“trend Following Techniques: Riding Waves Of Profit In The Australian Forex Market” – It’s a fine line between too much stuff on the chart and too empty charts. Obviously, if you use too many indicators or signals, you will suffer from “analysis paralysis” and entry into trades will become increasingly difficult. But trading completely “naked” price action charts should also be avoided because you need reference points and something you can use for confirmation and confluence. In this article I want to show you 5 simple and SUPER effective price action tips on how to analyze, understand and trade any price action chart. In my own trading, I keep things very simple and focus only on what is absolutely necessary to make the best possible decisions quickly and correctly. Price Action Tips #1: Trend Structure All good price analysis begins with trend structure analysis. To do this, we can follow the classic Dow theory, which states: An uptrend is intact as long as the price is consistently making higher highs and lows (and vice versa if the trend is down). It sounds very simple, and maybe too simple, but I challenge you to try it. Strip your charts and follow the trend structure principles of Dow theory. As a trend-following trader, you can constantly look for entries in the direction of the trend, and when the trend structure breaks, it’s time to get out and look for a new trend. It is possible to buy dips during the uptrend. Or I look for reversal signals in the new trend during my trade and then ride new trends from the beginning when the trend reverses. Price Action Tips #2: Momentum Being able to read momentum from price action charts can be very useful, and many indicators also use momentum information (RSI, MACD, CCI, Stochastic, etc.). So understanding the momentum without looking at the indicators can be an advantage in finding the signs early. When we talk about momentum, we mean the strength of the trend. To do this, we look at the size of the candle, the ratio of wicks to candle bodies, and the ratio of bullish to bearish candles. Some points to help you understand momentum: Long candles with small wicks usually indicate big momentum. Both bullish and bearish candles usually indicate bullish momentum Small candles with long wicks show indecision and lack of momentum Below we can see that the first half of the chart was dominated by the bulls. The candles were mostly green and the bullish candles were also much larger. At the top, things changed and suddenly we started seeing strong bearish candles. Price Action Tips #3: Price Limits Finding confluence areas on our charts can be very helpful when looking for turning points or breakouts of new trends. In my trading, I primarily use support/resistance or supply/demand to identify such high impact areas. I look for obvious swing highs and lows, as well as multi-touch support and resistance. I then use my own setup and signals to time the trades according to my strategy. I have drawn just a few support and resistance zones in the price chart below and you can see how they help us make the charts much more meaningful. We can clearly see the price wars going on in the same areas and how breakouts can lead to great new deals. It’s important not to let the charts get too cluttered and I always recommend that you only look at the most recent price action and only focus on the biggest levels. Many amateurs use too many zones and go back too long. Trading Tips #4: Classic Trading Structures There are dozens of trading structures and patterns, but I’ll focus on just a handful. One of the most important to me is Head and Shoulders, and I’ve talked about this pattern many times here on our blog. This is one of the strongest signs and it really pays to study this pattern carefully. By analyzing different head and shoulders patterns, you can learn a lot about price trends and market movements. Price Action Tips #5: Rejections This is where everything comes together, and rejections are a combination of everything we’ve learned so far: Rejections can happen when a Dow trend structure is about to end. The best rejections happen with strong momentum Rejections are better when they are support/resistance price limits And can be combined with classic patterns like rectangles, triangles or double tops/bottoms In my own trading, one pattern is based entirely on rejections and can be great trading signals. You can see, each point sounds very simple by itself, and you have probably heard about the price sale tips. But by combining all the clues, you can develop strong trading signals and find great trades. Analyzing the price action then becomes quite simple and the best trades immediately jump out at you. So my challenge to you is to check your trading and see where you can simplify your approach, add some of the principles I have explained here and then create your own simple and effective trading strategy.

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This post marks the start of a new weekly category here on the website. Starting this week I will be sharing the chart of the week…Trading the trend is trading the flow. If the prevailing trend is up, why look for short entries when buying can result in a much smoother trade? Many amateur traders, even when faced with a very obvious trend, cannot stop trying to predict the reversals and burn their fingers against the countertrend, when they could have made much more money by simply joining the trend. But even if you are not a trend trader, you can combine the concept of trend and momentum trading with your regular trading approach. Knowing where the price is going and which side of the market is stronger is an important trading skill. In order to correctly read price action, trends and trend direction, we now present the most effective ways to analyze charts. Introduction: The Different Market Phases Before learning how to identify a trend, we must first be clear about what we are looking for. It may sound overly simplistic at first, but stay with me and you’ll soon see the power of this analytical approach. Markets can do one of three things: move up, down or sideways. Of course, how fast (or how slow) and how long each period lasts is constantly changing, but price can only do one of these three things. The image below shows the three possible scenarios and how the market alternates between phases. We will soon see how all price patterns and chart formations are built from these moves. 1. Trading the trend: the line chart Most traders only use bars and candles to observe the charts, but they completely forget about a very powerful and simple tool that allows them to see through all the clutter and noise: the line chart. Bars and candles are meant to provide detailed information about what is happening on the charts, but is it really necessary to identify the overall trend? Probably not. The trader should zoom out from time to time (at least once a week) and switch to the line chart to get a better and clearer picture of the current events. And since our only goal here is to determine the direction of the trend and understand the general situation, the line chart is the perfect place to start. 2. Trading the Trend: Highs and Lows This is my personal favorite way to analyze charts, and although it sounds very simple, it’s usually all you need to understand any price chart. Traditional technical analysis says that in an uptrend, the highs are higher because buyers are in the majority and push the price higher, and the lows are higher because buyers are buying the dips earlier and earlier. It works the same way during a downtrend: the lows are lower when excess sellers move the price lower, and the highs are lower because sellers sold earlier and buyers aren’t as interested. Chart Example: Head and Shoulders vs. Highs and Lows Highs and lows define all market patterns and chart formations. Below we see a head and shoulders pattern and this pattern

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