Price Action 1-2-3 method in the Forex Market
What is Price Action Forex Trading Method? - Forex Price action is the use of only forex charts to trade Forex, without the use of forex technical indicators. When trading with this price action method, forex candlesticks charts are used. This forex trading strategy uses lines and pre-determined forex price patterns such as the 1-2-3 forex price pattern that either develops or series of candlestick bars.
Traders use this forex strategy because this technical analysis is very objective and allows the trader to analyze the forex market moves based on what they see on the forex currency charts and market movement analysis alone.
This forex strategy is used by many traders; even those that use forex technical indicators also integrate some form of price action in their forex trading strategy.
The best use of this price action forex trading method is achieved when the forex signals generated are combined with line studies so as to provide extra confirmation. These line studies include forex trend lines, Fibonacci retracement levels, support and resistance levels.
Price Action 1-2-3 Breakout - Trading Forex Price Action 1-2-3 Method
This price action 1-2-3 method trading strategy uses three chart points to determine the break out direction of a forex currency pair. The 1-2-3 forex trading method uses a peak and a trough, these chart points forms point 1 and point 2, if market moves above the peak the forex signal is long - buy signal, if it moves below the trough the forex signal is to short - sell signal. The break out of point 1 or point 2 forms the third point of the price action 1-2-3 method.
Price Action 1-2-3 Breakout Forex Trading Strategy - Trading Forex Price Action 1-2-3 Method
Series of breakouts in 1-2-3 price action trading strategy
Series of Forex Price Action Breakouts 1-2-3 Method Forex Trading - Price Action 1-2-3 Breakout Forex Trading Strategy Method
Investors use forex price action strategy to try and predict where a forex price currency direction might go. The foreign exchange market is either trending or ranging.
A trending forex market moves in a specific direction while a ranging market moves sideways, normally after hitting a support or resistance level.
Observing the behavior of price action provides this information of whether the forex market is trending or ranging or reversing its direction.
As with any other Forex trading strategy this method should also be combined with other confirming forex trading indicators to avoid whipsaws. The 1-2-3 price action pattern can give good forex signals in a trending market but will give whipsaws when the market is ranging, it is best to determine if the forex market is trending or not before you start using this forex trading strategy.
Combining 1-2-3 Price Action Forex Strategy With other Forex Indicators - RSI and Moving Averages
Good forex trading indicators to combine forex price action trading method with are:
- RSI Indicator
- Moving Average Indicator
Investors and forex indicators should use these two forex trading indicators to confirm if the direction of price action breakout is in line with the trend direction shown by these two forex technical indicators. If the direction of the price action breakout is also the same as that of these forex indicators then investors and traders can open a trade in the direction of the forex signal. If not investors and traders should not open a trade as there is more likely a chance that this forex trading signal may be a whipsaw.
Just like any other indicator in Forex, price action also has whipsaws and there a requirement to use this as a combination with other forex trading signals as opposed to just using this forex strategy alone.
Combining 1-2-3 Price Action Forex Strategy With other Forex Indicators - RSI and Moving Averages Indicators