chapter.

The overlooked treasure

It's essential to note that the market itself has its own language that you must decipher to predict its upcoming
directions. In the market, each candle is a letter, each wave is a sentence, and when you group several waves
together, you have a conversation about supply and demand and market trends. To connect each sentence into a
meaningful dialogue, it's time to delve into Pivot Points. Simply put, these are turning points or reversal points of the
wave. It's the point where the wave reverses from an uptrend to a downtrend or vice versa. In other words, it's the
high or low in the market with crucial meanings.
So why are these pivot points important in reading market trends? Pivot points are not formed randomly. Each point
reflects a temporary shift in supply and demand, indicating psychological zones formed by fear and greed. This
makes it easy for us to identify price levels containing strong market support or rejection. For example, when the
price of Gold forms a peak at $2,000, it shows us that among over 14 million traders worldwide, not a single trader
wants to execute a trade above this price level. The power dynamics shift at this price level as the majority of those
holding buy orders are concerned that the price is too high and tend to sell. At the same time, those on the sidelines
feel that the price is too high and begin to enter the market with short sell orders. At this point, supply surpasses
demand, leading to a reversal in the trend.
So what happens if the price returns to the previous high? In essence, the pivot point is the marker indicating the
boundary between the temporary fear and greed of the crowd. If the market participants still maintain the view that
the price is too high at this point, then the market will find it challenging to move higher, and as a result, the price
tends to turn downward again. After the price goes down, the peak-forming area we are observing will become what
we commonly refer to as a resistance zone. Similarly, the bottom-forming areas will create support zones.
However, these zones won't always hold the price. In reality, it's common to see prices breaking through previous
peaks or troughs to create new highs and lows. The resistance/support zones broken through may even transform
into support/resistance zones afterward when the price returns to test them. Therefore, the most crucial skill in
trading is identifying which zones are likely to impede the price and which ones are not. To achieve this, you must
understand that the formation of pivot points is different.

Types of Pivot Points

There are three types of pivot points that you need to distinguish: basic pivot point, experimental pivot point, and
valuable pivot point. While the valuable pivot point provides the strongest resistance and support levels among the
three types, the basic pivot point offers the weakest resistance and support. However, both basic and experimental
pivot points are very useful in helping us trade along with a trend. Understanding this foundational theory, you can
apply it to other knowledge such as smart money flow, and order blocks, and even learn how to avoid whale hunting
or price traps, leveraging them to maximize profits.
To distinguish these three types of pivot points, we have to rely on their preceding price level. Specifically, if you
want to determine whether a pivot low is a basic one, you must compare it to the preceding pivot low. Similarly, if
you want to identify the type of pivot high, you'll have to compare it to its preceding pivot high.
Now, let's delve into the definitions and illustrations of these three types of pivot points. Let's begin with an upward
market context.

First, we have the basic pivot low. The market attempts to push prices lower, but it halts without surpassing the
previous pivot low, and then prices rebound. The point where it turns is the basic pivot low. So, the basic pivot low
is higher or equal to the previous pivot low.
Next is the experimental pivot low. The market makes another attempt to push prices lower. This time, it pushes
prices to a lower level than the previous pivot low (note that even a slight decrease of just one point will be
considered an experimental pivot low). Afterward, prices rebound. This pivot point is essentially testing the strength
of the support zone at the old level, hence it's called the experimental pivot low.

Lastly, we have the valuable pivot low. The valuable pivot low is a bit more intricate. It's a special type of
experimental pivot low. Specifically, if this experimental pivot low breaks above the highest price point where the
rebound started to continue the initial uptrend, it becomes a valuable pivot low. This lowest experimental pivot low
has reached the psychological price threshold where demand has enough strength to alter the market structure.
Therefore, we refer to it as the valuable pivot low, providing the strongest support threshold among the three types
of pivot low.
We will now explore the pivot points in a downward market context.
First, we have the basic pivot high. The market attempts to push the price higher, but it fails to create a higher high
than the previous one. Subsequently, the price declines again. The point where it turns is the basic pivot high.
Therefore, the basic pivot high is lower or equal to the nearest pivot high.

Next is the experimental pivot high. The market once again makes an effort to push the price higher. This time, it
succeeds in pushing the price higher than the high just before it (note that even one point higher will make the peak
an experimental pivot high). Subsequently, the price declines again. It can be said that this pivot point is testing the
strength of the old resistance zone, so we call it the experimental pivot high.
Finally, we have the valuable pivot high. The valuable pivot high is a special type of experimental pivot high. If this
experimental pivot high breaks through the lowest price point where the corrective wave begins to continue the
initial downtrend, it becomes a valuable pivot high. It can be said that this highest experimental pivot point has
reached the level of psychological prices where the supply and demand differentials are significant, and the supply
has enough strength to change the market structure. Therefore, we call it the valuable pivot high, which is the area
providing the strongest resistance among the three types of pivot high.
So, we've got the rules to identify pivot points. The market is always changing, but our method of determining pivot
points remains consistent and clear. With these pivot points, we have many advantages in evaluating trends and
riding the market waves. In the next sections, we'll delve deeper into each type of pivot point.

Basic pivot point

After getting a broad overview of pivot points in the previous section, you might think that basic pivot points are the
least useful and have the least value, as they provide the weakest resistance and support levels among the three types
of pivot points. In this part, I'll show you the practical applications and true power of basic pivot points.
In Figure 5.7, it's easy to conclude that this is an uptrend. Now, I'll apply the wave-drawing techniques, and then
we'll identify and mark the basic pivot points. Let me briefly recap the theory. A basic pivot low is higher than or
equal to the preceding low. Conversely, a basic pivot high is lower than or equal to the preceding high. Applying
these identification rules, we can mark the basic pivot lows and basic pivot highs as in Figure 5.7, where upward-
pointing arrows indicate basic pivot lows, and downward-pointing arrows indicate basic pivot highs.
What do you notice? Pay attention to the frequency of basic pivot lows to basic pivot highs. Clearly, in this uptrend,
the occurrence of basic pivot lows is more frequent than basic pivot highs. So, what does it mean? It indicates that in
a clear uptrend, the buying force, or the demand side, dominates more, demonstrating stronger strength. And that's
the significance of basic pivot points.
Next up, let's look at the daily chart of Gold. In this chart, we observe both the uptrend and the downtrend. Let's
compare these two trends by marking the basic pivot points. In the uptrend on the left half of the chart, where buying
pressure is stronger, we see that the frequency of basic pivot lows overwhelmingly surpasses that of basic pivot
highs. Conversely, in the downtrend on the right half of the chart, where selling pressure is stronger, we notice the
selling side continuously pushing into lower price areas, reflected in the higher frequency of basic pivot highs,
completely dominating the buying pressure and causing Gold prices to plummet.
We've just covered cases of uptrends and downtrends. How about a sideways market? Let's dive into the final
example in this section, looking at the USD/JPY pair on the H1 timeframe. We will mark the basic pivot points in
this chart. You can easily see in a sideways market, the ratio of basic pivot lows to basic pivot highs is
approximately equal, indicating a balanced supply and demand with no dominant side. By simply identifying and
marking the basic pivot points, you gain a more comprehensive view of the strength of supply and demand displayed
on the chart. This helps you spot signs of a trend gaining or losing strength early. Unless the market is moving in a
clear trend, it's advisable to stay on the sidelines. This approach will help you reduce risks and steer clear of
unnecessary losses.

Experimental pivot points

In this section, we'll continue exploring the second type of pivot point: the experimental pivot point. An
experimental pivot high is higher than the preceding high, while an experimental pivot low is lower than the
preceding low. Their task is to retest the support and resistance zones just before. Hence, they are called
experimental lows and experimental highs. While basic pivot points show us whether supply or demand is
dominating and help us ride the trend, experimental pivot points reveal the effectiveness of attacks by supply and
demand in areas of prior resistance. For example, an experimental high indicates the highest price that demand, or
the buying side, can achieve after breaking above the preceding high. An experimental low reveals the lowest price
that the supply, or the selling side, can achieve after breaking below the preceding low. Depending on the success of
the breakout, we can assess the strength and momentum of the price.
In this method, price momentum is a crucial concept. It helps you find the path of least resistance in the market,
much like when you're driving - your eyes are the observation tool to help you spot potholes or obstacles to avoid.
To assess momentum, answer these three questions:
How far does the price travel after breaking out of the resistance or support created by the prior pivot
point?
Does the price close beyond the prior pivot point?
Does the price form candlesticks entirely beyond the prior pivot point?
In these questions, the concept of "entirely beyond the prior pivot point” is crucial. It is a pivotal factor in my
trading system, and you'll find me referring to this concept quite a bit in the upcoming sections. Let’s take a look at a
simple illustration below.

In the case of A, the price breaks out and immediately reverses, indicating a reluctant upward movement. In case B,
a candlestick entirely above the previous high appears, signaling that the market is ready to accept trading at higher
price levels. To better understand the strength of experimental pivot points, let's revisit the examples from the
previous section.
This is the GBP/USD chart on a daily timeframe. Let's remove the basic pivot points and mark the experimental
pivot points according to the learned rules. If in the previous section, the basic pivot points indicated the dominance
of the buying side, in this section, the experimental pivot points reveal the disadvantage of the selling side. You can
also observe a continuous retreat of the selling side.
Now, let's move on to the most crucial information provided by the experimental pivot highs: evaluating the
momentum. First, pay attention to the momentum created by the experimental pivot highs. At the experimental pivot
high (1), buyers pushed the price significantly higher, well beyond the previous high, and closed far above this high.
The market produced many candles entirely above the prior high, indicating a strong momentum. Similarly, at the
experimental pivot high (4), the price also broke significantly higher, closing far above the previous high, and there
were candles entirely above the prior high, signaling that the resistance created by the sellers was not strong enough,
and the momentum of the buyers easily broke through. The market is accepting trading at higher price levels. These
are two experimental pivot highs bringing the strongest momentum in a strong uptrend. In the example above, the
market also showed many other experimental pivot highs but with moderate momentum.
Now, let's observe the momentum created by the experimental pivot lows. For the experimental pivot low (12), it
broke below the prior low and formed a candle entirely below the prior low, albeit with a short distance. After a
candle closed below the prior low, the price was immediately pushed up without forming another candle entirely
below the nearest low. This indicates relatively weak selling momentum, gradually exhausting. The price might
have reached a strong support zone created by the buying side. For experimental pivot lows (13) and (14), the
momentum is even weaker as no candle could form that closed below the prior low. A commonality between these
two experimental pivot lows is that they both set the stage for a strong subsequent upward momentum with
consecutive experimental pivot highs being formed. The momentum of the experimental pivot low (15) is the
weakest among the experimental pivot lows in this example. It only closed slightly below the nearest prior low
before the price bounced back up.
Through this example, we can see that in an uptrend, the momentum created by experimental pivot highs is typically
from average to very strong, while the momentum created by experimental pivot lows is usually relatively weak.

Next, let's turn to the Bitcoin price chart on the daily timeframe. We will mark the experimental pivot points
according to the defined rules we have learned. On the left half of the chart, with an upward trend, the frequency of
appearance of experimental pivot highs is higher, indicating the disadvantage of the selling side, and the selling side
is consistently pushed back. Conversely, in the downtrend on the right half of the chart, the frequency of appearance
of experimental pivot lows is higher, showing the disadvantage of the buying side.
Now, let's evaluate the significance of the experimental pivot points. In the experimental pivot high (1), we observe
a substantial breakthrough of the preceding high, marked by a considerable distance. Moreover, the market displays
numerous candles entirely above the previous high, indicating a robust increase in upward momentum. The buying
side encounters minimal resistance while surging through previous resistance zones. A similar scenario unfolds in
the case of the experimental pivot high (2), where the price not only surpasses but also closes above the previous
high, forming candles entirely above it.
Moving to the experimental pivot high (3), we notice the emergence of a candle fully above the preceding high,
underscoring a persistent upward trend. However, upon comparing it with the two previous experimental pivot
highs, the third one exhibits a diminishing strength in upward momentum. It appears that the market is conveying a
nuanced message to us. At pivot high (4), the price nearly enters a sideways phase, indicating weak upward
momentum. Subsequently, at the experimental pivot high (5), the price breaks above the preceding high with
vigorous upward momentum. Nevertheless, upon closer scrutiny, the price hasn't fully embraced the higher price
levels above the initiation point of the corrective wave (pivot high (3)). Following this, an outside bar candle leads
the price back below the region of the previous high. Combining these signals of weakening upward momentum,
caution is warranted regarding the potential exhaustion of buying interest and an impending reversal.
Now, let's shift our focus to the right half of the chart. The experimental pivot low (9) serves as the initial indication
that the selling side has regained control, forming an experimental pivot low with robust downward momentum, as
evidenced by multiple candles entirely below the preceding low. Subsequently, a series of experimental pivot lows
is established. The buying side only has two opportunities to resist at (6) and (7), but its momentum at (7) is notably
weak, failing even to close above the preceding high. In this example, we once again clearly observe that in an
uptrend, the momentum created by experimental pivot highs tends to be stronger, while in a downtrend, the
momentum generated by experimental pivot lows is typically more forceful.

Finally, let's explore the sideways market of the USD/JPY pair in the 1-hour time frame. After removing the basic
pivot points and marking the experimental pivot points, we observe an equal frequency of experimental pivot highs
and lows. Most of the momentum expressed through the experimental pivot points is weak. The selling side
generates slightly fewer experimental pivot points than the buying side, but it manages to produce some instances of
relatively strong momentum with experimental pivot lows at (10), (12), (13), and (15). Conversely, the buying side
only forms one candle entirely above the preceding high at the pivot point (5). Nevertheless, given the information
provided by both basic and experimental pivot points regarding their frequency, it seems prudent to stay on the
sidelines as the market does not strongly support any particular trend. Additionally, the market structure does not
present an attractive consolidation zone for potential market entry.
So, through the lens of experimental pivot points, we have gained more data for analysis and a deeper understanding
of market trends. The momentum provided by experimental pivot points helps us identify the path with the least
resistance to price movement. In the next section, we will discuss the most powerful pivot point - the valuable pivot
point.

Valuable pivot points

In this section, we will delve into the final type of pivot point among the three - the valuable pivot point. The
valuable pivot point provides us with the most information about the market. While it appears less frequently than
the experimental and basic pivot points, once it does, it signifies a robust zone of supply and demand capable of
altering the market structure. The valuable pivot point is a special form of the experimental pivot point. Let me
illustrate how it forms.

This is an uptrend structure, and a consolidation zone emerges. During the formation of the consolidation zone in an
uptrend, experimental pivot points will attempt to test the support areas below the previous pivot low. As the price
approaches an area with strong demand that causes it to turn and surpass the highest price point where the
consolidation zone began, it marks a strong demand zone capable of altering the market structure. We call it the
valuable pivot low.
Thus, the lowest experimental pivot point within the consolidation zone of the primary uptrend is the valuable pivot
low. Conversely, the highest experimental pivot point within the consolidation zone of a primary downtrend is the
valuable pivot high. It's essential to note that a basic pivot point cannot transform into a valuable pivot point even
after breaking through the starting point of the retracement wave that forms the consolidation zone. Let's look at
some illustrative cases before analyzing an actual chart.
This is a case of a retracement wave, forming a basic pivot low and an experimental pivot low. Subsequently, the
price broke through the highest point where the corrective zone began to continue the uptrend, turning this
experimental pivot low into a valuable pivot low.

In Figure 5.16, the market undergoes a retracement wave and forms only an experimental pivot low. However, in
this case, since the basic pivot low had already been formed earlier during the impulse wave, after the price broke
through the highest point where the corrective wave began, it turns this experimental pivot low into a valuable pivot
low and continues the previous uptrend.

The third case adds a bit of complexity. We have two experimental pivot lows, so which one will become the
valuable pivot low when the price rises? Pay attention to the two price levels, X1 and X2. When the price breaks
through X1 - the highest point where the small corrective structure begins—this experimental pivot low (EPL1) will
become the valuable pivot low (VPL1). This corresponds to the first case we discussed earlier. However, if the price
breaks through the highest level which initiates the corrective wave of the larger structure (X2), then the lowest
experimental pivot low in this case (EPL2) will become the valuable pivot low of the larger structure (VPL2).
Naturally, this pivot low will be stronger, holding a better potential for support than the valuable pivot low of the
smaller structure (VPL1).
In the fourth case, the market continues to create two experimental pivot lows in a corrective rebound trend - similar
to the third case. However, the difference is that the second experimental pivot low is lower than the first one. This
time, it will become the lowest experimental pivot low in the correction area. Therefore, when the price breaks
through the highest point where the correction begins, it will become the sole valuable pivot low.
In another angle, pay attention to the small structure outlined by the rectangle. In the context of a downtrend, there is
a corrective rebound that only forms an experimental pivot high because the basic pivot high had already formed
earlier. Subsequently, the price breaks through the lowest point where the rebound begins and continues the
downtrend structure. This experimental pivot high has become a valuable pivot high. However, the valuable pivot
high in this small structure did not hold the price as the market rose, and the valuable pivot low clearly has a
stronger potential to change the market structure. This shows us that market signals are relative in nature. Therefore,
we always need a stop-loss to protect our account in cases where the market does not follow our scenario.
Now let's dive into an actual chart. This is the daily chart of EUR/CAD. (A) marks the highest point where the first
corrective rebound wave began, creating a correction area. In this case, the basic pivot low had formed within the
previous impulse wave. (1) represents the experimental pivot low, which has become the valuable pivot low as the
price broke through the highest point where the rebound started. This valuable pivot low at (1) corresponds to the
second illustrated case above. Next, (B) indicates the highest point where the second rebound wave began. This
rebound created an experimental pivot low (2). Then, as the price broke through the highest point where the rebound
started and continued the upward trend, this experimental pivot low became the valuable pivot low. Moving on, (C)
is the highest point where the third rebound wave began. The lowest experimental pivot low (3) subsequently
became the valuable pivot low as the price broke through the highest point where the rebound started. At this point,
you'll notice that in an uptrend, all three experimental pivot lows became valuable pivot lows as the market
continued the upward trend, but we didn't find any experimental pivot high that turned into a valuable pivot high.
Furthermore, valuable pivot points inherit the characteristics of experimental pivot points. In this example, all three
valuable pivot lows exhibit weak momentum as they fail to form any candle entirely below the preceding low.
Keep in mind that valuable pivot lows during an uptrend and valuable pivot highs during a downtrend with a weak
momentum do not imply weak support or resistance zones around them. On the contrary, support and resistance
areas around valuable pivot points are often robust fortresses for traders to analyze, choose entry points, and manage
trades.
Therefore, when looking at any chart, you must check whether there are any valuable pivot highs or lows. If one or
more valuable pivot lows appear, there is a high probability that the trend is an uptrend. Conversely, if one or more
valuable pivot highs are present, there is a high probability that the market is in a downtrend. This is also a
fundamental basis for a profit-taking method that I have frequently employed in trades over the years, based on pivot
points. I will introduce this method to you in the subsequent part of the book.
Note: In an uptrend, most experimental pivot lows often evolve into valuable pivot lows as the price continues the
trend after a correction, while experimental pivot highs are usually challenging to become valuable pivot highs.
Conversely, in a downtrend, most experimental pivot highs tend to transform into valuable pivot highs as the price
resumes the trend after a correction, and experimental pivot lows are typically difficult to become valuable pivot
lows.
So, we've taken a closer look at the three types of pivot points, identifying their core characteristics in an uptrend or
downtrend. The characteristics of these pivot points will be crucial knowledge for us to identify trends and seek
trading opportunities within the trading system that I will present in Chapter 7. In the next section, we'll address
some common misconceptions beginners may have when starting to identify valuable pivot points and share tips on
precisely determining valuable pivot points within just three seconds.

Common misconceptions in determining valuable pivot points

Determining what is a valuable pivot point may seem straightforward at first, but in real trading, it can be more
complex. The reason some of you, especially those new to the market, hastily conclude a valuable pivot point while
it may not be the case often stems from incorrectly identifying the starting point of a corrective wave – the X line.
So, what is the X line that we need to grasp to quickly and accurately identify whether a market point is already a
valuable pivot point or not? In this section, I will guide you through a simple two-step rule that helps you swiftly
recognize a valuable pivot high/low in just three seconds.
First, let's look at two situations that may cause confusion with the illustrated examples below.
Case 1: The market forms an experimental pivot low, breaking through a basic pivot high.
Case 2: The market creates an experimental pivot low and breaks through a valuable pivot high.

Both of these cases can easily confuse some new traders, considering X1 and X2 as valuable pivot lows if they don't
observe the market closely. Let's take a look at the chart below, where I've added a line illustrating the price path
leading up to it.
In this illustration, we can easily recognize A1 and A2 as the starting points of the assumed corrective waves.
Clearly, determining the two valuable pivot lows at X1 and X2 hastily and inaccurately can lead to misidentifying
the market structure. Traders might fall into the trap of placing trust in an unclear area of strength, and the price
could form one or more additional pivot lows before truly approaching a strong demand zone and rising. So, what is
the threshold that the price needs to surpass to transform the experimental pivot low into a valuable pivot low in this
case? The answer lies in the illustration below.
To determine the highest point that the price needs to surpass to become a valuable pivot low, we need to do two
things:
Draw a horizontal line from the experimental pivot lows (X1 and X2) to the left. The first point where
the line touches the price belongs to the impulse wave within the structure of a previous uptrend.

Follow that impulse wave and go to the highest point (A1 and A2). That is where the corrective wave
begins to form the structure that the price needs to surpass to transform the lowest experimental pivot
low into a valuable pivot low.

Note: In the two hypothetical cases above, I applied it to an uptrend. For a downtrend, the application is based on
the same principle.
Let's refer to the chart below to better understand what I am referring to.
This is a daily Gold price chart. We can easily identify A as the lowest pivot low. If you hastily assume that X1 or
X2 is the level where the price needs to break through to transform A into a valuable pivot low without carefully
examining the chart, you would be mistaken.
The best way to determine the pivot point in this case is to look the chart at a bigger scale, observing the price action
more comprehensively and apply the two-step rule mentioned above to accurately determine where the market's
corrective wave begins that the price needs to surpass. Next, draw a horizontal line to the left to find the impulse
wave, and from there, trace it to the highest point where the corrective wave begins. As shown in Figure 5.24, it's
not X1 or X2 but X3 that represents the threshold for the price to surpass for A to become a valuable pivot low.
Moreover, the time for A to truly become a valuable pivot low is significantly longer than the time it takes to break
through the price levels of X1 and X2.
So, I've shared a simple yet effective method that I often use to identify valuable pivot highs/lows and determine
trends. In summary, based on pivot points, we have a more solid foundation for evaluating market trends, even
detecting early reversal signals. In an uptrend, the momentum expressed through experimental pivot highs is usually
stronger, the momentum expressed through experimental pivot lows is often weaker, and most experimental pivot
lows will become valuable pivot lows. Conversely, in a downtrend, the momentum expressed through experimental
pivot lows is often stronger, the momentum expressed through experimental pivot highs is often weaker, and most
experimental pivot highs will become valuable pivot highs. Additionally, when a pivot high/low no longer creates a
strong momentum by forming candlesticks entirely above/below the preceding pivot point (after a long way move),
that could be an initial sign of a weaken trend. In the next chapter, we'll explore common price traps in the market
and delve into a crucial element in high-probability trading based on a concept we learned at the beginning of the
book: the four levels of resistance strength.
 CHAPTER 6: THE STRENGTH OF THE ZONES
In this chapter, you'll encounter one of the crucial factors impacting the success of traders in the financial markets:
optimizing trade quality. I've touched on this in some of my other books. Simply put, optimization means that you
focus only on good trading opportunities in the market based on logical and systematic analysis. Of course, this may
result in fewer trades, but once you're in a trade, the chances of success with those trades will be higher compared to
many mediocre ones.
In this book, we've explored Gann waves and pivot points. Therefore, optimizing trading opportunities will also rely
on the characteristics of the pivot points we've learned, combined with market structure. Optimizing trading zones
helps us avoid weak price areas and concentrate on high-probability trade areas. To understand the significance of
what I just said, let's first delve into a price trap that can confuse traders, especially new ones.

Market price traps

In the financial markets, price traps refer to market situations that provide false signals, deceiving traders. For
instance, the market might give signals that prices will go down, only to reverse and move upward just as you've
placed sell orders. Alternatively, it may provide supportive signals for an upward trend, and as soon as you've placed
buy orders, it immediately reverses and moves downward. You've probably encountered many cases like these.
They are quite common in the financial markets. As for the forces behind these price traps, I don't delve into that.
For me, price traps are situations that distinguish experienced traders from inexperienced ones. While new traders
often fall into price traps and lose money, experienced traders know how to avoid them, even utilizing price traps to
profit from many losing traders.
In reality, listing all the price traps in the market is an impossible task because these traps are diverse and often
manifest in various forms. In this book, I'll share with you a common price trap that has caused many traders to incur
losses. This price trap consists of two price actions:
Price rapidly, strongly, or suddenly rushes to a significant resistance area.
Immediately, it faces rejection from the market.

Price Rushing to Resistance Area

The price rushing to a resistance area is crucial. It must demonstrate speed, strength, and suddenness. This price
behavior will impact the emotions of the crowd, especially inexperienced and psychologically weak traders. Most of
them will feel excited and hopeful that the surge to this resistance area signifies the market's resurgence, intending to
break through this resistance zone in its path. And as you know, emotions are a deadly factor in this market. So, how
does the price surge to reflect speed, strength, and suddenness?
While it's only relatively indicative, pay attention to some points that can tempt traders, including:
First: continuous candles of the same color,
Second: the appearance of an unusually long-bodied candle,
Third: the emergence of a trending candle, meaning a candle with a body larger than 50 percent of the
candle;
Finally, the appearance of an outside candle.

Let's go through an example to better understand what I've just explained.

In Figure 6.1, I've drawn waves according to the rules we've learned. Based on the highs and lows that the market
creates, we can easily recognize that the market is in an upward trend, forming resistance zones as illustrated. Please
be informed that the “resistance zone” I am mentioning in this chapter can be understood as the zone to resist price
retracement – even upward or downward one. Please don’t misunderstand it with traditional support or resistance.
Note: As learned in previous chapters, the resistance zone starts from the starting point to the end of the corrective
wave. In this case, for your convenience, I've only drawn the bottom part of the resistance zone. Technically, it's a
part of the resistance zone, not the entire resistance zone.
We have two cases where the price rushes to the resistance area, as shown in the example. In the first case, you will
notice a series of continuous candles of the same color, and two out of three main candles are trending candles,
meaning their bodies are larger than 50 percent of the preceding candle (in this case, the trending candle has a body
larger than 80% of the candle – indicating strong momentum). In the second case, there is also a series of continuous
candles of the same color, and one of them is a trending candle. These price behaviors are enticing enough to tempt
the crowd to follow them.

Immediately rejected by the Market

Next, let's move on to the second price behavior: being immediately rejected by the market. In this case, we want to
see signs indicating that the market is rejecting the price and how traders who chased the market are trapped. The
behavior of price rejection can be demonstrated through several signals. It could be the appearance of a pin bar
candle, an engulfing candlestick pattern, or a scenario where the price cannot close beyond that resistance area (or
closes and is immediately rejected).

Still with the example above, in both cases, the market shows a bullish engulfing bar right after the strong downward
retracement. These are candles with strong upward momentum, closing higher than the highest points of the last
bearish candles in both cases. This demonstrates the market's strong rejection of a bearish scenario at these
resistance areas. In these cases, traders who chased the previous price down will be trapped, and when they realize
it, they collectively cut losses, creating a block of buy orders in the opposite direction and contributing to pushing
the price upward. Some traders, after cutting losses, may also place additional buy orders. This will further
contribute to the reversal and strengthen the upward movement.
When applying the knowledge about the momentum that I shared in the previous chapter, the upward movement in
these resistance areas becomes easier to understand. In zone 1, although the market creates an experimental pivot
low, it does not produce a candle entirely below the preceding low. Things are even more challenging for the selling
side in zone 2, as sellers cannot push the price below the previous low, making it impossible to create an additional
experimental pivot low. As a result, the price surges strongly right there.
We move on to the second example. After plotting the waves, we identify a resistance area as shown in the figure.
Pay attention to the bearish candle whose body is bigger than that of all preceding candles. This unusually long-
bodied candle goes straight into the resistance area, tempting many emotionally driven traders to chase the market,
hoping this is a sign that the market will continue to fall. The next candle is a pin bar. It marks the beginning of the
market's rejection, followed by a strong bullish candle (trending candle). These two bullish candles can be seen as an
immediate rejection by the market of a bearish scenario. Afterward, the price rapidly surges upward. Under the Gann
wave’s angle, the experimental pivot low (A) created during this market retracement has weak momentum as it fails
to produce a candle entirely below the preceding low.
Let's delve into the third example. In Figure 6.4, we encounter a compelling illustration related to the concept of
smart money flow. The 15-minute GBP/USD chart exhibits a sideways trend after a substantial uptrend. Upon
plotting the waves, we identify a resistance zone as depicted on the chart (Zone 2). Take a look at the swift price
movement. It consists of three consecutive candles of the same color, comprising two trending candles and an
unusually long candle. Such strong downward force in these candles is highly tempting and induces many traders to
seek selling opportunities. However, while numerous traders rush to sell, attempting to drive the price below this
resistance zone, the next (bullish) trending candle immediately delivers a powerful blow to the intentions of these
sellers. Although not an engulfing candle, this candle carries robust momentum, rejecting over 70% of the
downward effort of the preceding unusually long-bodied candle. In just three candles from this rejection candle, the
market wipes out the downward pressure from the three previous bearish candles. Based on the Gann wave
knowledge that I have shared, we also recognize that the experimental pivot low X has indicated a weak bearish
momentum as no candle fully formed below the preceding low.
Furthermore, in this example, we come across a liquidity accumulation zone, as illustrated in the chart. The
institutional players adeptly navigated prices during the accumulation phase (liquidity) toward Zone 1. Using merely
three candles, they efficiently cleared the liquidity formed during the accumulation, steering the price back to the
robust second resistance zone (Zone 2). Upon reaching Zone 2, the price entices inexperienced traders to sell, and
then the institutional players swiftly clear the remaining liquidity in Zone 2 before initiating a price surge. I will
delve into liquidity in the subsequent chapter of the book. For now, it suffices for you to grasp the simple notion that
liquidity is a trap zone with the characteristic of enticing prey. Subsequently, the whales, through price action,
eliminate these prey, securing a market advantage, and propelling the price in their desired direction.
Thus, we have explored a common behavioral pattern that lures traders into market traps. Mastering this market
reading technique demands patient observation of charts. Hopefully, after completing this section, you will possess
the knowledge to avoid falling into market traps, and perhaps even leverage these traps to capitalize on profits from
other traders. Always remember that in this market, the experienced and vigilant emerge as winners. In the next
section, we will collectively delve into six resistance zones with four different strength levels.
Four strength levels of support/resistance

In this market, anything can happen, and no one can predict where prices will move next. All of us, including
professional traders, can only rely on speculation based on analysis and personal experience. One of the most crucial
aspects of trend following is identifying the resistance zones most likely to impede corrective waves. It's a reliable
area to outline trading scenarios, then patiently await price reactions and execute trades. However, the most
important thing is also the most challenging. When looking at a chart with numerous support and resistance levels,
it's difficult to discern which areas are strong and which are weak. Although not foolproof, based on what we've
learned about market structure, combined with pivot points, we at least have some foundation for evaluation. Below
are six scenarios with four different levels of resistance strength.

Scenario 1

This is an unsustainable uptrend structure. The correction zone for trade entry only forms a basic pivot point. We all
know that unsustainable uptrend structures are more prone to break than sustainable structures, and basic pivot lows
typically offer the weakest support levels among the three types. Therefore, the combination of an unsustainable
uptrend structure and a basic pivot low creates a trade entry correction zone that is relatively weak. Entering trades
within this correction zone carries a higher risk. The probability of successfully resisting these corrective waves is
not so high. Hence, we categorize them at level 1 - the weakest among the 4 strength levels.

Scenario 2
This is a sustainable uptrend structure with a correction zone for trade entry that forms a basic pivot low. Since the
trade entry zone only features a basic pivot low, it lacks significant strength, and it is challenging to expect this price
zone to effectively resist corrective waves with a high probability of success. This zone is often a target for market
liquidity hunting. Therefore, although it is stronger than case 1 as it appears within a sustainable structure, it still
falls under strength level 1.

Scenario 3
This is a sustainable uptrend structure with a correction zone for trade entry featuring a basic pivot low, and the
previous retracement zone has a valuable pivot low. However, since this valuable pivot low only appears in the
previous zone, this does not carry a strong impact as we aim at a valuable pivot low in the newly-formed correction
zone. In other words, the probability of successful price resistance within the new zone is not excessively high in
this case. Hence, the third case falls under the strength level 2.

Scenario 4
This is an unsustainable uptrend structure, but the correction zone for trade entry includes a valuable pivot low. This
case is stronger than case 3 because the correction zone has a new valuable pivot low. This correction zone falls
under strength level 3. Here's a small but useful experience I want to share with you: correction zones with valuable
pivot lows will increase the strength value for their zones. This means that when trading with entry points within this
correction zone, the probability of successfully resisting the price retracement will be higher.

Scenario 5
In this scenario, we have a sustainable uptrend structure. Even better, the correction zone for trade entry includes a
valuable pivot low, thereby increasing the strength of this entry zone. The combination of these two crucial factors
turns this trading scenario into an ideal one that I often seek in the market. This correction zone falls under the
highest strength level – strength level 4. However, there's still an even more ideal trading scenario – the last
scenario.

Scenario 6
This scenario is similar to the fifth scenario, but the previous correction zone also includes valuable pivot low(s).
Although not significantly different in strength, the combination of two consecutive correction zones like this
indicates that the market is growing very sustainably. Therefore, a trade entry zone following this trading scenario
carries the highest strength according to my analysis.
So, we've gone through 6 different scenarios of correction zones with 4 different strength levels. For zones with
strength level 1, it's best to stay away and not execute any trades. Trading in these zones can easily turn our trade
positions into liquidity for big hands to hunt. At strength level 2, in some situations, we can still execute trades if
there are good market entry opportunities, meaning multiple complementary entry signals. However, it will be more
suitable for experienced traders. From strength level 3, you can start looking for trading opportunities, at least
ensuring a more stable probability of resistance to rebounds compared to levels 1 and 2. Finally, I encourage new
traders to focus more on finding trading opportunities at level 4 because they have the highest stability.
Please note that the strength level evaluations in this chapter are based on comparing price rebound zones with each
other, so don't be under the illusion that trading in a level 4 price zone guarantees a 100% win. Level 4 only
indicates a trend that is stable and sustainable, yet based on this strength classification, you can eliminate many risks
compared to simply trading with normal support and resistance levels.
In the next section, we'll explore the tool that I find most suitable to combine with the pivot points we've learned: the
order block.
 CHAPTER 7: ORDER BLOCK, AND THE TRADE
SYSTEM

In the previous chapters, through Gann waves, determining pivot points as well as their frequency, we have been
able to grasp an overall picture of the market trend and the correlation of strength between the buying and selling
sides. Furthermore, we have been able to identify buying and selling zones to trade along with the trend. To be more
specific in identifying potential entry zones, we have learned about six different market structures with four strength
levels of a resistance zone and identified three resistance zones with two noteworthy strength levels. What we may
have been lacking until now is probably a systematic trading method with a logical and consistent analysis
foundation so that we can find a reasonable entry, stop loss, and take profit level. From there, we can turn the
information we gather from the market into trades that bring sustainable profits.
Based on my practical experience, knowledge of the order block is a perfect addition to the theory of Gann waves
and pivot points. Whether you are just learning or have traded with order blocks but have not been profitable,
experiencing stop-hunts, or being confused within the structure of time frames, this chapter will help you overcome
those challenges. Let's get started.

What is an order block?

As you already know, the term "order block" refers to the last bullish candle before a sharp decline or the last
bearish candle before a strong rally. Its price range is determined from the opening price to the farthest point before
the market undergoes a sudden change in supply and demand, reversing its direction. Because the order block
signifies a specific block of orders where a sudden change in supply occurs, there must be a gap between it and the
third candle (counting from the order block), which we call an imbalance (of supply and demand). If there is no
imbalance gap in between, indicating a lack of significant buying/selling pressure, this order block will not have
much significance in identifying crucial supply zones. Let’s take a look at Figure 7.1.
First, the uptrend. The reason for the appearance of the gap in the uptrend is that the demand is too strong. The
market lacks supply, so it consistently rises in price to find liquidity, meaning to find sellers. Inside the imbalance
zone, there is very little liquidity. It partly reflects the strength of the demand force, thus enhancing the value and
strength of the order block.
Conversely, the gap at the beginning of a downtrend indicates that the amount of supply selling off is too large. The
market lacks buyers, so it continuously lowers the price to find liquidity. The imbalance zone has little or no
liquidity at all. The down gap appears due to the strength of the selling force, thereby indicating the value and
strength of the order block in this area.

Discover the golden zones

Order blocks come in two forms: continuation order block and reversal order block. According to the supply and
demand theory, the reversal order block in an uptrend is the Drop - Base – Rally pattern, and the reversal order block
in a downtrend is the Rally - Base – Drop pattern. Similarly, in this theory, the continuation order block in an
uptrend is primarily the structure of Rally - Base – Rally pattern, while the continuation order block in a downtrend
is the structure of Drop - Base – Drop pattern. However, you don’t need to memorize this; you only need to
distinguish between the two main types that I’ve just mentioned. Among them, reversal order blocks are generally
stronger than continuation order blocks. If you've read my book "Supply and Demand Trading," you might be
familiar with these concepts about order blocks. However, the application of order blocks in this book is different
from how they are used in "Supply and Demand Trading." We'll gradually unlock their secrets.
To further evaluate the strength of an order block, you need to distinguish between three types of candles:
Trending candle: A trending candle has a body that is more than 50% of the candle's length (from the
lowest to the highest point). The perfect pattern of a trending candle is when the body is more than
80% of the candle. In other books, I often call this perfect pattern the marubozu candle.
Semi-trending candle: A semi-trending candle has a body oscillating from 20% to 50% of the candle's
length.
Non-trend candle: A non-trend candle has a body of less than 20% of the candle's length. A typical
representative of this type of candle is a Doji candle, with a very small body.

We rank their strength as illustrated in Figure 7.3. Note that this is a relative assessment based on the internal
strength of the order block itself. To trade effectively, we need to consider additional important factors such as
examining the context of the order block or market structure.
Now, let's dive into a real chart to practice identifying and evaluating the strength of order blocks.
In Figure 7.4, we are marking all appearing order blocks without focusing on market structure.
(A) represents a powerful reversal order block. It is a candlestick with a body approximately 80% of the entire
candle’s length. The market exhibits an imbalance zone following the emergence of this candlestick, indicating a
lack of liquidity at this peak. Due to significant supply and a shortage of buyers, the price decreases in search of
liquidity, meaning buyers. This is an effective order block as the price continues to react in this area and moves
downward afterward.
Next, (B) is a reversal order block with a body larger than 50% of the entire candle, although the length of candle B
is relatively modest compared to some surrounding candles. This order block failed to withstand the subsequent
selling pressure, marked by an unusually long-bodied candle.
Finally, (C) is an order block with average strength (semi-trending candlestick) with a body covering less than 50%
of the entire candle’s length. Nevertheless, this order block still proves to be a resilient resistance, holding the price
as it retraces before a candle with an unusually long body appears, pulling the market to retest the nearest
experimental pivot low.
As you can see, when identifying and plotting the order blocks on the chart, we will encounter alternating winning
and losing trades. Not every order block in the context of a trending candlestick, like order block B, will fulfill its
role effectively. Conversely, not every order block with average strength will fail to resist a price retracement. As
mentioned earlier, our exploration of order blocks is not to rigidly apply a formula to trade but rather to find entry
points after identifying the market structure and the balance of strength between buyers and sellers. Therefore, don't
overly concern yourself with whether the order block in this example successfully holds the price. I'm providing
these examples of order blocks in real scenarios to help you better visualize this concept.
In the next section, we will delve into determining which order blocks serve as the footprints of the whales and
which do not. Simultaneously, we will learn how to use market structure correctly to identify trading opportunities.

Three types of order block

When it comes to order blocks, many traders often consider them as the footprints of the whales. In reality, it's not
entirely accurate. In this section, we will explore three different types of order blocks, how they form, and the
trading opportunities associated with them.
There are three types of order blocks that you need to distinguish based on market behaviors:
Order block appearing during whale hunting – strength level: 3.
Natural order block, meaning the block appears due to the psychology and behavior of the crowd at
important supply and demand zones – strength level: 2.
Invalid order block: this is also an order block appearing due to crowd psychology. However, it has
almost no trading value – strength level: 1.

While whales’ order blocks provide you with the highest winning rate among the three types of order blocks, invalid
order blocks are the least valuable for trading. Unfortunately, this is also the type that beginners often mistakenly
perceive as a trading opportunity in the market. Trading with the third type of order block may help you win a few
times, but in the long run, it can erode your account, even affecting your psychology and trading skills.
Let's start discussing each type of order block, starting with the whales’ order blocks.

Whales’ order blocks

Before delving into order blocks created by whales, let's discuss the entities participating in the market. In the
financial market, the entities at the top with the most significant influence are financial institutions such as central
banks, and commercial banks ("big hands"). Through their strategies, these banks accumulate and execute trades on
a large scale, influencing the price movements of various assets, stocks, cryptocurrencies, and even currency pairs.
Next in the hierarchy of market participants with less impact on price movements are exchanges, trading companies,
investment funds, or major speculators. At the bottom of the chain are retail traders with accounts ranging from a
few thousand to several hundred thousand US dollars.
Fairly speaking, retail traders are not the sole target for liquidity in the market. The real prey of large banks are large
and small investment funds and major speculators. For “big hands” in the market, the liquidity provided by these
groups is worth hunting for. Conversely, some medium-sized players often find themselves trailed by smaller fish,
facing the risk of being chewed on for profits. Therefore, to rise to the top, they often have to dive down to push
retail traders out of the market. Ultimately, only a few experienced big fish can ride the wave and reap profits.
So, why do big hands have to hunt for liquidity and engage in stop hunts? We will explore this in the following
sections.

Stop loss hunting

Stop hunting (or stop-loss hunting) is a trading strategy employed by large traders, often referred to as "whales,"
"sharks," or "big hands," primarily in financial markets like stocks, forex, and cryptocurrencies. The tactic involves
these influential players identifying clusters of stop-loss orders concentrated around a particular price level.
Subsequently, they strategically push the market through these orders, compelling participants to exit their positions.
Once a successful stop hunt is executed, the whales initiate the closure of their positions, triggering a reversal in the
market trend. This strategy gains enhanced effectiveness for big hands when leverage is employed, amplifying the
impact of market trades. On the other hand, this can be particularly frustrating for retail traders who, having been
forced out of their positions, witness the market reversing and trending in the direction they had initially analyzed.
To better understand why the whales hunt stop-losses in the market, let's explore the following example.
In Figure 7.5, we have a drawn resistance zone. Let's assume the price has just returned to the previous high zone,
turning this resistance zone into a potential support zone to join the upward price structure. It's understandable that
many traders will plan to place a buy order here, with their stop-loss just below the support zone. The whales know
this, and if they plan to trade here, they won't let us join the boat with them. Why?
If the majority of the market controls the supply, the whales will have difficulty controlling risks and optimizing
profits. The group of early profit-taking traders can slow down the upward momentum, causing the price to rise for a
short while and then drop again. In this way, it will be challenging for the price to achieve higher targets in a short
period. In general, a failure to grasp the majority of supply will make the whales’ trades less favorable.
To simplify things, they will try to eliminate retail traders right from the start. By doing so, they will achieve an
important purpose: accumulating more inventory at a lower cost. Furthermore, whales also understand that to make
the price rise or fall, a large supply-demand imbalance must be created in the market. After a significant amount of
supply in the market has just been absorbed and reduced significantly, they only need to pump a reasonably large
demand into the market to achieve their goal. At this point, due to the shortage of supply, the market cannot find
sellers, and the price has to rise quickly to find liquidity. The rising price may attract some traders to jump in and
buy, causing the price to rise even more. If on the rising trend, there is no significant supply, the price will continue
to soar, and the whales will achieve their goal.
This is just a simple illustrative example. In reality, whales’ actions can be in more scenarios, and the traces are
more challenging to detect if you don't have much experience. However, through this example, you can grasp the
basic and most crucial characteristics of a whale's order block: it is a block formed during the whale's hunting
process. Below are some common hunting scenarios.
First, we have single tops and single bottoms. This type provides the least liquidity and is also the easiest to absorb
for smaller whales. They only need to push it slightly, turn around, and continue the trend.
Next is the pattern of double tops and double bottoms, also known as equal highs and equal lows. It provides more
liquidity than the single tops and single bottoms.

The next pattern in the list is multiple tops/bottoms. It forms an accumulation area that we also call a sideways or
congested price zone. The longer this accumulation area lasts, the greater the energy and liquidity it accumulates.
Whales also need more effort to absorb and control this area. This pattern is often observed in the price behavior of
banks, and big funds, with abundant financial resources. Once the price breaks out of this zone, it often moves far
and brings in significant profits.
The final liquidity pattern is called the uptrend/downtrend accumulation. For the accumulation in an uptrend,
liquidity is often concentrated more in the lower half. On the other hand, for accumulation in a downtrend, liquidity
tends to be concentrated more in the upper half. Similar to the sideways accumulation zone, these two accumulation
zones also contain a lot of liquidity and energy. After breaking out of these zones, the price often moves far and
brings in significant profits.
So, we have gone through several common stop-hunt scenarios by whales. Understanding this behavior helps us to
be well-prepared to avoid whale hunting, and even follow the whales safely and make profits in the market. In the
later part of the book, we will explore the art of combining Gann waves and the traces of whales’ order blocks for
profitable trading.

Natural order block

The next type of order block that I want to introduce is the natural order block. Unlike whales’ order blocks, the
natural order block forms without any signs of a liquidity hunt. It often appears in areas with strong resistance, such
as resistance zones, support zones, previous tops or bottoms, or a congested price zone. If these areas do not exhibit
the price-hunting behavior of whales, they can be considered the natural shifts in supply and demand formed by the
psychology and behavior of the crowd when the market reaches a significant price zone.

Invalid order block

The final type of order block that we explore is the invalid order block. It is the weakest type, offering minimal
trading value. It emerges from natural shifts in supply and demand or may be formed by the psychology and
behavior of the crowd. Most of these order blocks float in between levels and do not belong to a sufficiently strong
resistance area. They do not appear after the liquidity-hunting behavior of whales. Some of these order blocks even
go against the market structure. From my experience, they often occur at basic pivot points. They can also be formed
by changes in supply and demand in response to the reaction to a previous order block. Figure 7.11 illustrates a real
example of an invalid order block.
Figure 7.11 presents the EUR/USD chart in the 1-hour time frame. I have identified an order block that exhibits
characteristics of an invalid one. From my perspective, this order block lacks significant trading value. Firstly, it
constitutes a basic pivot high, contradicting the market's prevailing uptrend. Moreover, I do not identify any
additional factors that could contribute to this order block acting as resistance. It does not result from liquidity-
hunting behavior and does not pertain to any noteworthy area. Essentially, this order block represents a price
reaction as the market retraces and exploits the preceding order block. Given that the price zone associated with this
order block has already been exploited, it is probable that it will not serve as resistance again when the price
rebounds.
Thus, we have gained insights into distinguishing various order blocks in the market. Remember that while order
blocks created by whales boast the highest winning rate, this doesn't imply infallibility, and trading with them does
not guarantee 100% success. Additionally, exercise caution and steer clear of order blocks lacking trading value. In
the subsequent section, we will delve into areas you may be eager to explore: trading strategies with order blocks
and pivot points.

Trading strategy with order block

Now that we've explored various types of order blocks along with some whale hunting behaviors, our trading
strategy in this section closely ties to reading market sentiment to avoid falling prey to whales or stumbling into
invalid order blocks. While order blocks aren't the sole tools to combine with waves and pivot points analysis, they
serve as suitable instruments to leverage the messages the market is conveying to traders. Let's delve into the trading
steps that incorporate Gann waves and order blocks.
Below is the full strategy with some necessary explanations:

Market Analysis:

Conduct a comprehensive market scan to identify the prevailing market trend. In an uptrend, focus exclusively on
identifying buying opportunities, and in a downtrend, concentrate on finding selling opportunities.
Utilizing Gann Waves:

Employ Gann waves to interpret market structure and evaluate buying and selling dynamics within a given trend.
Identifying Significant Resistance Zones

After determining the trend and market structure, along with assessing buying and selling dynamics within that
trend, proceed to delineate potential entry zones. As emphasized in the previous chapter, our objective is to identify
an entry zone belonging to the strength level 3 or 4. This could ideally be a zone where the price has reacted and
failed multiple times before. Additionally, I recommend exploring zones of strong resistance where an order block is
yet to be exploited. This could be a footprint of whales’ activities or simply a natural order block. Our goal is to
identify a trading zone with significant potential to resist the retracement wave, allowing us to enter the trade (at the
end of the retracement wave) and follow the impulse wave.
Entry:

After identifying the entry zone, we analyze price action in this area and wait for signs of diminished momentum in
the corrective wave, such as the experimental pivot low failing to form a candlestick entirely below the preceding
low or the experimental pivot high failing to form a candlestick entirely above the preceding high. We will consider
initiating a trade with a buy-stop order just above the highest price of the candle forming the experimental pivot low
or a sell-stop order just below the lowest price of the candle forming the experimental pivot high. If the order is not
triggered, continue monitoring the market and seek alternative opportunities.
Stop loss: Just below the trading zone in case of an uptrend, or just above the trading zone in case of a
downtrend;
Take-profit 1: The next key zone;
Take-profit 2: When there is a basic pivot high in an uptrend or a basic pivot low in a downtrend;
Take-profit 3: Based on the newly created valuable pivot points (constantly updated).
Take-profit 4: Combine take-profit 2 (50%) và take-profit 3 (50%);

Now, let's delve into profit-taking considerations with a focus on the wave structure we've learned. It's crucial to
note that in financial markets, there can't be a fixed profit-taking formula. In reality, no two trades are alike, making
the choice of a profit-taking level flexible. Selecting the right moment to exit the market depends on various factors,
including our trading style and the level of discipline. Here's my analysis of the four profit-taking options mentioned
above.
First take-profit option: This option involves a key level closest to the current price and ensures a risk-
to-reward ratio of at least 3. This is a traditional profit-taking approach applicable to any trading
strategy. However, armed with the knowledge of market pivot points, we certainly aim for more to
maximize profits in the market. Our subsequent profit-taking targets are points where the strength of
the prevailing trend diminishes to varying extents, specifically as follows:

Second take-profit option: When the market forms a basic pivot point. As learned in the previous
sections, an uptrend is characterized by experimental pivot highs. Conversely, a downtrend is
characterized by experimental pivot lows. In cases where the market no longer forms experimental
pivot points but rather basic pivot points, it is the first sign of waning trend strength. Conservative
traders may consider exiting the trade to protect profits (if the reward/risk ratio is already greater than
3). Note that the market forming a basic pivot point does not definitively confirm a trend reversal. It
could be a brief market pause before resuming its trend forcefully. For a more robust confirmation of a
 potential price reversal, some traders may prioritize the third profit-taking method.

Third take-profit option: This profit-taking approach requires traders to be more patient. It involves
taking profits when the price forms a valuable pivot low in an uptrend or a valuable pivot high in a
downtrend. This is my favorite type of profit-taking and trade management. Let's use an uptrend as an
example. In an uptrend, a valuable pivot low serves as a crucial support level. In my observations,
prices don’t retrace below the valuable pivot low and then bounce back along the existing uptrend
quite often. Typically, once the price retraces and closes below the valuable pivot low, forming at least
a candle entirely below the previous low, the uptrend is likely nearing its end. For each sustained
market trend, whenever a valuable pivot low appears, we shift the stop-loss to that price level and
observe how the market reacts. This is also my favorite capital management technique, turning the
stop-loss into a take-profit point and efficiently leveraging market ups and downs. Note that the
principle is the same in a downtrend.

Fourth take-profit option: A more balanced option is that you combine the second and third profit-
taking methods. For example, in an uptrend, you may take 50% of your profits when the market forms
a basic pivot high and continuously move the stop-loss whenever the market creates a valuable pivot
low. The worst outcome of this method is the price rapidly returning to the initial stop-loss after
you’ve closed 50% of the trade in profits using the second profit-taking option. However, if the market
consistently produces higher valuable pivot lows, you can make more through market moves. The
profit-taking principles are similar in a downtrend, with a focus on valuable pivot highs instead of
valuable pivot lows.

Note: The stop order itself will protect us when the market does not move as anticipated. In that case, the order
simply remains untriggered, and we will seek other trading opportunities.
You may observe that the trading principle, especially the entry point, requires your skills in observing and
analyzing the market, rather than applying a rigid approach. This is the message I want to emphasize in this book:
proactively read the market to trade with the trend.
Is the trading strategy still a bit vague for you? I understand that you need specific examples to better grasp what I'm
conveying and to understand why the order block is an ideal combination with Gann waves to find an ideal entry
point at the end of a retracement wave. In the next chapter, I will share real examples of trading with Gann waves
and order blocks.
 CHAPTER 8: INTO THE REAL EXAMPLES

Trade example 1: Hunt with the whales

From my experience, there are two ways to trade with whales’ order blocks. The first method is to hunt stop-loss
orders alongside whales. After accumulating a significant amount of liquidity in the market, whales leave their
footprints in the form of an order block before a strong price increase/decrease. Our task is to exploit the footprints
for trading purposes.

This is the EUR/JPY chart, and I've utilized a 5-minute timeframe to analyze the market. Firstly, taking a broader
look, we observe that the price has broken through a significant resistance zone, forming an upward structure with
higher highs and higher lows. This resistance zone has now turned into a support area, which we anticipate may
hinder the price retracement before initiating a new upward trend. Now, let's return to the most recent market
developments. You need observational skills and the ability to interpret price action through each candle to
understand what the market is conveying. I find Gann's wave-drawing most suitable for this, as it relies on the
changing correlation between consecutive candles to draw waves.

The price has formed a basic pivot low at A as it is higher than the preceding low. Pivot low B is lower than pivot
low A, making it an experimental pivot low - a test of the support zone created by pivot low A. The test failed when
attempting to break significantly below pivot low A. The price then broke through the starting point of its
retracement to continue the upward wave, transforming the experimental pivot low B into a valuable pivot low. This
is currently an upward trend, and the appearance of this valuable pivot low further confirms it. Hence, we will only
seek buying opportunities as the price retraces.
As I've mentioned before, valuable pivot lows are the strongest levels of support and resistance among the three
types of pivot points. After pivot low B became a valuable pivot low, the price continued to rise, forming
experimental pivot highs and basic pivot lows.
As shown in Figure 8.3, after forming the experimental pivot high at C, the whales’ footprint appeared with a large
supply entering the market, clearing the previous liquidity zone. The price dropped significantly to D to find buyers.
As per the rules shared in previous sections, the experimental pivot low D indicates a sharp decrease in demand,
evident from the formation of several candles completely below the previous low. Therefore, I would refrain from
entering a buy order in this zone until the selling pressure weakens.
As shown in the figure above, the price bounced back and quickly returned to this support zone, creating an
experimental pivot low at E. Below is the analysis of my trading plan.
Firstly, this support zone had previously been a very strong resistance area with multiple price reactions. Next, the
market formed a valuable pivot low at B, providing the strongest support level among the three pivot points. If you
observe closely, the market is exhibiting a structure with the highest strength level (level 4 – sustainable structure
combined with a valuable pivot low in the entry zone). Thus, with these factors in mind, I expect a potential market
entry opportunity in this area. Subsequently, I will use a bit of a smart money perspective, where prices decrease to
absorb the liquidity of this accumulating bullish zone.
Upon closer observation, I discovered equal lows between B and D. Equal lows refer to the area where two or more
lows appear at the same level in the smart money method, signifying a region with significant market liquidity.
Some traders, upon seeing the price retracing to the low area at D, hastily placed buy orders, becoming liquidity for
big hands. Then, candle E cleared this liquidity area. The fact that candle E is a bullish candle with strong volume,
fully embracing the preceding bearish candle, could be the move of whales looking to push the price up from a
potential buying zone. Therefore, the bearish candle preceding candle E could be the order block that whales will
leave if the market rises from this point onward.
If, after this candle E, another up bar appears following the Gann wave-drawing rule, it will confirm an experimental
pivot low with weak selling volume, as no candle completely formed below the previous low. Therefore, I place a
pending buy order just a few pips above the highest price of candle E, and the stop-loss will be set just below candle
E. Essentially, two scenarios may occur after the appearance of candle E.
If, after candle E, another bearish candle appears, it is likely that selling volume is still present, and it may form a
candle entirely below the previous low, thereby increasing selling volume in this trading zone. In this case, my
pending buy order will not be triggered. I will cancel it and create a new trading plan. However, if the candle
following candle E is a bullish candle, it aligns with my plan and activates this pending buy order. In this scenario,
the second scenario has occurred, and the buyer has no difficulty pushing the price up after the appearance of candle
E.
Regarding the take-profit level, if you look a bit broader, as shown in Figure 8.3, you will see that the market has
just completed a retracement phase, and the price has cleared the liquidity on the way back to point E. Therefore, I
expect the price to have enough energy to break through the previous peak at C. This order has the potential to go
further, and I anticipate the price will reach the nearest key level. Figure 8.4 further reinforces my assessment. You
can easily achieve a winning trade of 7R-8R in this case.

Trade example 2: Find the past traits of whales

The second way to trade with the whale's order block is to find a footprint that the whale has left in the past. This
could be a potential entry zone in the future to consider for trading (after combining it with market liquidity factors
in that area). Let's go to the example below to better understand this method.
This is the chart of AUD/JPY in the 1-hour time frame. The market structure indicates an upward trend. This time,
pay attention to the right half of the chart. The price has formed an experimental pivot low Y' with a strong decrease
in volume due to the appearance of some candles entirely below the previous pivot low. Now, let's analyze to find an
entry point to participate in this upward trend. The X zone was previously a resistance area that turned into a support
area after a pullback. Upon closer examination of the downward price action towards the experimental pivot low Y,
there is a footprint of the whales’ liquidity hunting. Take a look at the three candles in the rectangular box. While the
price is in the accumulation zone, the three bearish candles quickly sweep down and immediately move up. This is a
sign of the whale’s liquidity hunting in the market before pushing it strongly in the direction of the existing trend. It
is the whales’ liquidity-pumping activity.
One noteworthy aspect of this trading scenario is that the Y low becomes a valuable pivot low after the whale's
efforts push the price through the starting point of the Y retracement wave. Thus, this entry zone gains significant
strength from a valuable pivot low. If we can look for a buying opportunity in this area, it ensures that we are trading
at a strong resistance area - with the highest level of strength (level 4).
As mentioned, the bearish momentum until the appearance of the Y' candle is quite strong, as the market forms an
experimental pivot low with some candles entirely below the previous pivot low. Now, we have to wait for the
weakening bearish momentum before proceeding. The Z candle has broken below the Y' low, approaching the order
block, which is the last bearish candle in the series of three candles during the whales’ liquidity-hunting process. If
the candle after the Z candle is an up candle, the market will officially create an experimental pivot low with
weakened bearish momentum as no candle fully forms below the Y' pivot low. Therefore, I placed a buy-stop order
a few pips above the highest price of the Z candle. Conversely, if the candle after the Z candle is a bearish candle,
the buy-stop order will not be activated. I just need to delete the order and observe the subsequent price actions to
consider another trading scenario.
The stop-loss is placed slightly below the Z candle. My preferred take-profit point is still the nearest key price level.
In the case that the market forms valuable pivot highs on the path to the expected take-profit point (near the key
level), I will not hesitate to move the stop-loss to these highs. In this scenario, after some initial up and down
volatilities, the market makes a strong move to the expected take-profit point.

Compared to a limit order, a stop order may have a smaller reward/risk ratio, but it brings in stable profits. On the
other hand, a limit order can potentially yield higher profits, but it also comes with higher risks and a lower win rate.
For new traders entering the market, I recommend practicing patience and waiting for price action confirmation
before entering a trade.

Trade example 3: Trading with a natural order block

In this example, we’ll review a trade with an order block due to the imbalance of supply and demand (natural order
block). In Figure 8.7, we have the CAD/JPY pair in the 1-hour timeframe. Now, let's take a look at how I analyzed
and entered the trade.
If you know which direction the market is supporting, you have a great chance of trading successfully. Looking at
the left half of the chart, we can see that the price has consistently created experimental pivot highs with strong
momentum, forming many candles entirely above the previous high. So, for me, the overall trend is upward.
Therefore, I will only look for buying opportunities. The crucial question is where and when to buy. Let's analyze
the price action further to find the answer. The chart below has been wave-drawn.
In this case, after breaking through the X zone, the price formed an experimental pivot high at A, creating many
candles entirely above the previous high. This indicates that the market is willing to trade at higher price levels. It's
worth mentioning that the X zone denied a lot of buying effort before, as evidenced by many candle wicks, as shown
in the figure.
After the attempt to push the price through the X zone, the market created another experimental pivot high at C
before retracing to test the X zone again, forming an experimental low at F. The X zone playing as a resistance area
before has now become a potential price support zone. Additionally, I also identified an order block as the last
bearish candle when forming the experimental pivot low at F. If the price returns to this support area, it's worth
looking for buying opportunities.
Continuing from F, the price continued to surge at G, but weak buying pressure prevented the price from rising
rapidly. Pay attention to the basic pivot low at H in the example. As learned, the basic pivot point brings the weakest
strength among the three types of pivot points in the wave theory. Since this low approached the X support zone,
many traders hastily entered orders here, pushing the price up to I before becoming liquidity in the market.
From (I), the market made another strong rebound to the X zone, sweeping through all the previous liquidity. This is
a fast rebound, with consecutive candles trending in the same color, indicating a reversal potential as we learned
before.
With these analyses, I believe that a buy order at this support zone is reasonable.
Next is the order placement. Similar to previous orders, I still use a buy-stop order for this example. The entry price
will be a few pips higher than the last bearish candle in the figure, with the stop-loss set just below this candle. The
profit-taking level will be the key zone based on past price action. As can be seen in Figure 8.9, the upward
momentum stopped right at the key zone.

With the order selection and approach like this, the principle of trade management is also the principle of profit-
taking, aiming to protect profits and to maximize the strength of the upward wave. Specifically, when a valuable
pivot low appears on the path that the price is taking, we will move the stop-loss just below that valuable pivot low
(similarly, for a downward wave, we will move the stop-loss just above that valuable pivot high). In this case,
although the price touched the stop loss that had been moved to the valuable pivot low, we still have a trade with an
R/R ratio of 7 (Figure 8.10). Quite impressive for a trading order, isn't it?
Trade management principle:
In a strong trend, every time the market forms a valuable pivot low in an uptrend or a valuable pivot high in a
downtrend, we move the stop-loss to that valuable pivot low/high to protect profits. As shown in Figure 8.10, when
the market forms the first valuable pivot low in this uptrend, our running trade has achieved about 3R profit. In a
strong and prolonged trend, the market can create higher valuable pivot lows, and we can continuously update the
stop-loss based on these lows. In this case, the market only created one valuable pivot low from the time I entered
the trade until the price reached the take-profit price.
Note that while the valuable pivot point is a valuable signal to determine the stop-loss and take-profit points, its
frequency of appearance is significantly less than that of the basic pivot point and experimental pivot point.
Therefore, I do not rely on this pivot point for ideal profit-taking. The market can entirely execute a strong reversal
without leaving any valuable pivot low near the ideal take-profit area.
Trade example 4: How I turned a loss into a profit
In this example, let's explore a case where I turned a loss into a profit through re-reading the market. Sometimes,
price movements are quite complex and even contrary to our initial analysis. Therefore, in these instances, to
effectively gauge the market, we may need to pause and carefully observe market signals through candlesticks. Let's
delve into the following example to further understand the point I am making.
This is the chart of the GBP/AUD pair in the 1-hour time frame. I've drawn waves according to Gann's wave-
drawing rules to help you better visualize the market structure. After a downtrend is depicted on the left half of the
chart, the market forms an uptrend structure with each subsequent high higher than the previous one and each
subsequent low higher than the previous one. Moreover, the latest high of the uptrend (D) has even surpassed the
starting point of the previous downtrend structure.
In this example, from A, the price breaks above the previous high and forms several candles entirely above the
previous high, creating peak B. Similarly, from C, the price also breaks above B and establishes a new experimental
pivot point at D, forming several candles entirely above the previous high. It indicates that the market is ready to
accept trading at higher price levels. So, at this point, I will look for a buying opportunity when the price retraces.
On the right half of the chart, the price has retraced to the nearest correction area (B-C area). As you can see, the
price has returned to the previous correction area and reacted. However, according to the rule of momentum
determination, you can see that when the price retraced to G, there were candles entirely below the previous low (E),
indicating a strong bearish momentum. Because it implies a strong selling force, I will not enter a trade until there is
a sign of weaken selling momentum. Let's continue analyzing.
Up to this point, a new low has been formed at I, showing us weak selling momentum as no candle entirely forms
below the previous low (G). Now, we can look for a buying opportunity because the selling momentum seems to be
weakened. Therefore, I will place a buy-stop order just a few pips above candle I, with the stop-loss set just below
candle I. Let's see how the next candles react.
After the order was triggered and the price moved up according to the anticipated scenario, the market quickly
reversed and hit my stop-loss. That's okay; the market is inherently unpredictable, and there's no method that can
consistently win. The most important thing I've learned is to understand what the market is telling me, and if
possible, refine your approach over time (even if it's just small adjustments) to optimize its effectiveness. As I
mentioned at the beginning of the book, this book guides you to read the market to accurately determine the message
the market is trying to convey to you, rather than rigidly applying a set of rules to enter and exit trades.
In cases like this, stay calm and carefully observe what the market is trying to communicate. Note that after the buy
order was triggered, the market couldn't form any candlestick entirely above the nearest high. It indicates the bulls
were losing momentum, and prices were reluctantly forming higher levels. Additionally, our entry point is in an
unsustainable correction zone. While we shouldn't entirely disregard unsustainable correction zones in trading,
sometimes its unsustainability could be a reason to reconsider whether to adjust our trading system.
In Figure 8.14, considering the current situation, prices have formed several candles significantly below and entirely
under the immediate previous low, indicating a strong bearish momentum. Simultaneously, prices have broken a
crucial key level of the uptrend. Thus, we have additional support for a downtrend. These signs indicate that buyers
have retreated, and sellers are regaining control of the market. We might need to pay more attention to sell signals
than buy signals at this point.
Usually, in cases without any special factors, I would wait for the appearance of a valuable pivot high before being
more certain that the uptrend has reversed into a downtrend. So, with this relatively strong bearish momentum, we
won't be seeking buy signals, nor will we be looking for sell orders. What should we do then? We will stand aside
and wait until clearer trading signals emerge.
Moving on to Figure 8.15, the market consistently forms experimental pivot highs, with the latest high seemingly
creating a weak momentum and suitable for a sell order. However, for me, this is not a reasonable entry point as it
hasn't reached a significant resistance area in the market. Let's overlook this signal, and continue observing the
market until it forms a valuable pivot high to consider entering a trade.
Finally, a valuable pivot high appeared, confirming a downtrend in the market. Now, we can confidently seek a
selling opportunity at a strong resistance level.
On the right half of the chart, note that the price has returned to retest the previous resistance area, forming an
experimental pivot high at K, with its peak higher than the immediate previous high (J). However, pay attention to
candle K. Upon reaching the resistance area, it retraces sharply, forming a bearish pin bar with a long wick. This
somewhat indicates strong selling pressure at this resistance level. Now, we can set a sell-stop order and see if this
level can hold the price. The entry point will be just below the lowest point of the current candle, and the stop-loss
point will be just above that candle. Similar to previous examples, an essential step in finding a take-profit point is to
look back into the past for key levels. In this example, the take-profit level will be the nearest key price level, and I
will always pay attention to whether any valuable pivot highs form along the price path for better trade management.
As shown in Figure 8.17, the price finally reached the expected take-profit zone.
Trade example 5, and the advice to the depth of my
heart
In this example, I'll delve deeper into a trading factor that you might have come across. The difference is that I'll
emphasize it based on an example of a past trade I executed to provide you with a more visual insight into the
message I want to convey.
This is the USD/CHF chart on the 1-hour time frame, and I've marked the entry point on the chart. Looking at the
bigger picture, we can see that the market has just experienced a retracement in a larger uptrend. So, why did I
decide to enter the trade as shown on the chart? Let's analyze it together.
After examining the chart, I noticed that peak C had broken through the previous peak (A) and formed a candle
completely above peak A. It indicates that the market is ready to trade at higher prices. Moreover, peak C also broke
through the starting point of the corrective wave which created an experimental pivot low (at B), turning B into a
valuable pivot low. When combining this valuable pivot low with the wave analysis just performed, I believe that
the next trend will be an uptrend.
From C, the price returned to test the resistance zone with a strong force but immediately faced rejection by an
engulfing candle. In this case, D is a basic pivot low, and we don't have any strong signals to enter a trade, even if
the price rebounds to a strong resistance zone.
After forming an experimental pivot high at E, the price continuously formed lower highs and lows. One thing to
note is that although the market consistently formed experimental pivot lows, the downward momentum is relatively
weak as H and J have not formed any candles completely below the preceding low. Therefore, when the price's
downward momentum reaches the resistance zone, I am quite confident in placing a buy order with an entry point
and stop-loss shown in Figure 8.18. Now, let's see how my trade turned out.
This is the chart 24 hours after I entered the trade. The stop order was activated, and the price rose nicely, but
everything unexpectedly took a turn for the worse, and an unusual pin bar with a long candle body swept the stop-
loss of the order. After that, the price continued to surge in the existing uptrend.
Do I dare say that I was confident in this trade?
The truth is, I am still confident.
The reason I want to showcase this losing trade for you is precisely the message I want to convey in this section.
One of the biggest secrets that helps me profit from the market is "stick to the system”. This is not a new piece of
advice for seasoned traders - the pros, but it's something that newbie traders often underestimate.
For this USD/CHF trade, I entered the market just a few hours before significant news related to the USD was
released. This means that all currency pairs related to the USD would experience significant volatility. If you've
been in this market long enough, you might have heard the perspective that news often serves to legitimize the price
path or the large-scale hunt by the big players. However, that's just one way to look at the event. The truth is, if you
ignore the news factor and trade during sensitive times, you are putting your orders at a risk that you cannot control.
How do you feel when your stop-loss gets hit right after entering a trade, only to see the market reverse and move in
the direction you analyzed? It can be quite frustrating, right? Such losing trades are not necessarily due to incorrectly
identifying the trend. There are moments when you analyze meticulously and logically, everything seems to align,
and you find a textbook-perfect entry point. Confidently, you shut down your computer, go out, and anticipate good
news from the market. Indeed, the price still moves in the predicted direction, but unfortunately, you don't see any
profit. You realize that you've been stop-hunted and start feeling bitter. After just a few instances like this, you
might begin to doubt your trading system. New traders are easily tempted to break their trading rules or change their
trading system after a series of losing trades. Large swings can pull you out of your trading system, making you
widen or even abandon your stop loss, enter trades without clear signals, succumb to FOMO, arbitrarily increase
trade volume, buy highs, sell lows, and, worse, fall into a cycle of seeking the holy grail.
You may have heard about Gann waves or order blocks as the holy grail in financial trading. While they are
powerful and effective tools for me in trading, I simply integrate them into my personal trading system to read
market signals, find entry and stop-loss points, and manage trades toward sustainable profitability. I don't see them
as a holy grail or something mystical that can multiply profits by 5 or 10 times in a short period. And because I view
them as just a part of my personal trading system, I accept that there are times when they don't work effectively. I
pay more attention to how I perceive the market (making necessary adjustments to the system) and control myself to
apply it more reasonably and effectively over time, aiming for long-term and sustainable profits.
I believe that professional traders worldwide focus on fundamental and foundational elements.
Returning to my trade, perhaps you understand why I remain confident in my system despite the loss. Stop hunts are
quite common in trading. Despite this losing trade, I still consider it a win because I have stuck to my system and
gained a better understanding of the market.
 WHAT IS NEXT?

So, we have now covered all important aspects of the trading strategy with Gann waves, pivot points, and order
blocks. As we wrap up this exhilarating financial trading journey, take a moment to reflect on the wealth of insights
at your fingertips. Together, we've uncovered the secrets to identifying ideal trading zones, crafting high-probability
trades, and decoding the intricate messages within Gann waves, pivot points, and order blocks. Let's linger on the
key elements that define this guide, each one a beacon lighting the path to trading mastery.

Trend Trading Never Gets Old-fashioned

From the inception of our exploration, the focus has been on discovering the ideal trading zones, those sweet spots
where the market's rhythm aligns with the melody of trends. This empowers you to navigate with precision,
seamlessly following the trend and optimizing your entry and exit points.

The High-Profit Landscape

In the pursuit of financial success, we've dived deep into the ideal market structure, uncovering the blueprint for
high-probability trades. The market, often seen as a complex puzzle, now reveals its patterns, offering you a
strategic advantage in identifying setups that tilt the odds in your favor.

Decoding the Symphony of the Markets

Gann waves and pivot points have been our compass, guiding us through the symphony of the markets. You now
possess the ability to interpret the messages intricately woven into market movements, providing you with a deep
understanding that transcends the surface ripples.

Unveiling Order Blocks and Narratives

Beyond the candles and charts, we've delved into the intriguing world of order blocks, where each type of block tells
a different story. Also, you have now been able to recognize traps, especially whale traps in the markets. Armed
with this knowledge, you won’t execute trades arbitrarily, but be selective in trade options to optimize their
effectiveness.

The Architecture of Success

A complete and systematic trading system has been meticulously crafted, integrating all the components we have
learned. This architecture is not a rigid structure but a flexible framework that adapts to the nuances of the market.
Your journey now encompasses a holistic approach, ensuring that no aspect of the trade is overlooked.

Practical Wisdom in Action

The principles and trade systems laid out in this guide aren't mere theoretical constructs. Real-world examples have
been presented, bridging the gap between theory and practice. Your understanding is not confined to abstract
concepts; it's rooted in tangible scenarios, offering you practical wisdom for your trading endeavors.
As you reach the final pages of this book, my sincere hope is that these insights resonate with you, not just as
theoretical knowledge but as tools for navigating the ever-shifting landscape of financial markets. The true benefits
lie not only in the trades you make today but in the foundation you've laid for a sustainable and prosperous trading
future.
In the spirit of shared learning, I would be grateful if you could consider leaving an honest review for this book.
Your feedback is a valuable contribution to the community of learners and traders, fostering an environment of
continuous growth and improvement. Click HERE to leave a review.
May your trading path be illuminated with clarity, guided by the principles and systems you've embraced. Here's to
your continued success in the ever-evolving world of financial trading!
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