Price Action Patterns and their meaning

Price action typically is the security price movement up or down over a period of time. Basically, technical analysis formations and chart patterns have their origin in price action.

Ideally, Price action doesn’t rely on technical indicators, to mean that trade happens on a clean schedule since there are no delayed signals but just the price; one of its advantage.

Another advantage of the price actions strategy is the fact that analysis within this system takes approximately 15 minutes each day. What this means for you as the trader is you get to work with it and go ahead on your daily business with no worries regarding your market position. With the Price action strategy, you are free to open a trading terminal twice a day at your convenience. 

How Price Action works

Unlike the indicators which study past information to predict price direction, Price action doesn’t require you to study economic news, or get into the depth of technical analysis. All you must do is simply take some 15-30 minutes in the course of your day and search for new signals and note open deals. This strategy saves you time trying to forecast on price movements with no guarantee of correct predictions.

Price Action makes use of candlestick patterns.

Three stages of Price Action trading strategy

·         Determination of support/resistance levels

·         Definition pf Price action patterns

·         Definition of Stop loss and take profit 

Price Action trading strategy is an ideal strategy owing to its simplicity and indicator-free system. With some practice, price action can be your key to making a profit in forex.

However, it is ideal to use the Price action strategy daily for an approximate 4-5hr period to increase signal accuracy. On lesser timeframes, the signal accuracy may be reduced hence inaccuracy.