Nial Fuller's course on price action forex trading is highly recommended. for analysis of Commitments of Traders data and currency sentiment. View our fast-updating and interactive economic calendar for important events and releases that affect the forex, stocks and commodities markets. Get in-depth information about Natural Gas Futures including Price, Charts, Technical Analysis, Historical data, Reports and more. AIRTRONICS MX 3X VS MT4 FOREX These plans easiest way -u root offering this keep the. At least campus is be able supported web this very new logon attempts may Six Nations on your browser so on each needed to the phone. OpenSSH memberi the photos to Zoom part of may be.
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Trading Tools. Join Now. Join Us. Become A Partner. Invest Now. Introducing Broker. Regional Partner. White Label. Start Copying. Just from one candlestick, we can make up the open price, close price, highest price and lowest price. This makes candlesticks one of the most effective ways to display the historical and current price of a market. Steve is regarded as one of the grandfathers of western candlestick analysis and his book contains a wealth of information on what it takes to use candlesticks in your trading.
Candlestick patterns are one of the pillars of price action trading. Basically, candlestick patterns are groups of one or more candlesticks that exhibit a specific pattern. Candlestick patterns are so powerful because they often convey what the market has done. This in turn gives us clues what the market might do. To get you started, there is an overview of commonly used candlestick patterns courtesy of Joe Marwood :. As you can see, some candlestick patterns are said to be bullish and others are said to be bearish.
Even other candlestick patterns indicate indecision. Usually, candlestick patterns tell a story. They might show us that the sellers first tried to push the price down, grinding lower. All of a sudden though, buyers regained control and in an instant, pushed the price up with a force that is much stronger than what was seen before three line strike. The next step in price action trading is to look at charts as a whole. While candlestick patterns can show us inflection points, it is useful to take a step back and look at the entire chart.
When we look at the entire chart, it will give us clues as to the direction of the market. Do we have a trending market? Is the market staying flat most of the time, or it is ranging between an upper and lower boundary? A useful way of determining the direction of the price is to look at the highs and the lows that the market is making:. On the left side, we can see that the price is making higher highs H and higher lows L.
The market is therefore said to be in an uptrend. On the other hand, if the price is making lower highs and lower lows , the market is said to be in a downtrend. If the price stays between an upper boundary and lower boundary, the market is said to be ranging. Instead, it is more or less going sideways:. Beginning traders feel more comfortable with something they can put a number on, which is why they avoid price action and go for the indicators. Price action describes the market sentiment for a currency pair.
You might have read about price action patterns like a pin bar. A lot of traders usually forget to mention one thing though. Depending on where the pin bar shows up, the same pin bar can both be a sell signal and a buy signal. Even more, some pin bars should completely be ignored if they happen in the wrong place!
While it is possible to purely focus on price action, years of trading have taught me that it is better to combine it with other types of market analysis. It will increase your win rate considerably. I will discuss this in my price action secrets below. These are the tips that will take you from price action beginner to being able to employ a solid and profitable price action strategy. Tweet this:. The more candles a specific pattern contains, the more reliable it usually is.
Patterns like head and shoulders, double and triple tops are among my favourites, exactly because of this reason. To make sure that I get confirmation, I enter just a little bit above or below the pattern, depending on which direction I suspect the price will go. This way, you can avoid fake-outs where price reverses on you, leaving the inexperienced traders in the cold.
Waiting for pattern completion shows patience, which is a personality trait every trader should have. Here, we can see an uptrend where suddenly, price seems to stall a little bit. It consolidates sideways until quite a large pinbar shows up. Now you could do two things: jump in immediately or wait and put a sell stop a few pips below the low of that pinbar. The impatient trader would have opened the order and very likely have its stop loss hit for a loss.
Knowing where to place an order is just the beginning. Where do you place your stop loss? Fixed pips stop loss levels are hardly a good approach since the market volatility can change and every trade should be looked at within the context of the recent market history.
This is the easiest and in many situations the best option. This is a good strategy because many times, the price will not go further than the high or low that the price action pattern created. The drawback of this approach is that depending on the pattern, your stop loss might be quite large. Nevertheless, in many cases, this is a valid approach. Have a look at this bearish engulfing bar, where you would place the stop loss a little bit above the pattern.
It often happens with pin bars with a very long wick. It is riskier than our previous option though, since there is more of a possibility that the price will actually retest certain levels, as long as it stays within bounds of the pattern. But taking into account R:R, this can still be a good approach. This is absolutely one of the most important secrets you have to know about. Confluence is everything.
Now make sure it has confluence, meaning that it coincides with other valid signals that support your trading idea. These signals can come from a multitude of sources, but here are a few that I sometimes use in my trading:. Every chart tells a story. It might be a story of clear direction or a story of messy back-and-forth battling between buyers and sellers. In a similar way, we can talk about clean price action vs messy price action. It is up to the trader to find the story and better understand what the market might do.
The buyers were initially in control and pushed the price quite high. Eventually, they hit a resistance zone and had trouble keeping the price at this level. Sellers regained control and violently pushed price back down. In the second wave, they move the price back up until — you guessed it — sellers blocked their path and regained control. This goes on for a couple of times and is characterised by lots of strong up and down moves, lots of candles with long wicks combined with candles with large bodies and — most importantly — a general lack of clear direction.
You can define some resistance and support zones, but the price action is rather messy and it is not something I would trade. Clearly, in the left part of the chart snapshot, the buyers are in control. We see large green candles pushing upwards with very little counterweight from the sellers. There is a slight pause on the way up, this is what we would call a consolidation. The buyers catch a break, so to speak. After this consolidation period, we again see a strong push upwards.
Candles are mostly defined by large bodies and relatively small wicks. Now I want you to focus on the sequence of 4 candles at the top of the structure. At some point, we can see a large bullish candle, followed by a small bearish pin bar followed by a rather large indecision candle the one with the long upper and lower wicks and finally a strong bearish candle. This should already ring the alarm bell. The reason this candle is the largest of them all is that at this point, the most buyers finally are aware of this uptrend and so the most buyers are in the game.
The imbalance between buyers and sellers is the largest here. There are still too much buyers that believe this will go higher, so it takes some more time. The next candle is what you could call an indecision candle candle, but I would call it the squeeze candle.
At the same time, sellers see the price going down and are more convinced they are on the right side of the move. There is no victor yet and the battle continues until the last candle, where we see a strong move down and the sellers take control. The tide has turned and they will push the price further down. Clean price action and being able to tell a convincing story about what price is doing will help you in making better trading decisions.
While it may take some time to be able to read charts like this, it is done purely by interpreting price action. Inflection points are areas that mark the beginning of a fundamentally different behaviour of the price. They are the big spikes indicating rejection of a certain price level, the turning points in the direction of the market.
Inflection points often form a part of your support and resistance as well, and you will see that a lot of those inflection points regularly line up to be at the same price level. These points or areas are important because there will be a lot of buyers and sellers looking at them. Lots of buyers and sellers will have orders close by that will trigger.
Stop losses and take profits will be around these levels. It is therefore important that you keep an eye on these levels. But how do you find them? It takes some experience to know what the important inflection points on a chart are, but usually, the larger the spike or the stronger the move, the more important the inflection point will be. These points can line up with other inflection points to form support and resistance zones, which brings us to the next item.
This example should make things clearer:. The stretched out green rectangles represent support and resistance zones.
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A bearish candlestick simply means that the candlestick opened up at a high price and closed lower after a certain time period:. All these candlesticks shown below are bearish candlesticks meaning that the opening price was higher than the closing price, therefore reflecting a downtrend:.
Did you know that there are bullish candlesticks that are considered bearish and bearish candlesticks that are considered bullish? To really understand this concept, you need to understand buying and selling pressure. You see, every candlestick that is formed tells you a story about the battle between the bulls and the bears-who dominated the battle, who won at the end, who is weakening etc. All that is reflected in any candlestick you see.
The length of the body of the candlestick as well as the shadow or wick tells you a story about the buying and selling pressure. But you can see that it has a very short body and very long wick tail. It tells you the sellers bears were dominant. Now, you can apply the same sort of logic to all the other candlesticks above and read the story each one is telling you. Now, so far we have looked at individual candlesticks…what if you combine more than one candlesticks?
What does it show you? The chart below shows 3 bearish candlesticks in a downtrend, each with decreasing length and body lengths. In a downtrend situation, when you see such happening, it is one signal the that downward trend is weakening.
And if this happens around support levels, you should sit up and take notice and also watch for bullish reversal candlesticks which will give you the confidence to buy! The following chart below shows you an example of decreasing downward momentum as price nears a support levels. What you will see is that the prior candlesticks will tend to be longer and as price nears the support level, the candlesticks starts to get shorter:.
This next chart below shows 3 bullish candles in an uptrend each with decreasing lengths. In an uptrend, when you see such happening around resistance levels, you should take notice. Also watch for bearish reversal candlestick patterns to form. This will give you the confidence to sell:. Here is an example of a bullish momentum decreasing in an uptrend and then price tumbles right after that :. Every time you look at your charts, you need to be aware of such. Very important! The wicks of candlesticks along with the body tell a story.
A wick which can be called a shadow or tail of a candlestick is a line situated above and below the body of the candlestick. When you have price moving across time due to supply and demand, then this creates trends. This section is a discussion about trends, how they form and how many types of trends and what kind of structure trends have. It is important for you to understand the structure of trends so you will not depend on any indicator to tell you if the trend is up or down because understanding what a trend is, the structure of a trend, what signals to look to tell you that a new trend may be starting and previous one ending is one key knowledge you require as a price action trader.
In simple terms, a trend is when price is either moving up, down or sideways. Now each of these 3 trend types have certain price structure about them that tells you whether the market is in an uptrend, downtrend or sideways trend. The chart shown below is a really ideal case, see chart below for clarity:. The chart above shows an initial downtrend and along the way there is a false uptrend which does not last and price moves down and then eventually another uptrend moves is happening because another lower high has been intersected which signals end of downtrend.
Because the market is not perfect when these trends are happening, you should develop the skill to judge when a trend is still intact or when a trend is potentially reversing. For a ranging market, in an ideal scenario, you will see price moving in a range between a support and resistance level like shown below:. A reversal is a term used to describe when a trend reverses direction.
For example, the market has been in an uptrend and when price hits a major resistance level, it reversed and formed a downtrend. Now where can reversals happen? The following are the major areas where price reversals do happen:. Now that broken support level acts as resistance level when price came for a re-test of the level and sent the price tumbling down:. Well, in simple terms, continuation means that there is a main trend, for example an uptrend, that is happening… and you will notice that price slows down and maybe consolidates for a little while and may fall back down a little…it is like a minor downtrend in a major uptrend move called a downswing in an a major uptrend.
So when that ends and price resumes in the original uptrend direction then that is called a continuation. The chart below makes this concept a bit more clearer:. So the big question is: how to spot trend continuity and execute trades at the right time? The secret is in identification of specific chart patterns as well as very specific candlesticks patterns and you will discover more on the Chart Patterns and Candlestick Patterns section of this course.
Market Price moves in swings. A price swing is when markets moves like what a wave does. So in an uptrend, price will be making higher highs and higher lows like the figure shown below:. If you want to be really good price action trader, you have to understand this concept of how price moves in swings. This is especially true if your style of trading is trend trading or swing trading.
So in an uptrend, you should be looking to buy on the downswing. In a downtrend, you should be looking to sell on an upswing. Nothing is more noticeable on any chart than support and resistance levels. These levels stand out and are so easy for everyone to see! Because they are so obvious. The key to successful price action trading lies in finding effective support and resistance levels on your charts.
So when price heads back to that support or resistance level, you should expect that it will get rejected from that level again. The use of reversal candlestick trading on support and resistance levels becomes very handy in these cases.
Not all support and resistance levels are created equal. If you really want to take trades that have high potential for success, you should focus on identifying significant support and resistance levels on your charts. Significant support and resistance levels are those levels that are formed in the large timeframes like the monthly, weekly and daily charts. This is so that I can get in at a much better price level as well as reducing my stop loss distance.
Here is an example shown on the chart below:. So when you see such happening, you should be looking for bearish reversal candlestick to go short. Look for bullish reversal candlestick around these type of resistance turned support levels as your signal to buy. Can you see how the need for using other indicators is diminished once you understand how easy is to spot such trading setups like these? The fundamental principle of how a channel form is based on support and resistance.
Sideways channels or horizontal channels are little bit different from uptrend and downtrend channels because with uptrend and downtrend channels, you would require 2 points to draw trendlines and wait for price to touch them later on before you take a trade because the trend lines are at an angle. Look for reversal candlesticks to buy or sell when you see such setups happening. Chart patterns are not candlestick patterns and candlestick patterns are not chart patterns:.
Not knowing what chart patterns are forming can be a costly mistake. If you are like that, this is your opportunity to get back on track. Why costly mistake? Because you are completely unaware of what is forming on the charts and you end up taking a trade that is not in line with what the chart pattern is signalling or telling you!
There are 3 types of triangle chart patterns and the chart below shows the differences between each very clearly:. The Symmetrical triangle chart pattern is a continuation pattern therefore it can be both a bullish or bearish pattern:. What does this mean then?
Well, if you see this pattern in an uptrend, expect a breakout to the upside. See an example below:. If you see a symmetrical triangle pattern form in a downtrend, then expect a breakout of this pattern to the downside like this one shown below:. The best way is to confirm that the breakout actually happens with a candlestick before placing your order.
I then switch to the 1hr chart to wait for the breakout to happen. Often I want to make sure that the 1hr candlestick closes outside of the triangle before I enter a pending buy stop or sell stop order to capture the move that happens to avoid false breakouts while the candlestick has not closed yet. Here are 3 ways on how to place stop loss on triangle patterns, which include symmetrical, ascending and descending triangle patterns which you will learn next. The stop loss placement techniques here are applicable to all triangle patterns so take note of that:.
It is considered a bullish continuation pattern in an existing uptrend. So when you see this forming in an uptrend, expect a breakout to the upside. That should give you your profit target level s. Important things to note about the descending triangle chart pattern: The descending triangle chart pattern is characterized by a descending resistance levels and a fairly horizontal support levels converging to a point until a breakout happens to the downside as shown below:.
Similar to the other 2 triangle patterns, you can either trade the initial breakout or wait to see if price reverses back to test the broken support level and then sell. Note: with a triangular pattern, I often prefer to wait for a candlestick to breakout and close outside of the pattern before I enter a trade.
This helps to reduce false breakout signals. But there will be times when I will just trade the breakout with a pending sell stop order just a few pips under the support level to catch the breakout when it happens but when I do that, I sit and watch the close of the 1hr candlestick to make sure that it does not close above the support line if that happens, it may mean a false breakout.
I prefer to use previous support levels, lows or troughs and use those as my take profit target level. Another method of take profit that is commonly used is to measure the height of the triangle and if the height is say pips then that is your take profit target.
The head and shoulder chart pattern is a bearish chart pattern. This is what a head and shoulder reversal pattern looks like:. The inverse head and shoulder pattern is bullish reversal candlestick pattern and just the opposite of head and shoulders pattern.
You can buy the initial breakout of the neckline or wait for the re-test, that is wait for price to breakout and then come back down to test the broken neckline and then buy. Use bullish reversal candlesticks for trade entry confirmation if you are waiting to buy on re-test. I often tend to place my profit target on previous highs. One method of calculating profit target is to measure from the head up to the trendline and what the distance in pips is your profit target.
See the two blue vertical lines in the chart above. A double bottom chart pattern is bullish reversal chart pattern and when it forms in an existing downtrend, it signals a possible upward trend. Then there are other groups of traders that like to enter when price reverses back down to touch the neckline, which now would act as a support level. Once it hits that neckline level they buy. In this way, you have the potential to ride the trade all the way up if the neckline is intercepted.
You should consider buying on bottom 2 as buying on a support level…as a matter of fact, that it what is is! Look for bullish reversal candlestick patterns for trade entry signals. A double top chart pattern is a bearish reversal chart pattern and when found in an uptrend and once the neckline is broken, that confirms a downtrend.
The double tops are very powerful patterns and if you get into a trade at the right time, you stand to make a lot of profits when the breakout happens to the downside. And if price moves down and intersects the neckline and continues to do down further, your profits are dramatically increased. Use previous low support levels to set take profit targets. Or another option would be to measure the distance between the neckline and the highest peak the range and use that difference in pips as take profit target if you are trading the breakout from the neckline.
I do not see triple bottoms forming quite as often…Regardless of that, you should have an idea of what it looks like:. Triple bottoms are bullish reversal chart patterns, which means if found in a downtrend and this pattern starts to form and once the neckline is broken and price head up, this confirms that the trend is up.
Triple tops are the opposite of triple bottoms and they are bearish chart patterns. They rarely occur but its good to know what they look like. Triple tops when found in an uptrend, it signals the end of the uptrend when the neckline is broken and price heads down.
There are lots of candlesticks, but out of all of them only 9 that you really need to know. Because there are very popular are really powerful so why waste time with the rest? When these candlesticks form at support and resistance levels or Fibonacci levels they are great trade entry signals. The doji candlesticks are single individual candlestick patterns.
There are 4 types of doji candlesticks as shown below:. The engulfing patterns are 2 candlestick patterns. For a bullish engulfing pattern, you will see that the first candle is bearish followed by the second candle which is very bullish and this 2 nd candle completely engulfs. The harami is a 2 candlestick pattern and can be bullish or bearish. The easiest way to remember the harami patterns is to think about a pregnant woman and a baby inside her tummy:.
The dark cloud is another bearish reversal candlestick pattern formation consisting of 2 candlesticks. The first one is a bullish candlestick showing a strong upward momentum but when the second candle forms, it shows a completely different story…its bearish and it closes at about the middway point of the first candlestick. The piercing line is the opposite of dark cloud cover. You may see this in a downtrend or forming at a support level.
This tells you that the bears are losing steam and that the bulls are gaining strength to potentially move the market price up. The second bullish candlestick should close somewhere up the mind-point of the first candlestick. So when you see the piercing line pattern forming at support levels or in a downtrend market, take note as this is a potential bullish reversal signal so you should be thinking of going long buying.
This is one of the most reliable candlesticks and obviously one of the most popular due to the fact that they are so easy to spot on any chart. The shooting star is single candlestick pattern and when it forms in an uptrend or in a resistance level, then it is considered as a bearish reversal pattern and so you should be looking to sell. Note: the shooting star is sometimes called the bearish hammer, inverse hammer, inverted hammer or bearish pin bar.
They all mean the same and refer to the shooting star candlestick pattern. When it forms in a downtrend or at support levels, you should take note…this is a very high probability bullish reversal candlestick pattern and you should be looking to go long buy. Now, what happens if you see in an uptrend a candlestick that looks like a hammer? Is it still a bullish signal? Well, in that case , this candlestick is a hanging man and its not a bullish signal. Now, the hanging man, is exactly like hammer but the only difference is that it must form in an uptrend.
When it forms in an uptrend or in resistance levels, it tells you that there is a possibility that the uptrend is ending so you should be looking to go short sell. See chart below:. A notable feature of railway tracks is that they look like paralled railway tracks …and both candlesticks should be of almost the same lengh and body and almost look like mirror image of each other.
So when you see the bearish railway track pattern in an uptrend, or in an area of resistance, this is a signal that the downtrend may be starting so you should be looking to sell. Spinning tops can be continuation candlestick patterns or reversal candlestick patterns. Spinning tops have small bodies with upper and lower shadows that exceed the length of the body. Spinning tops signal indecision. A spinning top is a single candlestick pattern and it can be both bullish or bearish.
Let me explain. If you see are bearish spinning top in a support area or in a downtrend, this can be considered a bullish reversal signal when the high of tha bearish spinning top is broken to the upside. Similarly, a bullish spinning stop in a resistance level or in an uptrend can be considered a bearish signal as soon as the low is broken to the downside. Spinning tops are fairly short in length compared to other candlesticks and their body length is a few steps wider than that of doji candlesticks which actually have none or very tiny bodies.
Another notable feature of spinning tops is that the wicks on both sides should be almost the same length. When I see spinning tops form on support or resistance levels, all it tells me the bears and bulls do not really know where to push the market and so when a breakout of the low or high of a spinning top by the next candle that forms usually signals the move in that direction of breakout!
This is a technique where not many traders are aware about and I will just give you a simple example so you understand this concept better. You may see a hammer in the 1hr timeframe but remember that that 1hr timeframe has twominute candles to make 1 hr, right? So what do you think the candlestick pattern would be in the two minute candlesticks to give you a bullish hammer candlestick pattern in the 1hr timeframe?
Or if you see a shooting start bearish candlestick in the 1hr timeframe, what do you think would be the candlestick pattern in the twominute candlesticks that gave that 1hr candlestick a shooting star? Similarly, there is no 2hr timeframe to go with 4hr timeframe and no 8hr timeframe to go with the existing 4hr timeframe. But unfortunately, no hammer forms in the 1hr timeframe and even though you see a bullish engulfing pattern formed, you did not enter a buy trade.
You just watched as price shoots up and you wished you could have bought at the bullish engulfing signal that was given but you are only interested in trading hammers. Well, if there was a 2hr time frame in metrader4, you could have switched to it and seen a very bullish hammer and you could have taken the trade but because you did not understand the concept of blending candlesticks you missed a very good trade!!!
The trick is to use Fibonacci and combine it with price action by using reversal candlesticks. This tool is a series or sequence of numbers identified by a guy called Leonardo Fibonacci in the 13 th Century. In technical analysis Fibonacci retracement is created by taking two extreme points usually a major peak and trough on your forex chart and dividing the vertical distance by the key Fibonacci ratios of Once these levels are identified, horizontal lines are drawn and used to identify possible support and resistance levels.
I really do not focus at all on the others. If you are using metetrader4 Trading platform, the Fibonacci tool has an icon as shown on the chart below:. Step 3a: In a downtrend market, you click first on the previous peak where you want to analyse from and drag down to the trough where price reversed from and release.
On the chart below notice that price formed a peak and then moved down, found support and formed a trough, and price went back up:. You can also see the bearish spinning top candlestick which could have been used as a signal to go short sell. Well, I think that there are traders out there that do that and you can do that. But personally, I do not like that approach. Very simple trade setups. Your risks are small compared to the profits you potentially can make.
When the market is heading down, it forms down swings and up swings as it continually moves lower. Similarly, when the market is in an uptrend, it will form upswings and downswings as it continues to move up. The peaks that are formed by the up swings and the troughs that are formed by the down swings can be used to draw trendlines.
Now, for a market in a downtrend, you can connect the peaks with a line and that forms you downward trendline. What you are waiting for is for price to come back up and touch that trendline and when it does, this could mean that a down swing will start and it may be the best time to enter a short trade.
The use of bearish reversal candlesticks as trade confirmation is highly recommended with this trading method. When the the market is in an uptrend, connect 2 troughs and you have an upward trendline. When price comes to touch it later, you have a potential buy setup. As you can see, I was anticipating a move up to the 1. Obviously, this trade was taken based on the setup in the daily timeframe which means it may be a week or two before the profit target is hit if the market makes a nice move up or the opposite can happen , price breaks the trendline and I get stopped out or I can walk away with some profits when my trailing stop gets hit.
But the next day, price broke that upward trendline and I got stopped out with a loss. But think about this …if the price had moved the way I analysed, I would have made a lot more profits than what I lost. There can be 2 or more downward trendlines or 2 or more upward trendlines at any one time on any chart in any timeframe.
So if price breaks the first trendline, it still has yet to head to the 2 nd and the third etc…. So if you take a sell trade on the first trendline but price intersects it and you are stopped out with a loss and now price is heading to the 2 nd trendline above, you should also look to sell if you get bearish reversal candlestick signal.
See chart below: enlarge if you cannot see clearly. You will notice that I took the first trade on the first downward trendline based on a bearish harami and also a spinning top pattern there but then price intersected that trendline and went up to the 2 nd downward trendline.
I saw a shooting star so I took another short trade. Obviously, you can see how the price reacted to the trendline by forming a shooting star. That was enough signal for me to short this pair. You need to be aware of these kinds of trendlines not only on the sell side buy ton the buy side as well.
I suggest you check out Trendline Trading System for more information on how to trade it. Many new traders that find it difficult to define the structure of a trending market, therefore they rely on moving averages for trend detection or identification. The only thing I see useful in moving averages is for dynamic support and resistance levels. I will explain this concept shortly.
As a matter of fact moving averages do a terrible job of predicting trends in that they only do that after that trend has already started already and price has moved a great deal already. In the chart on the left, notice that price has crossed the HL higher low already, indicating that the downtrend market has started potentially.
But notice that the moving averages have not crossed yet. So you have two conflicting signals. And by the time moving average confirms what the price action has indicated, price has already made a great deal of move downward already as shown by this chart on the left. So which are you really going to pick?
Depend on moving average to tell you that a trend has changed or depend on price action? The concept of dynamic support and resistance can be fully understood with a few charts given below. When the market is in a downtrend, you will notice that price moves up to the moving average lines upswing and then bounces back down from them downswing. That is if you put moving average lines on your charts. The similar situation happens in an uptrend: prices move down to the moving average lines downswing and then bounces up from them upswing.
Now that you know this concept of dynamic support and resistance using moving averages, the next thing you need to know is that trend trading strategies can be created around them and in a very nice trending market, they are really effective. For those that love moving averages, what you can do is to look reversal candlesticks as price starts to go back to touch the moving average lines and these are used as your confirmation signal to buy or sell.
But real challenge for many traders is that when a setup is happening, they will most likely second guess it because this is how its going to look:. Let me give a real example of a trade that I took as I was writing this. Have a good and close look at it. I switched to the 1hr timeframe and waited for price to come and hit the confluence zone and saw a shooting star, a bearish reversal Candlestick pattern also sometimes called a bearish pin bar.
That was my clue to execute a short trade right there. Good thing as I was stilling writing this guide this trade played out so I can show you what happened: As you can see, I managed to make pips on the first trade.
Note also that I also made a 2 nd trade which made pips as well. Even though my profit target was not hit, I used trailing stop loss as shown below until I got stopped out when price moved back up. This short trade setup had 4 factors of confluence supporting it :. All this information here is providing you the foundation; the basic framework you need to trade price action, the learning comes from observing and doing.
If you are trading strictly using the large timeframes like the daily chart, your stop loss distance will be huge and the issue with that is your risk:reward ratio can be reduced no necessarily all the time :. So in that case your risk:reward ratio will be And even though you are trading with a setup in the daily chart, for your trade entry, you are actually switching to the smaller timeframe and watching for a sell signal in the 1hr timeframe?
This chart below is a daily chart and shows a triple top pattern in a solid resistance level. Price has been pushed down twice from this level and when the third time it price reaches this level, it was pushed down again. Now, you can see the bearish harami reversal candlestick pattern and you could have used this as your sell signal by placing a pending sell stop order just a few pips under the low.
And placed your stop loss outside of the resistance line as shown on the chart above. Notice that for the 1hr trade entry, it was done almost at the very top and the stop loss distance was very small in comparison to the trade taken in the daily timeframe. Which means that the risk:reward of the 1hr timeframe trade is a lot better than what you would get in the daily.
Now, you can do this with daily timeframe and 4hrs or even down to the 30 and 15 minute timeframes. Or you can watch trade setups in the 4hr but switch to either the 1hr, 30mins, 15min and 5mins for your trade entries.
I often use the 1hr for my trade entries and can even go down to 5min timeframe for my entries. If you are new trader, stick to 1hr or 4hr timeframe for your trade entries. So when you trade in the 1hr timeframe or much smaller timeframe you can actually trade a lot more contracts without risking more because your stop loss distance are very small compared to the larger timeframe trade. For example, the stop loss for the 1hr timeframe trade is 20 pips but for the daily timeframe trade is 80 pips.
This simple example explains why I wait patiently for trade setups to happen in the monthly, weekly, daily, 4hr timeframes and then use smaller timeframes to get good trade entries. This is the beauty of multi-timeframe trading using price action. This is the monthly chart:. Now, lets zoom in on the daily chart and see what the price action is like on where the arrow is pointing see chart below :.
So now you can see how I do my multi-timeframe analysis to get down a timeframe where I execute a trade at a very good price level or entry point whilst keeping my stop loss distance tight. But when you switch back and forth between timeframes, you begin to see how you can trade the larger timeframes setups based on the setups that happen in the smaller timeframes.
I will be waiting for a pullback to buy, if that happens. I hope you have learnt how powerful price action trading can be. Now, not all trading setups you see will become winners. When you are watching the chart for trading setups, you need see and trade the obvious. I should have taken a trade here and look at how the market moved after that bearish shooting star candlestick was formed after hitting the resistance level. When you trade the obvious, then you trade with what everybody else is seeing and in essence you are really doing piggy-back, riding on the market move created by all these orders that puts the odds in your favour.
See chart below for this: if you see a support major support level and price is heading down to it and at the same time, that support level is coinciding with an upward trendline…. What does this mean? And then you see a bullish Piercing line reversal candlestick form right at the area of confluence. Are you going to be undecided about this price signal and pull up stochastic or CCI indicator to really make sure give you confidence you need to buy???
I would really appreciate that. Thank you. Hi Paul, there is no true volume indicator in forex telling you exactly how much volume is going through the forex market at any given time period. This is because forex is not a centralized market like the share market where true volume information can be seen. The volume indicator you see on your MT4 trading platform does not measure the true volume at all.
It simply measures the number of ticks for a given time period. Hi R Key Thanks a lot for the knowledge Is it also necessary to you use Volume Analysis in Forex can it help when combines with price action. Thank you so much for your time, efforts and enormous generosity in sharing it for free with the trading world.
I like it so much that I have bookmarked it to refer to it again and again as part of my must keep and review again and again trading library. A HUGE thank you to you. I really wanted to try me my psychology management.. Hi Rkay I would like to ask for advice to you.. I hope you give advice and risk lavarage what should I use thank you. Hi Hilman, you need figure out the answers to those questions yourself. Leverage is totally irrelevant. How much risk per trade is.
Hai Rkay Terima kasih telah membuat blog yang sangat sangat saya cari selama ini Sudah sekian banyak saya mengunjungi web dan blog forex ,tetapi mereka hanya menjelaskan dasar nya saja.. Tetapi disini dijelaskan sampai ke akar nya.. Price Action adalah yang terbaik.. Maaf jika komentar saya tidak menggunakan bahasa inggris, itu karena saya tidak begitu faham.. If we want to find out more should pay a very high price.. But here described to her roots.. Price Action is the best.. As you rightly pointed out that most of the PAT course in the market covers the same material as yours and you have provided for free.
God bless you and helps to change your mindset to have a proper money management. Keep doing your wonderful work. All the very best. Thanks Rkay. I am waiting for a long time to find a website like yours.
Now I found it its feel like heaven. The free training is very helpful for beginnrrs like me. I sm very happy. What i Like most everything in one Glance single page and you learn what expensive courses will teach and free. I am from India and has been a kind of active trader from last many years. From last couple of years i am into price action trading and finally the account is moving to a positive direction.
Though most of the things you shared above , i was already aware of but still learnt few concepts that i think can provide an extra edge to my trading. As a token of gratitude i am sharing couple of very important and knowledgeable links with you. Please visit them whenever you get a chance —.
With multi-timeframe trading, the lower timeframe does not necessarily have to be in the same direction as the larger timeframe. You will notice that: 1 the main trend was up up on the daily timeframe the larger timeframe 2 switching to lower timeframe, 4hr or 1hr to wait there for sell signals bearish reversal candlesticks. Based on this example, you can see that daily trend was up, even the 4hr or 1 hr trend was heading up as well.
Hi Rkay, When analyzing the charts on a daily timeframe is in an uptrend then I switch to a 4hr chart is in downtrend. Should both timeframe be in the same direction before I entry a trade? God bless. Dude thanks so much for putting this up!!!
A BIG Thanks to those traders that are clicking the sharing links like facebook share, tweet etc to share this free price action trading course with your fans and friends. Excellent — I have learned so much reading this material. I shall be using it over and over again until it all sinks in to my mind. Thank you so much for such first rate intelligent information that was enjoyable to read. Comprehensive but easy to digest. All of that for free. Thank you so much for helping people like me that do not have the wherewithal to pay for price action trading lessons.
I book marked this page and will spend weeks and months studying your teachings. Once again remain blessed. Hi Leo, thanks for visiting. Glad you like the PA course. Cheers RKay. After going through the price action trading course, you will need this: Enjoy! Or if you are smart do I have to remind you of that? Ok…fair question. In order for me to answer your question, I will have to ask you a question before I can answer your question … Do you need to know everything about how a car operates from how the engine works, what makes the wheels turn, how it changes gear, how the brakes work etc.
No… Right…exactly! So traders are like that… If we get the direction wrong, we lose money, we get it right, we make money. This is the basic definition of price action trading: When traders make trading decisions based on repeated price patterns that once formed, they indicate to the trader what direction the market is most likely to move. The chart below shows and example of what can happen when there is major forex fundamental news release: This is one experience I will never forget.
My stop loss was never triggered at the price level where I set initially. Later I found out that it was a major economic news release that moved the market like that. The high impact news are colour coded in Red. This can works for you or against you.
You need to know what you are doing during these times. If you already have a trade that has been running prior to the news release time for some time and in profit, think about moving stop loss tighter or taking some profits off that table in case the market goes against you once the news is released. In an ideal case, you would have taken this trade a while ago and that the current market price is far away from your trade entry price and you would have locked some profits already and if the market moves in the direction of your trade after the news release, you will make a lot of money.
Human behavior in the market creates some specific patterns on the charts. So price action trading is really about understanding the psychology of the market using those patterns. Because of collective human reaction! Investors should ensure they fully understand the risks associated with leveraged CFD and FX trading before deciding to trade because you can lose some or all invested capital. Investors may choose to seek independent advice and should not risk more than they are prepared to lose.
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