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What is Price Action?

Price Action is an approach in technical analysis that focuses on the movement of an asset or currency pair. Although it may seem simple, its application requires experience and in-depth understanding. This article will discuss the definition, basic applications, and supporting factors of Price Action.

Definition of Price Action:

Price Action is the study of past price movements to help traders identify patterns and market conditions. It involves chart analysis, including candlestick patterns, to evaluate the next price direction.

Basic Applications of Price Action Analysis:
A. Market Condition Identification

  • Trending: Identified through Higher Highs (HH) and Higher Lows (HL) in an uptrend, as well as Lower Highs (LH) and Lower Lows (LL) in a downtrend.
  • Consolidation (Sideways): Recognized when prices move zig-zag without forming a clear trend.

B. Identification of Resistance and Support Points

  • Resistance: Point where prices tend to stop rising and may reverse downward.
  • Support: Point where prices tend to stop falling and may reverse upward.

Supporting Factors for Price Action:

  • Time Frame: The chart's time frame used influences signal accuracy. Lower time frames increase the risk of fake signals.
  • Forex Calendar: Major news releases can impact price movements. Use a forex calendar to anticipate important news.

Price Action, although simple, requires caution and experience. It is used as a tool to help identify market conditions, trends, and support/resistance levels. A good understanding of supporting factors such as time frames and the forex calendar is crucial to avoid significant risks. Beginners are advised to practice on a demo account before applying Price Action to live trading. With a deep understanding, Price Action can become a powerful strategy in the trading world.

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