Price action involves looking at every candle stick (summary of basic price data or price movement) on a chart to identify a price’s probable direction without the use of any technical indicators. Analyzing price action allows traders to know who is controlling the price. Also, it tells them whether the buyers or sellers are losing control of the price. After determining this, it will be possible to pinpoint price reversals and make money. While you can get a good harmonic & price action trading course to help you learn more about forex trading strategies, here are some price action tips to consider.
Determine Support and Resistance Levels
This should be the first things that you know about in technical analysis. When it comes to chart reading, this is the most significant aspect. However, not all traders keep an eye on this. The majority of them are too busy focusing on nonsense. It is important to know that a support or resistance level is an area on a price action chart.
Analyze Swing Points
Swing points or pivot points are areas on the chart where there is an occurrence of short-term reversals. However, not all of these points are made equal. Indeed, your decision to purchase a pullback will rely upon the previous swing point.
Find Broad Range Candles
Broad range candles signify necessary changes in sentiment on all charts in all time frames. They tell important turning points and can usually be utilized for determining reversals.
Look for Rejected Price Levels
On a candlestick chart, upper or lower shadows on candles often signify that a shooting star candlestick or a hammer candlestick pattern. No matter what the name is, such shadows mean the rejection of a price level.
Be Aware of the 50 Percent Rule
You will know if a candle is essential by checking how far it has moved into the previous-days range. It is essential if it moves a minimum of 50 percent into the previous- days range. Often, this shows up on the chart as an engulfing or piercing candlestick pattern.
Know about the Gape and Trap Price Pattern
Every gap is necessary tells on all price action charts. However, there is a single kind of gap which is particularly essential when it comes to analyzing price action. This is known as gap and trap. This gaps down at the open; however, closes the day on top of the opening price.
Measure the Swing’s Depth
Determine how far a price moves into the prior swing. You need to know this as it can identify the price’s future direction. If the price action moves around halfway down into the prior swing, then this is great. In case it retraces more than this, the move’s validity can be questioned as a price in a strong trend must not retrace over halfway into a prior swing.
Learn the Consecutive Up and Down Days
Prices will reverse direction following consecutive up days or down days. Thus, remember this if you trade into the forex world.
Know the Trending Price’s Location
The start of a trend is your friend in trading. This is because a number of the best moves take place at the start of a trend.
Author Bio : Yudha Putra is a popular forex traders who aim to help beginners in the trading world. His posts on harmonic & price action trading course have always been a good start to newbie traders.