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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 price charts to trade Forex, without the use of forex technical indicators. When trading with this forex 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.

 

Forex traders use this forex strategy because this technical analysis is very objective and allows the forex 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 forex 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 forex 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 forex chart points forms point 1 and point 2, if market moves above the peak the forex signal is long - buy forex signal, if it moves below the trough the forex signal is to short - sell forex 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 Method Breakout Forex Trading - Price Action 1-2-3 Breakout Forex Trading Strategy - Trading Forex 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

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 forex 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 forex 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 Forex Indicator
  • Moving Average Forex Indicator

 

Investors and forex indicators should use these two forex trading indicators to confirm if the direction of forex price action breakout is in line with the forex trend direction shown by these two forex technical indicators. If the direction of the forex price action breakout is also the same as that of these forex indicators then investors and forex traders can open a forex trade in the direction of the forex signal. If not investors and forex traders should not open a forex 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 Forex Indicators

Combining 1-2-3 Price Action Forex Strategy With other Forex Indicators - RSI and Moving Averages Forex Indicators

 

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