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Price Action

February 18th, 2019 @ 5:24 am by Muhammad Azeem

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To a newcomer, Forex trading may seem chaotic and unreasonable. There’s a reason that it is often compared to a casino. However, this is far from the truth — Forex market is actually predictable and there are methods to forecast the situation on it.

For a long time, any research into market patterns was kept private and the general public had no notion for it. But in 2005, users of the ForexFactory forum got together and started a new form of Forex technical analysis — one that is reliable, approachable and usable. They call it Price Action, and with this article, you will learn its basic points.

What is Price Action

Price Action doctrine states, that there are market movements that will lead to a pre-defined market situation in the future. The followers of this Forex trading strategy differentiate two types of movements: candlestick patterns and chart patterns.

Candlestick patterns are built around price movements confined to a single candlestick. They are very short-term — they only affect the next candlestick or two. If you want to predict a market situation dozens of candlesticks away, you need to look into chart patterns.

Chart patterns are more global and use the key market levels instead of singular candlesticks. They are used to predict market situations for longer periods of time on the market.

The key market levels are support and resistance. Support shows the minimal stable price of an asset, while the resistance shows the maximum one. Both values are dynamic and tend to change.

How Many Price Action Patterns Are There

If you check the original thread on ForexFactory, you’d find hundreds of patterns described both by James16 and his followers. However, there is no need to know all of them, since the majority of those patterns are extremely rare.

In order to start making a profit on Forex, you need to know:

  • 5 candlestick patterns: Pin Bar, Inside Bar, Outside Bar, Fake Breakout, Double High/Double Low;
    • Pin Bar is a candlestick pattern with a small body and one shadow longer than the other. It indicates a change of trends, for example, a beginning of a descending trend after the ascension;
    • Inside Bar is a smaller candlestick opposite to a previous, larger candlestick. It indicates a temporary resistance to the larger trend and acts as a good market entry point;
    • Outside Bar is a larger candlestick opposite to a previous, smaller candlestick. It is another sign for a change of trends, but less certain than a Pin Bar;
    • Fake Breakout happens when a candlestick goes beyond a support or resistance level, but only with its wick. It indicates a turn of the trend;
    • DoubleHigh/DoubleLow is formed by two candlesticks next to each other that can’t break through some abstract level. It represents a strong resistance of that level and serves as a good market entry point;
  • 2 chart patterns: Triangle and Flag;
    • Triangles are represented by a seeming crossing of support and resistance trends. If the support trend ascends to the resistance, the market will soon become bullish. If the resistance trend descends to support, the market will soon become bearish. If the triangle is symmetric, or if the trends are moving away from each other, the market is unstable and you should pull out.
    • Flags are chart patterns with support and resistance levels running parallel to each other. They are correction patterns and tend to break out in an opposite direction to their movement. So, for example, an ascending flag is a sign for a bearish market.

There are many other patterns, but these are more than enough to start trading successfully. In order to do so:

  1. Sign Up with a Forex broker, i.e., JustForex broker;
  2. Create a practice account and hone your strategy with virtual currency;
  3. Deposit real money once you are ready and make profit!

Following the rules above you’re likely to predict the price movement in Forex market.

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August 6th, 2018 @ 4:29 am by Setyo Wibowo

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USDCHF Forecast
The USDCHF was indecisive last week. Price attempted to push lower bottomed at 0.9867 but closed higher at 0.9944. The bias is neutral in nearest term probably with a little bullish bias testing 1.0000 region but key resistance remains at 1.0055 which is a good place to sell with a tight stop loss. Immediate support is seen around 0.9935. A clear break below that area could trigger further bearish pressure testing 0.9900 region. Overall price is still trapped inside a range area between 1.0055 – 0.9785 and we need a clear break from that range area to see clearer direction.

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August 3rd, 2018 @ 4:24 am by Setyo Wibowo

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USDCHF Forecast
The USDCHF continued its bullish momentum yesterday topped at 0.9956 and hit 0.9960 earlier today in Asian session. The bias remains bullish in nearest term testing 0.9980 – 1.0000 but key resistance remains around 1.0055 region. Immediate support is seen around 0.9935. A clear break below that area could lead price to neutral zone in nearest term testing 0.9900 area. Overall price is still trapped inside a range area between 1.0055 – 0.9785 and we need a clear break from that range area to see clearer direction. Fundamental focus today will be on the US NFP.

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August 2nd, 2018 @ 4:25 am by Setyo Wibowo

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EURUSD Forecast
The EURUSD had a moderate bearish momentum yesterday bottomed at 1.1657 and hit 1.1653 earlier today in Asian session. The bias remains bearish in nearest term testing the lower line of the triangle and 1.1600 – 1.1575 support area. Immediate resistance is seen around 1.1680. A clear break above that area could lead price to neutral zone in nearest term testing 1.1725/50 region which is a good place to sell with a tight stop loss as a clear break above 1.1750 would be a threat to the major bearish trend testing 1.1850 area. On the downside, a clear break below 1.1575 would retest 1.1500 key support area. Fundamental focus will be on the US NFP on Friday.

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August 2nd, 2018 @ 4:24 am by Setyo Wibowo

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GBPUSD Forecast
The GBPUSD had another indecisive movement yesterday. The bias remains neutral in nearest term. Immediate resistance is seen around 1.3160. A clear break above that area could trigger further bullish pressure testing 1.3215 area. Immediate support is seen around 1.3070. A clear break below that area could trigger further bearish pressure testing 1.3000 psychological support area which remains a good place to buy with a tight stop loss. Fundamental focus will be on the BoE and MPC statements today and US NFP on Friday.

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August 2nd, 2018 @ 4:22 am by Setyo Wibowo

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USDJPY Forecast
The USDJPY was indecisive yesterday. The bias is neutral in nearest term but as long as stay above 111.55 the overall short-term technical bias remains to the upside retesting 113.00 key resistance. Immediate support is seen around 111.39 (yesterday’s low). A clear break below that area could trigger further bearish pressure retesting 110.75 key support which need to be clearly broken to the downside to reactivate my bearish mode. Fundamental focus will be on the US NFP on Friday.

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August 1st, 2018 @ 4:22 am by Setyo Wibowo

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EURUSD Forecast
The EURUSD attempted to push higher yesterday topped at 1.1745 but closed lower at 1.1690 and hit 1.1682 earlier today in Asian session after failed to break above the triangle as you can see on my H4 chart below. The bias is bearish in nearest term retesting the lower line of the triangle and 1.1600 – 1.1575 support area. Immediate resistance is seen around 1.1700. A clear break above that area could lead price to neutral zone in nearest term testing 1.1750 region which is a good place to sell with a tight stop loss as a clear break above 1.1750 would be a threat to the major bearish trend testing 1.1850 area. Fundamental focus will be on the US NFP on Friday.

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August 1st, 2018 @ 4:20 am by Setyo Wibowo

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GBPUSD Forecast
The GBPUSD had another indecisive movement yesterday. Price slipped above the bearish channel, topped at 1.3173 but closed lower back inside the bearish channel as you can see on my H4 chart below. The bias is neutral in nearest term. Immediate support is seen around 1.3070. A clear break below that area could trigger further bearish pressure retesting 1.3000 psychological support area which remains a good place to buy with a tight stop loss. Immediate resistance is seen around 1.3160/75. A clear break above that area could trigger further bullish pressure testing 1.3215 region. Fundamental focus will be on the US NFP on Friday.

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