EXAMPLES OF TRADE ANALYSIS USING PRICE ACTION SET UP
Trade set up based on Pure Price Action works in all the time frames as such we will be looking at Monthly time frame of EURUSD pairs
EURUSD MONTHLY CHART
The charts below is EURUSD Monthly time frame showing the tools described above
When you look at the chart image above, I numbered it for easy explanations
Price moved in a bearish direction to hit the Support which closed as a bearish candle but at the time the bearish candle closed there was no pattern. A good Price Action trader will wait for the following month candle to close before taking any trade decision. Then the following month the candle closed as a bullish candle at the support. When you combine the two candles (the Bearish and the bullish) it formed a Bullish Inside Bar. This was the reason the price experienced a bullish trend from where I marked number 1
Number 2 from the image above
As price moved in a bullish direction price hit the monthly Resistance producing a very long bullish candle.Since price is at the Resistance, a good Price Action trader will wait for the next month candle to open and close before taking any trade. The following month a bearish candle formed. Combining the two candles for the two months it formed a candle reversal pattern called Bearish Inside Bar. The was the reason price moved in a bearish trend.
Number 3 from the image above
When at the Price Action set up at number 3 you will observed that price moved in a new level.The first set up is called Bearish Pinbar that I marked number 6. If one have placed a sell pending order(which I will explain before I finished writing this article) you will observe that it would not have triggered. so the following month the price moved higher but the time the bull candle was very small. In the following month as the candle closes it formed a massive bearish candle. Now combining the small bearish and the massive bearish candle formed what we call Bearish Outside Bar. You will aggree with me that the bearish trend was as a result of the bearish Outside Bar.
Number 4 from the image above
At number 4, you will observe that as price hit the Monthly support it closed with a candle reversal pattern called Bullish Pinbar. This is the reason price moved in a bullish direction.Whenever you are trading any market using Price Action strategy always wait for the candle of any time frame you are trading close completely before you start looking for the name of the candle pattern.
Number 5 from the image above.
The Pattern formed at number 5 is call Bullish Dogi (Spinning Top). I don't trade such type of Spinning Top becuse of the excessive long wick. But in any case it is good candle reversal pattern that must be consider when using Price Action strategy to trade any market.
Number 7 from the image above
The number 7 set up is also a very good candle reversal pattern called Bearish Pinabr. As price moved in a new high it formed a pattern that looks like a pinbar but it does not have the full characteristics of a normal pinbar that is why I did not highlight it but price pulled back to retest the resistance forming the normal Pinbar. From there you could see how the price rallied for complete three months without stop in a bearish trend.
Number 8 from the image above
Number 8 set up is called Bullish continuation pattern. Price breakout from the Resistance then formed a good candle continuation pattern called Bullish Pinbar Continuation pattern. Whenever price breakout from Support or Resistance do not be in a hurry to trigger your position but wait for price to react at the Support or resistance to either form candle reversal or candle continuation patterns. The five candle patterns I listed above can be reversal or continuation pattern. Like in this example it is call a continuation pattern but in example number 4 set up it is called a candle reversal pattern. The name is Pinbar.
Number 9 from the image above
Set up number 10 formed a good bullish set up as price hit monthly Resistance to form bullish Pinbar Continuation pattern. When trading any set up using Pinbar it is important to note that if the pinbar have no body the better. It moves the price the more.There are two Pinbar at the same position this is a very good sign of continuation pattern and if found on a support it is a very good reversal patterns.
Number 10 from the image above
I have explained the set up at number 10 when I explain set up number 3. It is the same set up called Bearish Outside Bar
Number 11 from the image above
Number 11 set up is called Bullish Pinbar continuation pattern as price breakout from monthly Resistance. I have equally explained it when I wrote on set up number 8. The little difference is that set up number 11 shows a pullback to retest the the Resistance forming support with a Pinbar pattern.
I will make another image of monthly chart of GBPUSD to let you know that since price Action is applicable in EURUSD monthly time frame that it work very well in GBPUSD time frame and in other time frames.
Below is the monthly time frame of GBPUSD showing similar set up that was I explained in detail in EURUSD monthly time frame