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FTR

1.Introduction
Beforesolvingthepuzzleofpriceactionandbeforebeingabletoreaditsuccessfully,onemustdiscoverand
understandtheindividualpiecesthepuzzleismadeof.Afterall,everyeyecatchingbuildingismadeofindividual
bricksandstones.FormostofusatRTM,thebeautyofpriceactionisjustasstunningastructureasthecathedral
ofChartresorSagradaFamiliainBarcelona.Theonlydifferenceisthatbricksandstonesofrealbuildingsare
representedbypricecaps,FTRs,engulfs,fakeouts,quasimodos,diamondsetc.Ofthebuildingblocksoftheprice
structurenothingismoreimportantthanengulfsandFTRs!
InmyarticleIamgoingtoexplainoneofthetwomostimportantpiecesofpriceactionFTR.Togetherwewill
explorewhatislookslike,whereitcanbefoundandwhatisitsroleinthestructureofpriceaction.
FTRmustbelearnedproperlybeforeonecanadvancefurther.Pleasetakeyourtime,dontrushlearningprice
actionisanamazingjourney,soenjoyit.
2.WhatisFTR?
So,whatactuallyisFTR?FTRmeansFailuretoReturn.ButwaitWhowantstoreturn?Wheredotheywantto
return?Andwhyonearthdotheyfail?
Thesethreeimportantquestionsmustbeanswered,soletsdoit.
Itsawellknownfactthatprice,onceitreachesacertainbarrier,eitherbouncesofitorbreaksit.Onceitbreaksit,
twopossiblescenariosoccur:iteitherreturnsbackbelow/abovethebarrierandgoesoninthedirectionagainstthe
breakorfailstoreturnandkeepsgoinginthedirectionofthebreak.Inthelatterscenario,aFTRismade.ALWAYS!
Anditisofvitalimportancetobeabletoidentifyit!
Why?Well,thereissuchastrongbuyingorsellingpressureakasupply/demandattheFTRthatthepricejust
cannotreturn,itmustgooninthedirectionofthebreak.
Hint1:theselling/buyingpressurealwaysremainsatFTRafterpricehasleft.Canyouseetheimplication?J
NowletstakealookattheanatomyofFTRs.
InthefollowingpictureyoucanseeadiagramshowingsomebasicvariationsofFTRs.Lookatthemcarefully,you
willseethattheymaylookabitdifferentbutremember:theyareabsolutelythesameintermsofthestructure.

Theredline(a)representsabarrier.ItcanbeaSUPPORT/RESISTANCE,aFTRinoppositedirection(willbe
explainedlater)orlimitofaPAZ(PriceActionZone).
Priceactionbreaksthebarrier(1)andretraces(2).Itisirrelevantwhetherpriceactioncrossesthebarrieragainor
not(asinexamples(iiandivabove).Attheextremeoftheretraceabaseisveryoftenmade(b).
Then,priceactioncontinuesinthedirectionofthebreak(3).FTRisconfirmedafterpriceactionbreaksthehigh/
low(c)whichformedafterthebreakofthebarrier.Onlyafterthebreakof(c)wecansaythatpriceactionindeed
failedtoreturn.
Now,whentheFTRisconfirmed,wedrawarectangleatthebase(b)andprotractittotheright.
Hint2:forinformationhowtodrawthebluerectanglesseethearticleCapsonPriceatRTMMarketpedia.
Nowthatwehavestudiedthediagramsabove,wecanlookatreallifeexamplesofFTRs.

3.FTRafterthebreakofSUPPORT/RESISTANCE
FTRsafterthebreakofsupport/resistanceareverycommon.Theyaresimplyeverywhereinthechartandyouwill
learntospotthem.
YoucertainlyknowthattherearemajorsupportresistancelinesaswellasminoronesthemoreimportanttheS/R
lineis,themoresignificancewemustassigntotheFTRthatfollows.

MajorS/Rline
Ok,letsstartwiththemajorones.IassumethatyoualreadyknowhowtodistinguishamajorSRfromminorSR...
InthefollowingchartyoucanseethebrownRESISTANCEline.TheRESISTANCEisamajorone,ithasbeen
respectedmanytimesinthepast(notjustthosetwotouchesseeninthepicture).Suddenly,theRlineisbroken.Is
itjustafakeoutorgenuinebreak?Howwillweknowit?Yes,right!WewillwaitforaFTRtobeformed.
Andvoila,aspectacularFTRismade!ThepricethenrushesawayfromtheRline.Nowitsgoingtobeinteresting!

SuchFTRisanamazingplacetotradeonthefirstvisit.Thefirstvisitoccurredinapproximatelyoneweek.Andlook
atthereaction!ThefirstvisittoanFTRiscalledFTB(FirstTimeBack).

Hint3:UponreturntotheFTRthepriceisfallinginafreefall,everyoneishappilyjumpingintotrendbecauseits
goingtogoonandonbutbeware,predatorsarepatientlywaitinginFTRlevel,andsoshouldyou!
Foryourconvenience,therearetwomoreexamples:

NowopenyourtradingplatformorForexTesterandseeforyourselfhowoftenthisworks!
MinorS/Rline
ItsimportanttoknowthattheFTRsintheabovethreechartsareactuallynottheonlyFTRsthatcanbespotted.
Farfromit!Everytimepricebreaksaminorsupport/resistance,failstoreturnandgoeson,anewFTRismade!

Inreallife,however,thechartseldomlookssoneatandcleanasintheabovediagram.Inthefollowingchartyou
canseetheaboveprincipleinarealchart(inadowntrend).

Pleasetakeyourtimeandstudytheabovechart,youmaynoticethatIhaventmarkedabsolutelyALLFTRs
becausethechartwouldbeverymessy.
OpenachartinyourplatformandmarkallFTRs.Practise!Markaswinghigh/low,findwhereitwasengulfed,then
findtheFTR.Repeatwithnexthigh/low.
Remember,thepurposeofthearticleisnottotellyouthateachandeveryFTRistradablebuttoteachyouhowto
spotFTRsandhowtomarkthem.Letmerepeat:itisofparamountimportance!

4.FTRafterthebreakofaFTRinoppositedirection
FTRsareformedafterengulfingofabarrier.Wealreadyknowthis.OneofsuchbarriersisanFTRinopposite
direction.Lookatthediagrambelow,Ithinkitisselfexplanatory.
FTRdisengulfedandFTR1ismade,andsoon.

Andareallifeexample.

Hint4:FTR1isagreatconfirmationofareversal.Formoreinformationonthisseemyjournalstartingwithpost
304onpage13(sweetFTRs).

5.FTRafterthebreakofaPAZlimit

ThelimitofaPAZisanotherbarrier,thebreakofwhichresultsinextremelyimportantFTRs!Thisis,however,rather
advancedanditgoesbeyondthescopeofthisarticleontheFTRbasics.

6.Conclusion
InmyarticleItriedtointroduceaveryimportantbuildingblockofpricestructureFTR.WehavelearnedthatFTRs
areformedafterthebreakofapricebarrier.ItisimportanttorealisethatFTRsareplaceswhereinstitutionaltraders
open/closetheirpositions.Thismakesthemidealplacesforlookingfortradesetupsortargets.
However,itmustbestressedthatFTRsontheirownarenotenoughfortrading,onemustmasterotherimportant
buildingblocks,engulfingbeingthemostimportantone.