If you are new to forex, I advise you to go to babypips.com and get yourself familiar with forex basics first and then come back to learn forex price action basics.
So what is forex price action? Forex price action trading is analyzing how price currently moves so we can predict future price movement. Focus is on price action exclusively, there are not many indicators if any at all. Charts are clean and easy to read. Basically we are watching what price is doing
Let’s compare two charts. Both are EUR/USD H4. First one is under heavy load of indicators and second is clean with only support and resistance areas. The second one is obviously much easier for the eye. You don’t need bunch of indicators to distract you. Reading price action is all you need. Keep it simple and don’t over complicate things.
We must analyze price action and make a well informed prediction.
Like when price is moving rapidly in one direction, maybe it will continue to move in that direction.
Or when price suddenly starts to struggle and stalls, then maybe it’s about to turn around.
Maybe it will, maybe it will not. We are not here to guess. That is why we must analyse price action.
Candlesticks are in my opinion most informative form of charting. Using candlesticks we can tell what price is doing right now and try to figure out what price will do next. We need to understand each candles life cycle. Each candle has useful information to tell us about it’s life. We can see how bears and bulls struggled in it’s life cycle. We can see what price has done. It shows us when price is stalling and might reverse, then it’s probably profitable to reversal trade. We see when price is becoming exhausted, so we can exit trades at the right time. We can see when price is going to continue, so we can extend our target and get more profit. It shows us when price is acting crazy and we should not trade, because keeping away from bad trades is also extremely important and useful skill to have.
Reading candlesticks is very important tool in price action strategy, so please check out my next lesson about candlesticks.
If you have any questions please comment below or send me an e-mail and I will answer happily.