Forex price action trading requires a clearer chart. Traders are to keep an eye on candlesticks’ attributes, consolidation, reversal candle, and support/resistance levels. The last swing high and the last swing low are two levels that traders must count. However, the price often reacts to certain levels, where it reacts heavily earlier. We may keep an eye on those closely since they often offer entries. In today’s lesson, we are going to demonstrate an example of that.
The chart produces a bullish engulfing candle after being bearish for a long time. The buyers still hold the key. However, the sellers may keep start eyeing on the pair as well. The chart shows a pullback level in its bearish wave. The highest high is further up, though. Thus, if the price makes a bullish move from here, it would be a big one.
The price heads towards the North with good bullish momentum. The buyers are to wait for the price to consolidate and produce a bullish signal candle to go long on the pair. A level of resistance (drawn level) is nearby. The price may consolidate around the level. Thus, this is time for the buyers to keep an eye in the pair closely.
The price does not consolidate around the level of resistance, but it makes a breakout. Some traders may think that they have wasted time here by keeping an eye on the pair, which is never right. In Forex trading, we need to invest money and time. After such a breakout, the price usually keeps going towards the trend’s direction for one or two more candles before having consolidation. Do not forget, it often consolidates around the breakout level and offers entry.
The chart produces one more bullish candle followed by a bearish candle. The last candle closes within the breakout level. This means the price is having consolidation around the breakout level. If the chart produces a bullish engulfing candle closing consolidation resistance, the buyers are going to push the price towards the North.
The buyers crave for getting such a good–looking bullish candle to go long from here. The equation is simple here. The buyers may trigger a long entry right after the candle closes. Let us find out how the entry goes.
The price heads towards the North with good bullish momentum. The buyers achieve their 1R easily here. The highest high is further up. Thus, it may remain bullish for some more candles.
The price may consolidate and offer entry at any level when it is trending. However, it tends to consolidate around some particular levels often. By spotting them out, we may make our trading life a bit easier.