Price action, along with time, is one of the purest forms of data available in the technical analysis. To trade profitably, you want to know where the market is most likely headed. Using price action analysis, you can do just that. There are hints of the strength of the market movement hidden within every candlestick. When this information is read correctly, it is possible to determine whether the market is going to reverse, continue on the current course or whether it will enter a ranging period.
WHAT IS PRICE ACTION
Reading price action is a subjective matter. This technique is rather an art then science which takes years of experience to fully master. Therefore, the purpose of our Price Action Trading System is to make reading the price action as objective as possible. This enables you to use the price action analysis a lot faster in your manual trading. Knowing whether the market is dominated by bulls or bears can help a great deal with your decision making.
PRICE ACTION STRENGTH INDICATOR
Price Action Strength indicator uses the purest form of data available in the market. With price action, it indicates the strength of the market move. Reading price action and measuring its strength is a subjective matter. Hence the purpose of the indicator is to make the reading of the price action strength as objective as possible.
The indicator can be used to determine the strength of the market movement/trend. This along with the actual price movement can help you determine whether the trend is going to reverse or carry on. Furthermore, it can also help you determine whether a breakout will carry over to a trend or if the move was just ‘market noise’. Therefore a bigger movement of the price will not be likely.
The ‘Strength’ buffer is calculated using many indications of price action strength. Three of these indications are the average bull/bear bar size, the average bull/bear bars in a row and the average upper/lower wick size during the given period. Using these calculations it is possible to see ‘behind the curtains’ of any market movement. As a result, this helps to determine the strength of the price action.
The ‘Overlap’ buffer is calculated using the average overlapping of the bars in comparison to the total bar sizes during the given period. The bigger value the overlap histogram outputs, the more direct a certain market movement. This indicates strong breakouts and trends. The smaller the value, the more the price ranges, therefore the trend is losing its strength or the market is ranging.
Reversal buffer is indicated with a thin upwards/downwards arrow. The reversal arrow indicates that the reversal of the price is likely. Reversal signals are the ones that produce the most false signals, but if correct, they predict the biggest moves. It is recommended to use a risk/reward of at least 2 or bigger when taking these signals.
Continuation buffer is indicated with a slanted arrow. The continuation arrow indicates that the market is gaining momentum in the corresponding direction. These signals often appear during an ongoing trend and are meant as a supportive indication that the market will more likely continue on the current course. Continuation signals provide more accurate predictions, but the market moves following are often not huge. It is recommended to use these signals for adding on to trend trades or scalps.
Confirmation buffer is indicated with a thick upwards/downwards arrow. The confirmation arrow shows up when both the reversal and continuation signals appears during the same candle. This indicates a highly probable move.
PRICE ACTION TRIGGERS INDICATOR
The purpose of the Price Action Triggers indicator is to spot the specific points for trade entries. After you have confirmed the market sentiment, you can look for signals created by the Price Action Triggers indicator to enter trades in the corresponding direction. The indicator uses pure price action analysis to detect various triggers, that include single and multiple bar entry setups.
First of all, the indicators have few inputs and are easy to use. All the signals the indicators generate are non-repainting and generated at the start of the candle they appear on. The Price Action Trading System indicators work on any timeframe and symbol in the Metatrader4 platform. Furthermore, the indicators can be adjusted so that they sound alerts once the signal is created. Finally, the indicators are also capable of sending push notifications to your phone application as well as emails.
PRICE ACTION TRADING SYSTEM
The Price Action Trading System consists of two steps – determining the market sentiment and finding out the exact entry points/triggers. We have created the Price Action Strength indicator for detecting the market sentiment changes. After the sentiment has been confirmed, you can use the Price Action Triggers indicator for finding the exact points to enter the market in the corresponding direction. Both of the indicators use nothing but pure price action analysis to read the market like no other regular indicators do.