Price Action 1-2-3 method in the Market
In Price Action 1 2 3 method, traders will use this trading method to try and analyze price setups on the chart that might result in a price breakout in one direction. The Price Action 1-2-3 method will be used to analyze the likely direction that the price breakout will move towards.
Forex price action is a trading method that is used by traders to analyze chart price movement using only price action analysis.
What is Price Action Trading Method? - Price action is the use of only price charts to trade Forex, without the use of indicators. When trading with this price action method, candlesticks charts are used. This trading strategy uses lines & pre-determined price patterns such as the 1-2-3 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 forex market moves based on what they see on the currency charts and market movement analysis alone.
This strategy is used by many traders: even those that use indicators also integrate some form of price action in their forex trading strategy.
The best use of this price action trading method is achieved when the 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.
Trading Price Action 1-2-3 Breakout - Forex Price Action 1 2 3 Method
This price action 1-2-3 method trading strategy uses 3 chart points to determine the break-out direction of a currency pair. The 1-2-3 trading method uses a peak and a trough, these chart points forms point 1 and point 2, if market moves above the peak the 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 Strategy - Trading 1 2 3 Forex Price Action Method
Series of breakouts in 1-2-3 price action trading strategy
Series of Price Action Breakouts 1 2 3 Method Trading - Price Action 1-2-3 Breakout Trading Strategy Method
Investors use price action strategy to try and predict where currency price direction might go. The forex market is either trending or ranging.
A trending 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 data 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 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 trading strategy.
Combining 1-2-3 Price Action Forex Strategy with other Indicators
Good indicators to combine price action trading method with are:
- RSI Indicator
- Moving Average Indicator
Investors and traders should use these two indicators to confirm if the direction of price action breakout is in line with the trend direction shown by these two technical indicators. If the direction of the price action breakout is also the same as that of these forex indicators then investors & traders can open a trade in the direction of the forex signal. If not investors & traders should not open a trade as there is more likely a chance that this trading signal may be a whipsaw.
Just like any other indicator in Forex, price action also has whipsaws & there is a requirement to use this as a combination with other trading signals as opposed to just using this strategy alone.
Combining 1-2-3 Price Action Forex Strategy with other Indicators - RSI & Moving Average
