Price Action Trading Guide

for Forex Traders

WHAT IS PRICE ACTION TRADING?

• Price action trading in forex is a trading method based solely on analyzing previous price behaviors.

• This means that a trader analyzes market conditions on a naked chart without using additional indicators or oscillators.

IDENTIFY TRENDS• The most important process in a

price action trading strategy is in identifying ongoing trends.

• You should always try to trade in accordance with the prevailing trend whenever possible.

PRICE CONSOLIDATION

• Price consolidation is when the price is ranging without any clear direction.

• For most traders, a good trading rule would be to stay out of the market when the price is consolidating in order to avoid whipsaws.

S/R LEVELS• Traders use support and

resistance levels to set entry and exit points on their trading position when trading with price action.

S / R LEVELS• Every forex trading strategy

can benefit from proper support and resistance identification.

Watch Price Action around Key

Support and Resistance Areas

BREAKOUTS• One of the most common ways

to trade key levels is simply by

trying to go with the market flow

after the price has broken thru a

support or a resistance level

TRENDLINES• Trend lines act the same way

as a horizontal support or

resistance. The difference is

that a trendline is diagnonal

Diagonal Support and Resistance

using Trendline Analysis

CHANNELS• Channels act the same way as

a trend line. The difference,

though, is that channels have

another level, which forms a

corridor with the trend.

Price Action Contained within

a Channel Breaks to the Upside

CANDLESTICKS

• The use of candle patterns

is a very common technique

for price action traders.

Downward price move is halted by a Hammer

Candle leading to higher price movement

CHART PATTERNS• Chart patterns are specific

formations and figures on the chart which give clues to potential trend continuations and reversals.

MEASURE MOVES• In many cases, chart patterns

have the potential to move a forex pair with an amount equal to the size of the formation.

• This is typically referred to as a measured move.

Head and Shoulders Chart Formation

Check Out the “IN DEPTH”

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