Price Action Trading: Buying the Market (live lesson)

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Usually I don’t share my trade activities on this blog. But today I changed my mind after seeing a nice trade setup that meets my entry criteria according to price action trading analysis.

You know the kind of trade setups that are very obvious and you do not even need to rethink your decision?

That’s exactly what am talking about. So I decided to bet my money because I was 100% sure about this. The pair that I am trading in this case is NZDJPY. Even as I write this review, the trades are still live, and haven’t closed in profit yet.

Price action trading is the most potent form of weapon to use as a hands-on trader. Even when looking for a Forex robot to buy, I recommend that you go with a price action trading robot because they are the most efficient.

With calculated moves, am sure you will see your bank account growing bit by bit.

But now, before you can focus on the money, focus on how to do the right thing first to become a good price action trader.

P.S: for those who are not decided yet on whether to become hands on traders or Forex robot users, here’s an article for that.

That being said, I just decided to take this trade at the right moment. Perhaps I was over-confident. Who wouldn’t when an obvious trade setup forms right before their eyes?

Anyway, if you’re looking to become a highly efficient price action trader who snipes opportunities at the right time, this post is for you.

It will show you the mechanics of inside bar patterns and how to use them to enter the market, either in an uptrend or downtrend market.

Price action trading: Patterns to look for when the market is at a support zone

I did not just enter this trade because a nice entry signal had formed. Instead, I looked for the buy entry signal in at least 2 different time frames, then confirmed if the area where it was taking place at was a support zone. Learn about support and resistance zones here.

 

weekly timeframe price action trading.png

The weekly time frame chat for the NZDJPY indicated that price was at a sure support zone. There were no signs that price would break support zone or even test it any time soon.

At least 2 solid green bars had formed, and so I entered just when the third green bar was forming. The market was clearly indicating that it was reversing direction, or rather the bulls were taking over.

So what I needed at this point in time was to refine my entry point. You don’t just enter the market based on one time frame alone.

I prefer that you check the right entry signals using the 1 or 4 hour time frame. 12 hour time frame is also good. But at least confirm your entry with two other time frames to be sure.

I mostly trade the daily timeframe because it’s the most efficient of all, plus it has a lot more entry signals compared to the weekly time frame which can keep you waiting for weeks without giving you any meaningful signal.

So before buying the market, I confirmed with the daily time frame to see if an entry signal had formed. Indeed there was an inside bar, and even a bullish pin bar. Perfect!

Just to be sure that I was buying the market at the right spot, I confirmed my entry using the 1h and 4h timeframes respectively.

how to trade 1h timeframe using price action
1h timeframe on the NZDJPY chart

 

4 hour timeframe price action how to enter the market
4h timeframe on the NZDJPY chart

 

The 4h time frame indicated that the market was breaking out of a consolidation zone. A consolidation zone is an area characterized by several candlesticks that neither move the price up or down. Never place any trade at a consolidation zone unless you’re a bad ass who is desperate to gamble and lose capital. I said NEVER.

Price action trading on 1h and above time frames

I started with the weekly timeframe to show you just how clear that support line was visible.

There is no way you can miss what is going on in this chart if you look at the weekly timeframe.

It tells you that price will most likely respect the support zone, and thus our job is to look for the right buy signals to enter the market. In that case, you would be looking for a bullish pin bar or an inside bar pattern to buy the market. This post will show you how to trade pin bars here.

Note: An inside bar pattern forms when a long candlestick precedes a smaller candlestick so that the high and low of the smaller inner candlestick is completely covered by the first candle. 

If you follow my advice on how to trade pin bars using price action, it will give you a clue on what is happening on this chart right them as well as what shall happen in the next couple of hours.

You see, that’s the beauty of price action trading. It’s clear and concise. I don’t clutter my charts with unnecessary indicators which could actually cloud my judgement. Instead, I keep it clean and crystal clear as you can see above.