How Do You Analyze Forex Price Action in Trading?

How Do You Trade Forex Price Action in Trading?

FX price action is analysis of price movements that are plotted on charts.

FX price action strategy uses line studies or price action setups to try and determine the trend of the price chart.

FX price action signals can also be combined with forex systems that can be used to figure out what direction of trading to take.

Pin Bar Price Action Trading Strategy

A pin bar is a trend reversal signal on a price chart which displays an obvious change in market sentiment during that trading period.

This pin bar price action set-up has got a long tail with the closing price near the open. The pin bar chart pattern looks like a pin thus the name Pin Bar - forms after an extended move up or down.

This pin bar chart pattern - trend reversal is confirmed after market closes below the candle that precedes this price action setup setup. Below the pin bar pattern reversal setup is confirmed after the prices closes below the blue candle that preceded this pin bar candle.

How Do You Read Price Action in Forex Trading? - How to Interpret/Analyze Forex Price Action in Trading

FX Price Action 1.2.3 Technique in Forex

Forex Price action strategy is use of only price charts to trade FX, without use of chart indicators. When forex trading with this method, candlestick charts are used. This price action strategy uses lines & pre-determined price patterns like the 1 2 3 price action pattern that either develops as one price action pattern or series of price action set-ups.

Forex traders use this price action strategy because this market analysis is very objective and allows a trader to analyze the price market movements depending on what they see on the charts and price movement analysis alone.

This price action trading strategy is used by many traders: even those that use technical indicators also integrate some form of price action in their strategy.

Forex Price Action 1.2.3 Break Out Strategy

This price action strategy uses three chart points to determine the price break out direction of a forex instrument. The 1-2-3 price action method uses a peak & a trough, these chart points forms chart point 1 & chart point 2, if price moves above peak the signal is interpreted and viewed as a buy trade signal, if price drops and falls below the trough the signal is interpreted and viewed as a sell trade signal. The price break out of chart point 1 or chart point two forms the third chart point.

How Do You Read Price Action in Trading? - How to Interpret/Analyze Forex Price Action in Trading

Forex Price Action 1.2.3 Break Out Strategy Example

RSI & Moving Averages

Good indicators to combine price action setups with are:

RSI Indicator

Moving Average Indicator

Forex traders should use these 2 indicators to confirm if the direction of the price action break-out is in line with the trend direction illustrated by these 2 chart indicators. If the direction is also the same as the direction of these indicators then traders can open a trade in direction of signal. If not traders should not open a trade as there is more likely a chance that this signal may be a forex whipsaw.

Just like any other chart indicator in Forex, price action strategy also has whipsaws & there's a requirement to use this price action strategy as a addition with other signals as compared to just using this price action strategy alone.

How Do I Trade Price Action in Forex Trading? - How Do You Interpret/Analyze Forex Price Action in Trading Forex?

Combining Together Price Action Trading Strategy other Trading Indicators

How Do You Analyze/Interpret Forex Price Action in Trading?

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