Trading With Price Action And Key Levels

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The key levels that is meant here is the level of Support and Resistance, either a static horizontal line, or a dynamic line of Moving Average line.

The key level that is meant here is the level of Support and Resistance, either a static horizontal line, or a dynamic line of Moving Average line. Fibonacci Retracement Level also includes a key level as it shows Support and Resistance.

As has been discussed in some previous articles, trading with price action does not rely on complex technical indicators and complex, but only on the observation of the formation of bars on the candlestick which can be fakey (false) bar and inside bar (term in price action) . Supporting indicator that is often used for confirmation is Exponential Moving average (EMA), because Moving Average shows a dynamic Support / Resistance level.

In this article we examine how price action formations formed at key levels will have a significant effect on the direction of price movements, so we can precisely determine entry points.
The following examples use the Daily time frame, which is highly recommended for use when we are trading with the Price Action method.

Price Action and Support  / Resistance Level In Trending Market Conditions

 

Note the bar formation that is formed at the support and resistance levels (horizontal red lines) which we can use to set entry level (after bar formation) and the target exit level (support / resistance line).

Price Action and Support / Resistance Level In Ranging Market Condition (Sideway)

t appears that the bar formation that is formed at the support and resistance levels ( inside bar and pin bar ) is quite valid for our entry . It’s just for the market that is currently ranging or consolidate we must be careful in determining the exit target, because we must anticipate if market conditions suddenly turned counter to our entry position and turned into strong trending . This is where the importance of risk / reward ratio in trading plan .

When the support level has been broken with the formation of a long-tailed pin bar , then the next two days prices fall sharply and market conditions become downtrend . At the time this pin bar is formed and the support level is broken, the above ranging condition is actually over and changed to downtrend . We can Sell entry on the next two days.

Price Action and ‘Swing Point’ On Trending Market Conditions

When the price moves new highs or lows, and then corrects before returning to the original trend, then the lowest and highest price in the valley or the peak of the correction is called a swing point . Swing point is important to note because at these points will form new support or resistance levels.

Swing point at the valley point as the uptrend forms a new support level. The swing point at the top point when the downtrend will form a new resistance level.

Consider the price action that occurs close to the swing point points like the EUR / USD Daily example above. The swing point forms a new key level , ie the support level, and confirmed its validity on the next bars in succession as resistance, support and resistance again.

The price action happens is represented by two pin bars that are formed close to the key level, and we can entry after analyzing the pin bar’s validity correctly.In this case, the key level formed on the swing point becomes the main supporting factor of both pin bars.

Price Action and Exponential Moving Average Indicators In Trending Market Conditions

Exponential Moving Average (EMA) indicators, especially EMA8 Daily and EMA21 Daily are often used as price action confirmations that occur, especially in trending market conditions. Moving Average forms dynamic support or resistance levels. Consider the example on the EUR / USD Daily above, the price action that occurs near EMA8 and EMA21 on trending market conditions (when uptrend or downtrend ), ie the pin bar and fakey bar are valid enough for our entry guidelines.

Price Action and Event Area At Support And Resistance Level.

Event area is the area around the level of support or resistance is broken ( break ) due to certain events that occur in market price movements. Furthermore, if the price movement remains referring to the level of support or resistance, then the event area at that level will be very significant, and the price action formed around it is very important to be observed.

In the example of XAU / USD (spot gold) above, the event area around the 1.700.00 level is very significant where the price action is occurring with the formation of some pretty valid pin bars for entry benchmarks.

From the above examples it can be concluded that the price action that occurs in a market condition with key levels as the main supporting factor. Whether it’s static support (resistance level) or dynamic (Exponential Moving Average), swing point or event area , will be a valid enough guideline for entry market.

 

 

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