Price Action for Dummies
Learn to read price charts - the basics of Forex Price Action & Technical Indicators
"Price action is the foundation of technical analysis. Knowing how price moves and behaves is paramount to becoming a successful Forex trader.
Learn price action and technical analysis for FREE. See my free online course below..."
Forex Price Action Course - An Introduction to Price Action
What is price action in Forex?
The prices of currencies are forever changing. Currency pairs move up and move down. These movements are displayed on charts called price charts. The historical price movements and patterns formed on price charts are called price action. Price charts show how price has acted in the past, hence the term price action.
Price charts show a Forex trader a historical record of price movements and behaviour. They also show price patterns, price highs, and price lows.
Price action is the foundation of technical analysis. It includes:
1. Identifying the current price direction
2. Identifying high and low points of price
3. Identifying patterns formed by price
Why use price action?
Price action can help a trader predict where future prices will be. This increases the chances of a trader making money from Forex trading.
I am a professional Forex trader. I use price action daily. It plays a significant part in my Forex trading decisions.
Price action is universal. Once learned, you can use price action to trade other financial markets, not just Forex.
Trading using price action
This step-by-step price action trading course will teach you the basics. Watch the video below for a more detailed introduction. Then, carry on with the program below. The course is all online, 100% free, and includes a free price action PDF!
Trading Using Price Action - Trending Markets Explained
When a Forex pair moves in a generally upward direction, this is called an uptrend. Sometimes, this is referred to as a bullish market.
When a Forex pair moves in a generally downward direction, this is called a downtrend. Sometimes, this is referred to as a bearish market.
Trends have specific characteristics. For example, price forms swings when a currency pair is trending.
Uptrends form a series of higher price swings. These are called higher highs and higher lows.
Downtrends form a series of lower price swings. These are called lower highs and lower lows.
Learning how markets trend is critical to successful price action trading. You can learn more with examples in the video below.
Trading Using Price Action - Ranging Markets Explained
If a currency pair is not trending, it could be ranging.
A ranging market means that the price is moving sideways. It is not bullish or bearish. Generally, a range means that the price is moving between 2 areas of the market. A ranging market can also be called a sideways market, market indecision, or market consolidation.
The free video below will give you some examples of price action ranging.
Want to practice? You get free price charts at TradingView. Alternatively, consider opening a free practice account with a Forex broker.
Forex Price Action Course - Japanese Candlesticks Explained
The majority of Forex traders use Japanese candlesticks. They play an essential part in Forex price action trading.
They may look daunting initially, but they are relatively easy to understand.
A Forex trader analyses - "reads" - candlesticks. Being able to read Japanese candlesticks can help a Forex trader. They can indicate where future prices might be. If a trader knows where future prices may be, he can use this to his advantage and make money!
Each candlestick has a candle body and candle wicks. The opening and closing of price creates the candle bodies. The high and low price forms candle wicks.
Learn more about Japanese Candlesticks and how to read them in my online video below.
Trading Using Price Action - Engulfing Candles Explained
Certain Japanese Candlesticks can signal future price direction. These candlesticks are called candlestick setups. Sometimes, setups are referred to as triggers or price action setups.
Engulfing candles are a price action setup. They are one of the most simple and commonly used setups.
The next lesson in this free trading course will teach you what an engulfing candle is and how to use it in price action trading.
Trading Forex Using Price Action - Pin Bars Explained
Another standard price action setup is the Pin Bar.
These setups are also called kangaroo tails, hammers, hanging man, and shooting stars.
Pin bars are another simple yet effective price action setup.
Forex Price Action Course - Support and Resistance Explained
As price moves, it forms clear levels and areas of the market of support and resistance.
Support is a level or area below the current price that keeps the price up. These areas have historically been a lot of buying or market bulls. Support levels indicate where buyers potentially are. In support areas, the price could become bullish.
Resistance is a level or area above the current price that keeps the price down. These areas have historically been a lot of selling or market bears. Resistance levels indicate where sellers potentially are. In resistance areas, the price could become bearish.
Support and resistance can form from historical price reversals - where price has historically reversed. These reversals can indicate where the price may change direction in the future. Technical indicators and psychological levels can also form support and resistance.
There are different types of support and resistance. These are horizontal support and resistance, diagonal support and resistance, psychological support and resistance, and dynamic support and resistance.
When support is broken, it becomes resistance. When resistance is broken, it becomes support.
Do you need clarification? Roll on the videos!
Forex Price Action Course - Price Patterns Explained
As price moves and trends, it can create patterns.
Price action forms patterns in the Forex market. These patterns can indicate the future price direction, like Japanese Candlestick setups, support, and resistance.
Common price action patterns include trend and consolidation, trend reversal, and trend continuation patterns.
The most common trend reversal patterns are:
Double bottom patterns
Head & shoulders patterns
Inverted head & shoulders
The most common trend continuation patterns are wedges, triangles, and breakouts.
Learn more about price action patterns in my free price patterns guide video below.