Lets dig a little deeper as to what is really happening here. This dead zone indicates that the price action is going nowhere. If the price action would make its way down to the lower red zone, then the trend is obviously not going up anymore and you want to get out this trade immediately. This is when you start seeing the double or triple bottom trading pattern form. This pattern applies a really neat trick by using the 123 pattern (also called 1 2 3 reversal) as a signal to buy or sell using the trendline trading system. Knowing these can help you jump into some of the best setups that can lead to some serious gains in your trading account. Price Action Setups: The Red Zone, if you know anything about American football, you know that the red zone the area between the 20-yard line and goal line. So since we now know what the dead zone looks like we can go to step #2 in this price action analysis process and determine where the RedZone. While much of what we see on the chart may be random, price action at various points in the chart, inflection points, can point to an imbalance of supply/demand which may be exploited.
So there you have, these are the best 12 Forex Price Action Trading Strategies That Can Be used by all all levels of traders because they are easy to understand and implement. Sometimes you will see market move in a downtrend and break the support levels and it goes down for a while only to return back up to the support levels that was just broken.
Price Action Trend Determination, one of the basic ways of using the movement of price is to determine the trend of the market you are looking. It is far too common for traders to impose their will or bias on a chart and since our brains are pattern recognition machines, it is easy to see something that simply is not there. It could even be when the price movement creates a swing high or swing low. Or, as the flipside to support breaking, you may be catching a downtrending market rolling over into an uptrend. The vital key is that these must setup in an area where we can expect a level of supply/demand imbalance. This is for those cautious traders that do not like to trade the bounce of the trendline trading system just yet but need the breakout of the 1-2-3 pattern to get into a trade. Many traders place their stop just beyond these levels and often times traders will be hit by a stop run that takes them from their trades and then price movement continues in the direction the trader wanted. One reason I like it is because you have an obvious area for your stop loss and the trade entry is determined by breaking of support/resistance. Also, it is quite common for a trend line to break and then be retested from the other side. Price action trading strategies are a method of trading that uses an analysis of price movement to form the basis of a trading method.
We recommend this strategy to be for swing traders and day traders. Anything under an hour time period you will not see us using this strategy. One of the simplest and most effective trading strategies in the world, is simply trading price action signals from horizontal levels on a price chart.