Welcome to part seven in the Price Action Traders Mindset series, if you have been following along in this series then I wanted to say thanks for the support. If this is your first time here, then I highly recommend going back to part 1 first in the series and starting from there.
In part seven we once again go back to basics with price action, in this part we focus on a couple of patterns that emerge in the forex chart on a regular basis and these patterns can in many instances offer excellent opportunities whether trading intraday or trading long term. The most common and preferred pattern I go over in this video part however is called the channel. This is when the market ebbs and flows in either a ordered bullish fashion or a bearish fashion. Both of which offer excellent reward potential if traded in the right way. In this video part i cover this in great detail.
In summary however what you want to look for can be divided into three parts:
- Identify the pattern such as a channel
- Look for bullish price action at the bottom to enter long trade
- Look for bearish price action at top for sell trade.
Please Note: It is important as well to note that not all channels should be traded both ways and if in strong down move then bias should stick to sell entries. If strong trending bullish channel then your bias should be bullish only. If however in the case of identifying a more so sideways channel with slight bias then of course both ways can be traded and i recommend doing so.
Above – Example of a Bearish Channel pattern in play.
Above – Example of a Bullish channel pattern in play.
As another tip when identifying simple patterns like this, if you are having trouble deciding if it indeed is a pattern then you should not trade it. That means often other traders are in the same boat which means less traders will trade what looks confusing. If clear trade as soon as you qualify the pattern.