29 Jan 2013

Price action trading can be easy with Tflow®

Posted in Blog By Soh Tiong Hum On January 29, 2013

Price action trading can be as easy as drawing boxes

Drawing boxes on MT4 is a great way to visualise trend. The principles involved here: price action at period highs and lows, actions such as expansion, wash n rinse. In this example of EURCAD, it is great to take note that this price action trading technique works extremely well and is a very easy well to understand market movement without indicators or black boxes. It is also rule-based which means anyone can use without letting emotions dictate judgement. (What is price action trading?)

A rule-based approach to price action trading

The start of a new trend is marked by price expansion in the opposite direction; previous lows (for bearish reversal) or previous highs (for bullish reversal) are penetrated
Downtrend is a series of lower highs and lower lows (marked by red line). In this daily chart, understanding highs and lows using monthly levels make it easy even for beginners.
Danger lurks when price makes false non-committal breaks. These give a semblance of reversal but could be wash N rinse movement.
There are instances when a period such as this inside month where price does not move out of both North and South boundaries. Instantly traders may recognise a consolidation pattern. Trading should switch to a range trading approach. If in doubt, trend riders should stick to previous trend i.e. down.
When a genuine reversal happens, it is marked by price expansion again. In this bullish reversal, price breaks the previous month high. Decisive breaks are often clear to recognise and not ambiguous.
As long as the previous low is not violated, the trend remains up.

This is an EURCAD illustration of using boxes in Tflow® Analysis to identify trend

EURAUD tackled with price action trading

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Soh Tiong Hum

Managing Director at TerraSeeds Market Technician Pte Ltd

Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005. Soh's Twitter account @sohtionghum was ranked #23 out of The Top 70 Twitter Accounts To Follow In 2015 by MahiFX. Disclaimer notice: "I do not have a financial advisor's license. I am not qualified by any regulator to give financial advice. I do not know you the reader. Your investment means and motive may be different from me. My posts here are based on observations and meant for education. I am not responsible for for any consequence from your actions."