What is Forex Price Action?

in LeoFinance •  3 months ago 

Direct from the desk of Dane Williams.



Are you trying to learn forex trading?

It all starts right here with my simple forex support and resistance strategy.

Within this guide, you'll learn my trading strategy that combines forex support and resistance with powerful price action setups.

It's time you became a consistently profitable forex trader.


What is Forex Price Action?

After going over what is forex support and resistance, it's time to move onto price action.

Price action is how price moves around levels of support and resistance. It's displayed visually by the candles on your chart, with different candle patterns showing us who's in control between buyers and sellers at any given time.

As I’ve said previously, the closest you’ll get to predicting the future, is in the here and now of price. All technical analysis indicators derive their formulas from price, so why not just go to the source and use price itself to trade?

To read price action, we use Japanese candlestick charts as a visual representation of price.

What is a Forex Japanese Candlestick?

Each candle display price action within a specific timeframe.

For example on a daily chart, each individual candle displays an entire day's worth of price action.

But when it comes to explaining what is a forex Japanese candlestick, let’s just say that a picture is worth a thousand words:

What is a forex Japanese candlestick

As you can see in the diagram above, each candle has an open, close, a high and a low. Between which, you have a body and two wicks.

As an example, let’s say you’re watching the EUR/USD daily chart. This means that each candle represents 1 day's worth of price action.

If the candle opens at 1.2000 and moves up by 100 pips to close at 1.2100, the candle’s body will be bullish (green) and exactly 100 pips high.

But lets say that within that same 1 hour of price action, price traded as low as 1.1975 and as high as 1.2025. The candle would then have two wicks above and below the candle body’s open and close, reaching the high and low point of that hour’s price action.

For the candle’s body to be bearish (red), simply reverse the open and low so that the candle opened higher than when it closed.

Always keep in mind that candle patterns are useless on their own. For them to mean something, you must always consider the market environment and levels that they have formed around.


If you have any questions around what is forex price action, then leave a comment below and I'll be happy to have a chat.

Best of probabilities to you,

Dane.



FOREX BROKR | LeoFinance Blog
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Thank you so much!

I seem that Price action describe Market Alive.
That make me dare to trade.

But, should I learn to trade for environmental and political state?
Is it right or not?

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There are two ways to analyse a market.

Technical analysis - Looks at price and candle patterns to make trading decisions.

Fundamental analysis - Looks at real world, environmental, political and economic factors to make trading decisions.

I use purely technical analysis to make my trading decisions, but many traders combine both to add conviction to their trades.

What you choose is entirely up to you.

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I will learn both Technical and Fundamental analysis.
In my country Myanmar, that isn't develope and Bank policy is not good.

Thank you so much.

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These candlesticks started to make sense when I was buying LEO with market orders, I put that little spike on the top of the green candle many times.

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One other thing to note is that the more liquid a market is (that is how much volume is being traded), the more predictable that candles and price action becomes.

This is because on markets that have low volume, just 1 rogue trade that's much higher or lower than the actual market price, can cause your charts to print misleading patterns.

If a market is highly liquid, then these rogue trades won't happen as often, because volume is tightly centred at the true market price, making candles and price action much cleaner.


LEO is still a market that has very low volume and as a result, trusting candles and price action can sometimes mislead you.

If you're just getting started on learning price action, I'd definitely check out more liquid forex markets such as EUR/USD or even BTC/USD if you're a purely crypto guy.

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I look at the major currencies most days just for my being in tune with the world and the ten year and its effects on the metals. I never looked at the volume or price action.

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