• What is a price action trading signal?
Next, let’s discuss how we can use price action analysis to find
entries into the Forex market from a raw price chart. As a result of
years of trading the markets I have boiled down all I have learned into
my own unique method of trading with price action. This method consists
of a handful of very specific price action entry triggers that can
provide you with a high-probability entry into the market. Essentially,
what we are looking for is reoccurring price patterns that tell us
something about what the market might do in the near-future.
For purposes of brevity and out of respect for my paid members, I
won’t give away all of my trading strategies and entry triggers here,
but you can learn more about the trading strategies that I teach in my trading course. In the chart below, we are going to look at a particularly good price action signal for trading with trends; the inside bar strategy.
In the example chart below, we can see one price action
trading signal that I like to use in trending markets; the inside bar
• How to use price action analysis to determine a market’s trend
You will probably come across many different indicators designed to
tell you what the trend of a market is. However, the most time-tested
and trusted way for determining a market’s trend is simply to look at
the daily charts and analyze the market’s price action. To identify a
downtrend, we look for patterns of lower highs and lower lows, sometimes
annotated by “LH and LL”. To identify an uptrend, we look for patterns
of higher highs and higher lows, sometimes annotated by “HH and HL”.
In the example chart below, we can see examples of a downtrend, an uptrend and an uptrend changing to a downtrend:
• Where and when should you trade a price action signal?
In my trading course I focus heavily on teaching my members how to
trade with “confluence”. When I say “trading with confluence” I am
basically referring to looking for areas or levels in the market that
are clearly significant. Confluence means when things come together or
intersect. Thus, when we are looking to “trade with confluence” we are
trying to put together an obvious price action signal with a significant
level in the market. There are different factors of confluence that we
can watch for, but in the chart below I am showing you price action
setups that formed at key support and resistance levels in the market;
support and resistance are each a factor of confluence. Note, I have
shown you two more price action setups in the chart below; the pin bar strategy and the fakey trading signal.
In the example chart below, we are looking how to trade price action setups from confluent levels in the market:
This lesson gave you a basic overview of what price action analysis
is and how to use it in the markets. From here, you should proceed to
the next part of this beginner’s course and continue learning about
Forex and price action trading.