Recall, on a risk-to-reward standpoint, your logical stop loss has to go way below the Moving Average.
So, I prefer for the price to go to an area of value towards the Moving Average.
This means that I could have a tight stop loss.
Another example is USD/JPY:
As I've said, the Moving Average is just one way to define the area of value.
When the trade is choppy, a Moving Average won't really cut it, so this is where the trendline
might help as shown in the example.
In this case, we have an upward trend line that has been tested 4 times, which also serves as an area of value…
If you were to go long, your stop loss could be somewhere here…
Again, from a risk-to-reward standpoint, buying close to the area of value is usually one of
the better ways to be entering your trade.
Another price action trading hack than I want to share with you is a term I call the first pullback.