How to Predict Where Price Will Go (Using Price Action Only)

Where is price going next? Up or down? In this video, I’ll show you how to predict where price is most likely heading using nothing but price action. No indicators, no lagging tools, just reading what buyers and sellers are actually doing inside the chart. And once you see it, you won’t be able to unsee it.

But first, quick test. Let’s see if you can already spot it. So, take a look at this chart, and I want you to tell me whether the price is going to go up or down. Take your best guess.

Now, here I made a little drawing for you to highlight the most important areas on the chart and also the areas where we see significant sellers. We see them here, and we see them here. We have a bearish Fair Value Gap, another bearish Fair Value Gap, the next one is here, and the next one is here. Those bearish Fair Value Gaps are telling us that sellers are dominating. They are in control, and the price is most likely going to go down.

There is one more thing here, and it is a weak rejection. It is here. This is a weak rejection, and it means that the price is slowly turning, but it is not able to do a quick reversal. Something like this would be a quick reversal. It is weak. Buyers are weak. So all this is telling us that buyers are weak, sellers are strong, and that is why the price went downwards.

Okay, now there is a little bit more going on in this chart. I just didn’t want to overwhelm you, but we’ll get to it later in this video.

Okay, now my second question is: will the price go up from here, or will it drop? Up or down? Again, I made a little drawing for you here. And as you can see, we have another Fair Value Gap here that is telling us that sellers are dominating. We also have a strong rejection of higher prices here, telling us about the strength of sellers. And another strong rejection is this one. So those things are telling us that sellers are dominating this chart, and that is why the price drops.

Now, in this whole video, we’ll be dealing with four major formations that will tell us who is in control, whether buyers or sellers. I put them all here on this screen. It is a strong rejection, weak rejection, Fair Value Gap, and stop-loss clusters. And now what I’d like to do is cover them one by one in more detail.

Let’s start with strong rejection. What you see on this chart is a strong rejection of higher prices, and it is a sign of aggressive sellers. We see that aggressive buyers were pushing the price upwards, but then the price suddenly turned. And that is important, the sudden turn. That is what makes the rejection strong. Sellers took control, completely overwhelmed the buyers, and pushed the price downwards. This is a strong rejection of higher prices, and it points to strong sellers.

If, on the other hand, we had something like this, then this would be a rejection of lower prices, a strong rejection of lower prices, and it would tell us that buyers are in control. So it would point us to strong buyers. But because in this chart there is that rejection of higher prices, a strong rejection of higher prices, the price continues to drop downwards. Okay, so strong rejection is a sign of strong players.

Now, rejection doesn’t need to be strong. It can also be weak. If it is weak, then it looks like this. As you can see, the price was slowly turning. It didn’t really make that sharp rejection, only a slow turn. And this is something that is called weak rejection. It is a sign of weakness. So in this example, this means that we are looking at a place where buyers were weak, and because buyers were weak, the price is likely to go down.

If you take a look at this chart, there are also a couple of strong rejections. There is this strong rejection. There is also this strong rejection. So on this chart, we have two places with strong sellers. On the other hand, we have a sign of weak buyers here. So everything is telling me that the price should drop. Strong sellers versus weak buyers.

Okay, this is what you should always do. Compare the strength of the buyers and sellers. For example, like this, using strong rejections and weak rejections.

Now, another thing that I’d like to cover is the Fair Value Gap. Fair Value Gap is essentially from Smart Money Concepts, and people who are trading Smart Money Concepts usually use it a little bit differently, for example, like a support or resistance zone or for a directional bias. In this case, we’ll use it to measure the strength of buyers or sellers.

When you see a bullish Fair Value Gap like this one or this one, then it is a sign of strong buyers. Strong and aggressive buyers were dominating the chart here. They were also dominating this little part of the chart here.

If you see a chart where there are bullish Fair Value Gaps and no bearish Fair Value Gaps, then the comparison is easy, isn’t it? Strong buyers, and we don’t really see any strength of sellers. Like on this chart, we only have bullish Fair Value Gaps, at least significant bullish Fair Value Gaps, and no significant bearish Fair Value Gaps. So for this reason, after the breakout of this rotation, the price goes up. That is because we had those two signs of aggressive buyers inside that rotation. Always compare the signs of aggressive buyers versus signs of aggressive sellers. And here it was easy. Only two signs of aggressive buyers, no signs of aggressive sellers. So the price went up.

Now, the last formation that I’d like to talk about is the stop-loss clusters. Traders like to place their stop-loss orders below swing points. And it can be even small swing points, like for example this one, this one, or this one, or those swing points: this one, this one, this one, or this one. And if you draw lines from those little swing points, it will show you where there is probably a lot of liquidity, or in other words, where there are probably a lot of stop-loss orders.

If those lines form clusters like this one or like this one, they are called stop-loss clusters, and they represent places with high liquidity, which the market likes to test. So if you see something like this, then it will tell you that the price will probably test the first stop-loss cluster and then the second stop-loss cluster, simply to take out the stop-loss orders.

That move that takes out the stop-loss cluster is usually swift because stop-loss orders are market orders, and that is why it is that quick. So when you see something like this, then it is a reason why you should anticipate the price to drop to take out the stop-loss cluster.

Now, a nice addition to this is when first there is something like this strong rejection of higher prices. That is telling you that sellers were in control here. And below that, if you see those stop-loss clusters, then it is almost guaranteed that the price will continue to drop, taking out those stop-loss clusters.

Now, what I usually do for our students, for example, in our live trading sessions, is that I draw those lines manually on the chart so they can see where the stop-loss clusters are. When I trade, then I don’t need to do those drawings anymore because I’ve been trading like this for years. So I kind of see those even without drawing them on the chart. But I recommend you guys start with drawing them on the chart so you can see the stop-loss clusters better.

So far, we’ve covered all those four main formations: strong rejection, weak rejection, Fair Value Gap, and stop-loss clusters. We’ve covered them one by one, but in a real chart, they are mixed, and we as traders need to be able to read the chart and tell who is in control, buyers or sellers. Compare the strength of buyers and sellers. All right, so let’s do that.

On this chart, I highlighted all the important things for you here. At this place, we have a weak rejection of lower prices followed by a couple of stop-loss clusters. Those stop-loss orders are here. Then we have another weak rejection and again a stop-loss cluster. This is followed by a strong rejection of higher prices. And because all those are signs that sellers are in control and buyers are rather weak, the price eventually drops.

Because weak rejection is a sign of weak buyers, that is essentially a signal to go short. Stop-loss cluster like this. Again, another weak rejection here, followed by stop-loss clusters. All those are signs that sellers are in control or that they will be in control. And then there is a strong rejection of higher prices. Again, this is a signal for you that the price is likely to go down. So that is why this happened. You always want to compare the strength of buyers versus sellers.

Now, here is another example. We have a strong rejection of higher prices here, then a bearish Fair Value Gap, another bearish Fair Value Gap, then there is a weak rejection telling us about weak buyers. Then there is a stop-loss cluster, which the price is likely to test. Then there is a Fair Value Gap, a bearish Fair Value Gap, and a weak rejection. All this is telling me that sellers are in control and that the price should drop, like it did here.

Now, one last example. What we have here are a couple of bullish Fair Value Gaps. This one, this one, this one, this one, and this one. All those are signs that aggressive buyers are in control. We also have two strong rejections, again signs of strong buyers. And one sign of strong sellers here. That is this strong rejection. And you have to look at the chart and compare who is in control. Who is dominating? Is it buyers or sellers? Do we have more signs of strong buyers or more signs of strong sellers? In this case, it is rather simple. We have more signs of aggressive and strong buyers, and that is why the price goes up.

So now you’ve learned a new skill: how to tell where the price is likely to go next. Now, this doesn’t really tell you where to enter your trade, where to place your stop, where to place your take profit, or how to manage your trade. If you want to learn this, you can visit my website and learn my whole trading strategy from A to Z. My website is trader-dale.com, and if you click this button saying “Trading Course and Tools” it will bring you to this page. Here you can browse my trading education and custom-made trading tools.

All right, now at this point, I’d like to show you how much you’ve learned today in this video, and I’d like you to test your new skill set. So take a look at this chart and tell me: is the price heading up, or will it drop?

Here, I made a little drawing for you to make it easier. Here we have a bearish Fair Value Gap, a sign of sellers. Then there is a strong rejection of higher prices, again a sign of sellers. Fair Value Gap, bearish Fair Value Gap, sign of sellers. Another one here. Strong rejection of higher prices. This is saying that sellers are dominating. Bearish Fair Value Gap and bullish Fair Value Gap. So who is dominating the market? Is it buyers or sellers? Yeah, it is sellers, and that is why the price dropped.

Now, one more question, and the question is the same. Will the price go up, or will the price go down? Again, I made a little drawing for you to compare the strength of buyers and sellers. Starting with a bearish Fair Value Gap, which is a sign of sellers. Then there is that strong rejection, which is a sign of sellers. Fair Value Gap, sign of sellers. Oh, and here is a bullish Fair Value Gap, a little sign of buyers. And another one is here. Then there is a bearish Fair Value Gap, a sign of sellers, and a couple of bearish Fair Value Gaps here. All those are signs of sellers. So now we have to compare buyers versus sellers. It is very clear, isn’t it? And as a reaction to that, the price continues to drop.

So, congratulations on acquiring a new skill set. I hope you guys enjoyed the video. I hope you found it useful. Now, the best thing to do is just practice. Open a chart and practice. If you have any questions, shoot them my way to my email address, which I’ll put below, and I’ll be looking forward to seeing you next time. Until then, happy trading.