Framework

Price Action Model Framework

The Price Action Model is designed to provide a structured, mechanical approach to trading by leveraging high-probability setups. This section will guide you through exactly how the indicator works and the step-by-step process to frame and execute your trades.

How the Indicator Works

The indicator uses a strict sequence of events to validate a setup:

1. Pivots & Market Structure: It continuously calculates pivot highs and lows over a specific lookback period to establish the current market structure.
2. Liquidity Pools: Each significant pivot high or low represents a pool of liquidity. The indicator tracks these levels.
3. The Sweep: It waits for the price to breach one of these liquidity pools, capturing a stop-run or "sweep."
4. The Shift (CHoCH): After a sweep, the indicator waits for a Change of Character in the opposite direction. If a buy-side sweep occurs, it looks for a bearish CHoCH. If a sell-side sweep occurs, it looks for a bullish CHoCH.
5. Model Confirmation: Once the CHoCH is confirmed, the model is officially formed. The indicator then projects dynamic take-profit targets and initiates an ATR-based trailing stop.

Step-by-Step Usage

1. Establish Context & Bias

Before looking for an entry, you must understand the broader market context.

• Use the MTF Dashboard: Check the dashboard to ensure your higher timeframes (e.g., 1H, 4H, 1D) are aligned in the direction of your intended trade.
• HTF Confluence: Look for setups that form around Higher Timeframe Fair Value Gaps (FVGs) or significant HTF support/resistance levels.

2. Wait for the Liquidity Grab (S-Area)

Patience is key. The indicator filters out low-probability trades by requiring a liquidity grab first.

• Bullish Setup: Wait for price to drop below a previous pivot low, grabbing sell-side liquidity. The indicator will highlight this sweep area (S-Area).
• Bearish Setup: Wait for price to rise above a previous pivot high, grabbing buy-side liquidity.

3. Identify the Change of Character (CHoCH)

The sweep alone is not an entry signal; it is just the setup. You need confirmation that the trend is reversing.

• After the liquidity grab, watch for a CHoCH. The indicator will automatically draw the CHoCH line and label it when the market structure shifts in the intended direction.
• This is your confirmation to enter the trade.

4. Execution & Risk Management

Once the model is confirmed, it's time to execute.

• Entry: You can enter at market immediately after the CHoCH confirmation, or look for a pullback into a lower timeframe FVG or Order Block within the new leg.
• Stop Loss: Initial stop loss should be placed safely below the low of the sweep (for bullish) or above the high of the sweep (for bearish).
• Trailing Stop: Once the trade moves in your favor, utilize the indicator's dynamic ATR Trailing Stop band to manage risk. Move your stop loss along the band as price trends.

5. Take Profit Targets

The indicator generates automated TP levels based on market volatility (ATR).

• Scale out of your position as price hits each dynamic Take Profit target.
• Allow a small runner to remain open, managed entirely by the trailing stop, to capture outsized trend continuations.

Best Practices

• Don't force trades: Only enter when the 15m and 1H agree with the 4H direction. If they don’t align, sit on your hands.
• Avoid Choppiness: In ranging markets, liquidity grabs can happen frequently without leading to a sustained trend. Always filter trades through the HTF Dashboard.