guys
hi again
can you help me with this question:
How do you incorporate price action analysis into your trading strategy, and what specific price patterns or formations do you find most useful in making trading decisions?
Price action is basically just the way price moves. One good example would be a trend; In an uptrend price consistently makes higher highs and higher lows.
There are 2 simple ways to enter into a trend: 1) Buy when price pulls back, or 2) Buy when price breaches the previous high.
Support resistance are a bit more subjective because different people can see these areas differently. Basically you look for areas where price has touched then reversed, 2 or more touches around the same area would be considered a support or a resistance area.
Again, there are different ways to enter these trades: 1) Buy/Sell when price bounces off 2) Buy/Sell when price breaks through.
How you approach these strategies is up to you and takes time and practice. But there is plenty of info out there to help get you started, the key is to start with some basics and build from there.
When it comes to incorporating price action analysis into your trading strategy, the key is to pay attention to those support and resistance levels that hold significance. Keep an eye out for candlestick patterns that reveal market sentiment, and keep an eye on chart patterns like triangles or head and shoulders
2 Likes
I think no pattern or formation guarantees the outcome. Does it?
This is a fair point, though some people might say “Well, that’s obvious, nothing is perfect” and downplay your comment, many traders forget this important fact of life when they start clicking buy and sell.
So you always need a Plan B, which will save your neck if Plan A does not work like you thought it would.
Would you explain more about higher high and higher lows?
By this “Buy when price breaches the previous high” you mean go long while the price is moving y\to a higher position?
Oooh really appreciate your though on this topic thanks.
just a question, what are your common candlestick patterns that often you look for when analyzing support and resistance levels?
I am not sure but I guess Amy that candlestick patterns provide indications rather than guarantees, and no pattern or formation can guarantee a specific outcome in trading.
Having a backup plan in trading is essential. Markets can be unpredictable, and outcomes may not always align with our expectations. well said tommor thanks
Here’s a chart that shows HH’s and HL’s:
Yes, in an uptrend when price breaches the previous HH, go long.This takes patience because as you can see, shortly after price breaches the HH, there’s usually a pullback, so you would want to give your SL plenty room to ride those pullbacks.
This strategy tends to be more reliable in higher TF’s such as 4H and up.
I trade price action when the market follows one-directional trend and it seems easier to me.