This is the power of using a simple
price action pattern in combination with a higher time frame such as the 4 - hour chart.
When
trading price action patterns, I occasionally shoot for different profit targets, based on what kind of pattern I'm trading and the reward to risk scenario it provides.
Those of you who have been reading my blog for a while probably already know that I don't recommend trading
naked price action patterns.
The triple top / triple bottom forex trading strategy employs a
unique price action pattern that tries to locate three swing highs / lows around the same level respectively.
Although the Fibonacci retracement is arguable a derivative
of price action patterns as it uses swing highs and swing lows to calculate retracement levels.
If a reversal
price action pattern forms (refer to our page for more on price action trading strategies), it is a signal that the current trend is losing steam, and hence it is wise to exit or take profit.
By learning to read the price action of a market, we can determine a market's directional bias as well as trade from
reoccurring price action patterns or price action setups that reflect changes or continuations in market sentiment.
In this video trading lesson, I discuss how I use the «
fakey price action pattern'to make money trading GOLD and the next «potential trade setup» I see setting up on the GOLD chart.
The head and shoulders chart pattern is a strong
bearish price action pattern that occurs when the market makes the first lower high during an uptrend.
If the Candlestick Recognition Master custom indicator forms a bearish candlestick
price action pattern above price bars, it thus denotes a trigger to exit or take profit.
This
propritary price action pattern program focuse on decoding some powerful price patterns that can be be viewed with naked eye, without needing any significant charting software.
There is no maximum, but each chart / pattern is unique so it's important to look at the entire context of the chart not just the
individual price action pattern to make a decision.
Another
great price action pattern, that often leads to very favorable risk to reward scenarios, is the bullish harami candlestick pattern.
If the Candlestick Recognition Master custom indicator forms a bullish candlestick
price action pattern below price bars, then it is time to exit or take profit.
In layman's terms, that just means by learning to
spot price action patterns you can get «clues» as to where the price of a market will go next.