ideal case, see chart below for clarity: But you know that in reality, the market is not like that, its more like this chart shown below: The chart above shows an initial downtrend and along the way there. (If you are interested in trading currency news, check out these news trading strategies: interest rates news forex trading strategy, Non Farm Payroll Forex Trading Strategy the 1 minute forex news trading strategy ) From my own experience and from what Ive seen, I say. If we had bought and sold following the rules of the channel we would have nice gains. Heres what It look like: This is what a double bottom pattern looks like on a real forex chart: 3 Ways on How To Trade Double Bottoms #1: Trade the breakout of the neckline: Many traders once they see that the double pattern has formed. Theres two ways you will learn from price action: First is to spend hours over your charts analysing what happened in the past and asking these types of questions: Why did price make a big upward move from here and why did price make. In a abcd pattern there are three waves among them two of them are impulsive in nature while one of them is corrective. If the lower wick is short, it tells your theres very minimal buying pressure. Here is an example shown on the chart below: So when you see such happening, you should be looking for bearish reversal candlestick to go short. Your personality, work circumstances etc may dictate what timeframe you can use. See chart below: (enlarge if you cannot see clearly). What is a channel?
In this example our short position would be a hugely successful trade. Once these three pivots are set the trading platform will automatically draw Andrews pitchfork for you. The use of reversal candlestick trading on support and resistance levels becomes very handy in these cases. Price action is not immune to false signals but it is a much better option than using other indicatorswhich are essentially derived from the raw price data anyway. For example: I see a sell setup on my chart but because Ive read the analysts report that says he is bullish on this currency pair because of this and that reason, I hesitate to pull the trigger. For some of you, it may take a while for you to understand, while some of you may be very quick to learn. All the price action trading stuff described here are applicable to all markets. When you see this in a downtred or in an area of support, take note because the market may be heading up and this is your signal to buy. This is the most simple and the most effective way of trading in a flat market.
Trading using Support and resistance levels. When focusing to the recent price action on the above chart we can see market is probably forming another lower high so our plan is to sell the pair. Si vous ne comprenez pas les termes de l'équation, vous ne pourrez pas trouver la solution. When you have price moving across time due to supply and demand, then this creates trends.