Price Action Trading Strategy to Boost Your Entries and Exits in Forex Trading

Price action trading is a methodology that relies on historical prices (open, high, low, close) and actual price movements, rather than relying solely on technical indicators.

Stay with me, it’s not as difficult as it sounds and if you want one profitable strategy as a trader I recommend you backtest this strategy and take your trading to the next level.

With price actions, traders can trade what they see the market doing and not what they think the market should do.

Better than indicators right

Here is even something better, with price action you will have cleaner charts and can pinpoint entries and exits with better precision

What you discover with price action trading:

· Support and resistance

· Candlestick patterns

· How the market moves

Let me try and break one major piece for this one

Support and Resistance

Let’s dive in

The markets will always make recurring patterns as I once said and support and resistance is just one way that will better improve your analysis in trading

Support- this is simply a horizontal line or area on your chart where you expect buyers to push the price higher. Trust me this strategy is all about price.

Resistance- this is a horizontal line or area on your chart where you can expect sellers to push the price lower

So this is where it gets interesting

Support and resistance levels can swap roles. How you ask

When support breaks, it can become resistance. And when resistance breaks it can become support.

Here is a Tip When Drawing Support and Resistance

Draw the most obvious levels, if you want to be more accurate try zooming out your charts it will give you a much clearer view.

What you want to do after is try and adjust your levels to get the most number of touches but remember if you second guess it’s not an important level.

Small Talk on Candlesticks

A candlestick has 4 data points

Open- this is the opening price

High — this is the highest price over a fixed period

Low- this is the lowest price over a fixed period

Close- this is the closing price

Here are 4 major candlesticks you want to learn about

Before I dive into this here are two major terms that you probably should know;

Bullish move — a bullish move or market is where the prices are rising or going high

Bearish move — a bearish move or market is where the prices are dropping or going low

· Hammer

Hammer is a bullish reversal pattern that forms after a decline in price

It shows rejection of lower prices so this means that the buyers are in control

· Shooting star

The shooting star is a bearish reversal pattern that forms after the price has advanced

It shows that sellers have control of the market

· Bullish engulfing pattern

A bullish engulfing pattern is a bullish reversal candlestick that forms after a decline in price

It shows that buyers have overwhelmed the sellers and are now in control

· Bearish engulfing pattern

A bearish engulfing pattern is a bearish reversal candlestick pattern that forms after the price has advanced

So this simply tells you that the sellers have overwhelmed the buyers and are now in control