Trading Strategy with Price Action
As is known, in the world of forex trading there are several things that traders need to pay attention to, especially before entry. One of them is the analysis technique used, namely whether to use fundamental or technical analysis. Fundamental analysis is usually more focused on the latest news updates that may affect price movements, such as economic and political news. Meanwhile, technical analysis is carried out with several mathematical calculations through the help of price charts.
In the financial market where this place is the location for buying and selling exchange rates between market participants, the exchange rate will leave a trail in the form of price movements or price action that can be clearly observed on the trading chart. Price action, in this case, is interpreted as a pattern of price movements, and is sometimes considered an indicator in itself. Traders must be good at reading what is happening to the price before using the actual indicator. When a trend is found, traders can then 'consult' the indicator to see entry signals that are in the direction of the trend.
Basically price action is price movement from time to time, and price action analysis is done by observing the formation of candlestick bars. Here are some terms in trading with price action:
Up Bar
Up bar is also called bullish which means the high level is higher than the previous high. And the low level is higher than the previous low. In general, the closing price of the up bar is higher than the opening price, but it can also be lower as seen on the black candlestick bar in the up bar series in the picture above. However, the bar is included in the up bar because the highest and lowest levels are still higher than the highest and lowest levels of the previous bar. The series of up bars indicates that at that time the buyers or 'the bulls' were controlling the market.
Down Bar
Can be called a bearish bar. That is a bar with a high level lower than the previous high and a low level lower than the previous low. The picture above shows that at that time the sellers or “the bears” were controlling the market.
Inside Bar
Many traders consider a bar with the same high or low level as the previous bar as an inside bar. A bar formation like this shows market uncertainty or a state of consolidation where buyers and sellers wait for each other, if it breaks the previous high level of the bar then the buyers win and vice versa if it breaks the previous low bar level then the seller wins and controls the market.
Outside Bar
In essence, the outside bar is a bar with a high level that is higher than the high level before/after it and a low level that is lower than the previous low bar level or the bar after it. In candlestick terms, the combination of the outside bar and inside bar formations is often referred to as 'harami'. In the example above, the closing level of the outside bar is higher than its opening level which indicates that buyers are in control of the market before consolidation occurs.
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