Price Action

The Elliott Wave theory is one of the most popular subjects in trading and many traders claim that it actually works, so you better pay attention to this lesson. As a forex trader, you obviously want to know when to enter and when to exit the market. Mr. Elliott’s theory might give you some clues.

The flag patterns are continuation patterns, which means the price enters a brief consolidation period before it continues in the trend direction. Traders would expect to recognize bullish flags on up trends and bearish flags on down trends.

Candlestick price action makes use of the hollow (or filled) candlestick pattern and the wicks (or shadows), which determine the open and close and the high and low, respectively. Based on distinct patterns, candlestick price action can help traders to determine what is happening in the forex and crypto markets.

By analysing price action, traders can benefit as the chart patterns can signal a potential reversal to the trend and open positions accordingly. That the reversal patterns can appear in any time frame suggests they can be used by both swing traders and short-term day traders.

As the price action patterns are formed across multiple time frames, traders can take advantage of the continuation patterns and either day trade or swing trade, depending on their preference. In most cases, the continuation chart patterns can be expected especially after a strong move by the markets.

Trend lines and price channels are two simple ways to trade corrections or breakouts in the trend. Remember, this would ideally be a counter-trend trading. While there are always risks involved, traders can capture profits quickly and efficiently on the forex and crypto markets.

Support and resistance levels are one of the most important elements of technical analysis and price action trading. Regardless of the market, you must keep in mind, that market has a memory and it tends to respect important support/resistance levels. The big investors respect those levels, so you should also.

Price action analysis works because the market has a memory, which means the chart patterns repeat themselves in time periods. If you compare it to technical indicators, the price action analysis would definitely give you more insights into the forex and crypto markets.