Making Moola with Price Action Trading.
If you ever try a trading strategy, you will often feel completely exhausted with indicators, volume patterns and other excess garbage which is not needed. The donwfall with indicators is that they are never current- they will only be lagging indicators. (some examples are moving averages, bollinger bands and other sometimes needles addons)
So Just What is Price Action? Basically Price Action is the action following the Price (with a candlestick chart or bar chart usually) and using maybe one or 2 other indicators (keep it very simple!). Using Price Action you can find supports, resistances, and price movement. The ideal chart I use for Price Action trading is a candlestick chart.
The left side is always the open tick, the right side is the close, and the main ‘body’ is the lowest and highest price of the day. A candlestick chart is similar but colored red to green for a positive of negative move. (or can be black and white also)
Price Action with Bar Charts. A couple of Price Action patterns to watch for are Bullish Outside Bar, Inside Bars, Bearish Outside Bar. (best when used at areas of resistance or support)
Bullish Outside Bar
This is when the second bar completely engulfs the previous bar but is usually CLOSING HIGHER. This is Bullish (upward trending momentum) and can be a great start position if at the correct point in the resistance. Construct a line of all the other areas of Resistance and you will see where this spot is. Resistance is classified as areas where the price reached but couldn’t breakthrough, sometimes Multiple times. The more times the price has tried to move through the Resistance the stronger the breakout will be.
An inside bar is a neutral bar , which indicates ‘indecision’ in the market. There are equal buyers and sellers and the bulls nor bears want to make a move or are too afraid. These type of bars will usually hang on for a while, and are the best bases for the forthcoming upward or downward move. Eye them closely and construct your trend lines and support lines for trend paths.
Bearish Outside Bars
This is when the bar on the right completely engulfs the previous bar, but is closing below the previous bar. This is a bearish move (to the downside) and can often be used as a short entry, if used in conjunction with ‘support’ levels. Look back at your chart to find an area with multiple support breaches. One bar might not be enough (for a short entry) you might want to wait for a confirmation also from more bearish outside bars.