Price Action Forex Strategy

As a foreign exchange trader, you must know how to define and how to read buy or sell trading bias. Knowledge about market price action is the most important thing, with this price action you can easily determine swing highs and swing lows in the market price. To define the market trend direction you can use common trend indicator to help you, such as moving average indicator.

Usually foreign exchange traders and especially beginners, choosing a good trading level to put a trading position is very difficult and confusing. If you have enough trading skill then you should not worry about determining a trading direction. In this article we will learn and discuss about 2 methods of determining a trading direction by looking the market trend direction.

The first one is price action

The initial method to determine a trading direction is by market price action. With this market price action we can see a market chart and see when the market prices are commonly moving bullish or bearish with the determination of a swing high and a swing low. When the market prices in forex trading are moving bullish and the lows are consolidating as well. we can assume the market price is in bullish trend and we can go to open buy trading position. In the situation that the market price is moving bearish, and lower lows and highs are being built traders must have a certain bias to open a sell trading position.

In the following image we can find a 4 hour time frame chart. And er can start our analysis by determining back on nearly two months. In this case show that the market price is in a bearish trend. which can let traders to make a bias to open sell trading position.

Movin Average is the second method

Moving averages are the other trading instrument that we can apply to aid define a trading direction or a trading bias. Usually for this hob we can use 200 period moving average SMA. We can use this trend indicator to any trading chart and find when the market price is either above or below the moving average indicator. When the market price is above the average, traders can use a bias that the market trend is moving bullish and look for chances to open sell trading position.