Price Action 1-2-3 method in the Market

In Price Action 1 2 3 method, traders will use this trading method to try and analyze price setups on the chart that might result in a price breakout in one direction. The Price Action 1-2-3 method will be used to analyze the likely direction that the price breakout will move towards.

price action trading is a trading method that is used by traders to analyze chart price movement using only price action analysis.

What is Price Action Trading Method? - Price action is the use of only price charts to trade Forex, without the use of technical indicators. When trading with this price action method, candlesticks charts are used. This trading strategy uses lines & pre-determined price patterns such as the 1-2-3 price pattern that either develops or series of candlestick bars.

traders use this strategy because this analysis is very objective and allows the trader to analyze market moves based on what they see on the currency charts and market movement analysis alone.

This strategy is used by many traders: even those that use technical indicators also integrate some form of price action in their trading strategy.

The best use of this price action trading method is achieved when the signals generated are combined with line studies so as to provide extra confirmation. These line studies include trend lines, Fib retracement levels, support and resistance areas.

Price Action 1-2-3 Breakout - Trading Price Action 1-2-3 Method

This price action 1-2-3 method strategy uses Three chart points to determine the breakout direction of a currency pair. The 1-2-3 forex trading method uses a peak & a trough, these chart points forms point 1 and point 2, if market moves above the peak the signal is long - buy signal, if it moves below the trough the signal is to short - sell signal. The break out of point 1 or point 2 forms the third point of the price action 1-2-3 method.

Price Action 1-2-3 Breakout Strategies - Trading Price Action 1-2-3 Method

Series of breakouts in 1-2-3 price action trading strategy

Series of Price Action Breakouts 1-2-3 Method Forex Trading - Price Action 1-2-3 Break out Trading Strategy Method

Investors use price action strategy to try and predict where a price currency direction might go. The market is either trending or ranging.

A trending market moves in a specific direction while a ranging market moves sideways, normally after hitting a support or resistance level.

Observing the behavior of price action provides this data of whether the market is trending or ranging or reversing its direction.

As with any other strategy this method should also be combined with other confirming technical indicators to avoid whipsaws. The 1-2-3 price action pattern can give good signals in a trending market but will give whipsaws when the market is ranging, it is best to determine if the market is trending or not before you begin using this strategy.

Combining 1-2-3 Price Action Strategy With other Indicators

Good technical indicators to combine price action trading method with are:

• RSI Indicator

• Moving Average Indicator

Investors and indicators should use these two technical indicators to confirm if the direction of price action breakout is in line with the trend direction shown by these 2 indicators. If the direction of the price action breakout is also the same as that of these indicators then investors and traders can open a trade in direction of the signal. If not investors and traders should not open a trade as there is more likely a chance that this signal may be a whipsaw.

Just like any other indicator in Forex, price action also has whipsaws and there a requirement to use this as a combination with other signals as opposed to just using this strategy alone.

Combining 1-2-3 Price Action Strategy With other Indicators - RSI and Moving Average