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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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February 15th, 2019 @ 5:04 am by Setyo Wibowo

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EURUSD Forecast
The EUR/USD failed to continue its bearish momentum yesterday topped at 1.1309 after rejected below 1.1270 as you can see on my daily chart below. The bias is bullish in nearest term testing 1.1350 – 1.1400 region. On the downside, 1.1270 – 1.1215 remains a key support and good place to buy with a tight stop loss below 1.1215 as a clear break below that area would resume the major bearish trend testing 1.1125 region.

eurusddaily

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February 15th, 2019 @ 5:03 am by Setyo Wibowo

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GBP/USD Forecast
The GBP/USD continued its bearish momentum yesterday bottomed at 1.2772. The bias remains bearish in nearest term as a part of the false breakout bearish scenario testing 1.2675 region. Immediate resistance is seen around 1.2850. A clear break above that area could lead price to neutral zone in nearest term testing 1.2900 region but as long as stay below 1.3000 I still prefer a bearish scenario at this phase and any upside pullback should be seen as a good opportunity to sell.

gbpusddaily

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February 15th, 2019 @ 4:57 am by Setyo Wibowo

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USDJPY Forecast
The USD/JPY had a bearish momentum yesterday after rejected above the daily EMA 200 as you can see on my daily chart below. The bias is bearish in nearest term testing 110.00 support area. A clear break below 110.00 could trigger further bearish pressure testing 109.50 or lower. On the upside, a clear break and daily/weekly close above 111.00 (EMA 200) would resume the bullish pin bar scenario testing 112.00/20 region.

usdjpydaily

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February 15th, 2019 @ 4:48 am by Setyo Wibowo

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USDCHF Forecast
The USD/CHF had a bearish momentum yesterday bottomed at 1.0044 after rejected above 1.0095 key resistance area as you can see on my daily chart below. The bias is bearish in nearest term testing 1.0000 region. Immediate resistance is seen around 1.0075. A clear break above that area could lead price to neutral zone in nearest term retesting 1.0095 region which remains a good place to sell with a tight stop loss as a clear break above 1.0095 would expose 1.0150/70 region.

usdchfdaily

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February 14th, 2019 @ 5:19 am by Setyo Wibowo

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EUR/USD Forecast
The EUR/USD had a bearish momentum yesterday bottomed at 1.1259. The bias is bearish in nearest term but note that 1.1270 – 1.1215 area remains a key support and good place to buy with a tight stop loss below 1.1215 as a clear break and daily close below that area would resume the major bearish trend testing 1.1125 region. Immediate resistance is seen around 1.1300. A clear break above that area could lead price to neutral zone in nearest term testing 1.1350 area but as long as stay below 1.1500 – 1.1570 I still prefer a bearish scenario and any upside pullback should be seen as a good opportunity to sell.

eurusddaily

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February 14th, 2019 @ 5:18 am by Setyo Wibowo

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GBP/USD Forecast
The GBP/USD attempted to push higher yesterday topped at 1.2957 but whipsawed to the downside and closed lower at 1.2845. The bias is bearish in nearest term testing 1.2800. A clear break and daily close below that area could trigger further bearish pressure testing 1.2675 area. Immediate resistance is seen around 1.2900. A clear break above that area could lead price to neutral zone in nearest term but as long as stay below 1.3000 I still prefer a bearish scenario and any upside pullback should be seen as a good opportunity to sell.

gbpusddaily

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February 14th, 2019 @ 5:17 am by Setyo Wibowo

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USD/JPY Forecast
The USD/JPY had a bullish momentum yesterday and now struggling around the daily EMA 200 located around 111.00 region as you can see on my daily chart below. The bias is bullish in nearest term especially if price able to make a clear break above 111.00 targeting 112.20 region. Immediate support is seen around 110.65. A clear break below that area could lead price to neutral zone in nearest term testing 110.00 region which is a good place to buy with a tight stop loss as a clear break back below that area after rejected above EMA 200 could trigger significant bearish pressure.

usdjpydaily

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