Price Action Trading for Beginners (Forex Trading Tutorial)
Hello, everyone, and welcome to this video. My name is Arash In this video, I'm going to explain about price action and how to analyze the chart with price action strategies. Watch this video carefully until the end because this video can help you to take the wise decisions in financial markets.
And let's begin. In order to trade and invest perfectly in financial markets, you need to use price action. But what is price action? You know, price action means analyzing the action of the price in the chart. For example, let me give you some examples. Whenever Bitcoin reaches $40,000 area this level, we have some reactions from the price. For example, when price is below this level, this level is working as a resistance, resistance again, resistance again.
And whenever price is above this level, this level is going to work as a support and support again. So you can actually use price action in order to analyze the action of the price in cryptocurrency or other financial markets. But how to analyze the chart with price action strategies? Most of people, they are drawing too many trend lines like something like this. They will draw channels. after that, They will draw some Fibonacci. you know, They are using everything they have in order to analyze price activity and price action in financial markets.
But you don't actually need anything. Okay. In this video, I'm going to teach you how to do and how to analyze the chart with only one line or how to analyze it with your eyes. Okay? Because you can do that. In order to make profit in financial markets, you have to observe the market really carefully. For example, right here, we could analyze the chart as I did in my previous videos with only one area. If you watch my previous videos, I have mentioned that this area is going to work as a potential support.
And as you can see, we have a long shadow into this area. And if you have set any kind of buy position, you would make 10% profit without using any kind of leverages. Okay. Without using any kind of leverages. And also, we can actually make another profit in cryptocurrency market if we break below this level.
If we break below $40,000, I'm going to enter buy position on $29,000 and $30,000 area. After this, price will move up for another 40% to the upside. So you can actually analyze the chart with only one area in most of cases. Okay. After that, you can draw channels. You can draw Fibonacci, you can use everything you want. But the first level of analyzing the chart with price action is finding potential supports and resistance areas.
This is the first and basic level. You have to find static support and resistance area. After that, you can draw trend lines. For example. After that, you can move to lower time frames. I can move to four hour time frame. After that, you can actually draw this trend line. Okay.
And you can actually wait for some pullbacks and after that you can expect the price to move up and hit some higher levels for you. So most of newbies, most of not experienced traders, they will draw trend lines and they will buy after any kind of breakout in the market and they will end up losing a lot of money. For example, most of traders, they have entered short positions somewhere around $40,000. Most of people, they have entered short position after this shadow and they end up making losses. Why? Because they are waiting for this breakout and after this breakout they have entered short position and all of a sudden price started to move up. Okay. It's too important to Zoom out.
It's too important to use higher time frames. For example, daily and weekly time frame. It's too important to find the potential support and resistance areas.
After that, you can actually draw trend lines in the lower time frames. Okay, let me give you another example. For example, another example is going to be Euro/dollar.
In my previous videos I have mentioned that this area is potential support for Euro/dollar and after that price moved up. But why did it happen? How can you understand that? We are somewhere around potential support area. You can use weekly and higher time frames. And if you do that, you can see we had potential support area somewhere around here. So this area is a potential support on weekly time frame.
And after that you can draw any kind of trend lines that you want. But before that, it's not really wise to enter buy position on some sort of trend lines. Most of traders, they will, for example, draw some trend lines, for example, this one.
And they say okay, let's buy here. And they will end up making losses because markets will respect the potential support areas, static support areas. But market is not going to respect too much to the dynamic support areas. Okay. In price action trading, you have to take care and you have to pay too much attention about static support areas.
Right here we have another potential support area on Euro/dollar. On daily time frame. This area was working as a static resistance, this level, and right now we are having some sort of pullback to this level. Most of noob traders, they will draw this trend line. Let me Zoom out from up there.
They will draw this trend line and they are saying, oh my God, we have pullback. But price is not pulling back to this trend line. Price is pulling back to this static support area which is going to be .
1.1378. Okay. Price is having pull back to this level, not to that trend line. So in price action in the basic level you can find potential support areas, something like this on four hour time frame or daily time frame. And you can actually enter buy position on lower time frames and somewhere around 15 minutes time frame.
So if we have more correction in the market. If we see this level for Euro/dollar, I'm going to enter buy a position on 15 minutes time frame. I will set my stop loss below this shadow here.
And after that I expect the price to move up and hit some higher levels. Okay, this is what I do. If we have more correction in Euro/dollar after we reach this level we can actually draw this trend line too. And we can actually even wait for the breakout from this trend line. And we can do that. But it's really important to know static areas are quite important.
They are really important. You have to pay too much attention to the static levels. Let me give you another example about the power of static levels in financial markets. Let's find some examples in XAUUSD chart.
Let's check this chart on monthly time frame. In the monthly time frame we had this area as the previous all time high. Okay. This is a potential resistance area. It's too important. You have to pay too much attention about it because it was a previous all time high too.
Somewhere around $1,900. It's quite important. Okay. So right now we are below this level and as long as we are below this level we have to be cautious actually. So here when we are below the previous all time high I'm waiting for some sort of short position. Why? Because right now we are under resistance.
And for example after this breakout I can enter short position. Okay. After this breakout I can enter short position. After this one I can enter another short position.
After this one I can enter another. And as you can see this technique is working properly and you could make a huge amount of profit from using this technique. Why? Because we are below a potential resistance area in the higher time frames.
That's why we can enter short position in daily time frame and I'm finding potential support and resistance areas first. And after that I can draw my trend lines. Okay. It's too important to do that.
I will set up my chart this way and in this video you have learned how to set up your chart on multiple time frames. For example for XAUUSD right now, as you can see we are getting compressed here. Price is forming some sort of triangle here and price is getting compressed too much. And right now we have to wait for some sort of breakout or some sort of strong movement to the upside on the weekly timeframe I can see this level. This level is quite important.
Let's check lower time frames on daily, on daily time frame you can see that this level is really really strong. It was a potential resistance. We had a fake breakout. After that it was a potential resistance again. And right now we are below this level.
So right now I know that we are below potential resistance area and I can use 1 hour time frame as my lower time frame in order to draw some trend lines and in order to find some confirmations in order to enter short position. For example we had this, we have actually this trend line and right now we are below this trend line I can enter short position here. I can set my stop loss above this level here. Oh, my God. Sorry I can set my stop loss for example here and my take profit is going to be down here again. So this is how I trade in financial market.
I find static support and areas and after that I will draw my trend lines in lower time frames. That's the first way to set up your chart in financial markets. That's the first way to use price action and if you do that you can actually earn some benefit from using it but in this video I'm going to talk about the second way to set up your chart in financial market. This setup is still working good but the first setup is really better. Okay right now in this setup we are going to draw some dynamic support and areas first. After that we can use our static levels okay.
For example on Bitcoin in monthly timeframe I think we have this bullish channel on monthly timeframe if I move it back, yeah we have this channel for Bitcoin and this channel is pretty valid why? Because the middle line of this channel is working properly which is telling us that this channel is really valid. In order to have a valid channel you need to heat in the bottom of the channel and two heat on the top of this channel and the middle line has to work properly. If you see this set up it's telling you that this channel is pretty valid so we are moving up for Bitcoin and right now we can move to lower time frames in order to see what's happening in the market.
If I move to lower time frames, I can see that the bottom of this channel is somewhere around $20,000. This is the bottom of this channel. So if Bitcoin price moves down again, I'm going to enter buy position somewhere around 20,000 and also $30,000 because we have nice potential support area in this level, too. So this is what I do. If Bitcoin price moves down for more. And also the top of this channel is going to be $280,000, which is going to be huge for Bitcoin.
And if price moves up and see this level, I'm going to sell my Bitcoin. I'm going to exit all of my Bitcoin position, all of my cryptocurrency position, because we hit somewhere on the top of this channel. So this is the second way to use price action trading in financial markets. You can begin with dynamic setups. For example, right now we have this dynamic setup for Bitcoin. And as you can see, we are below the middle line of this channel once more, which makes the price to move down.
And also we might have some sort of consolidation again, because each time we break below the middle line of this channel, we have big consolidation in the market. And right now I think we are having another one. And the potential resistance the first potential resistance for Bitcoin is going to be this middle line somewhere around $65,000 , $66,000. Okay. This middle line is going to work as a dynamic support and resistance area. If you Zoom back, you can see that this middle line worked here as a resistance after the breakout. It worked here as a support after the breakdown, worked here again as a resistance and resistance.
And it was a support here. But we break below this level. Okay. And right now you can see that the bottom of this channel is working as a dynamic support, too. So if we see some dumps, if you see some bad news in cryptocurrency market, we can enter buy position somewhere around $20,000. And also don't forget that, guys, we can combine this technique. How can we combine it? We can search for some sort of static levels at the bottom of the channel.
For example, right here at the bottom of this channel. We have the previous all time high for Bitcoin. So this level is going to work really, really strongly. Okay. You can actually combine this technique with static support and areas, too.
Let me give you another example. Let me find another example. This setup is going to work pretty well, too.
This is the second way to use price action in financial markets. I found the example. This example on 1 hour time frame is going to be pretty good. Let me show you we can actually draw this bearish channel here. And you know, this bearish channel was working as a resistance after the breakout.
It was a support. Okay. But you can combine levels in financial markets. For example, this is a dynamic support. But if you are wise, you can see that you are having this static support too, which is going to work pretty well and price is having some sort of pullback to this level. Okay. And you can combine levels in financial markets and you can enter buy or short position with more confidence. Another example is going to be here.
We had this uptrend channel for Bitcoin. This was an uptrend channel for Bitcoin. After the breakout, price had a pullback to this broken channel. Okay. And if you are wise, you can see that you are having static resistance area on this level, too. And also if you are wiser, if you are pro or you are at the God level, you could actually draw this trend line too.
After this breakout, you could enter short position and you can see that price has moved down dramatically. Okay. This is the best way to use price action trading in financial markets. You have to combine levels, static and dynamic levels together in order to make profit in financial markets. We can also use Fibonacci.
How can we use Fibonacci in this technique? How can we do that? I'm going to tell you it's not going to be a big deal because it's easy. Let me give you a nice example about how I use price action with Fibonacci. For example, from up here. This is the third way that you can actually use price action trading and you can combine it with indicators or I don't know, Fibonacci, I'm going to explain everything to you.
For example, we had a big bearish wave from the $64,000 to $28,000 area for Bitcoin and the market was pretty scared at this moment. Okay. So we are having a pull back to the upside. If you check my previous post on Instagram, I'm mentioning this area as a potential resistance and I said that we are going to see some lower levels after that. Price moves down to $40,000 I've mentioned this area as a potential support after that price moved up and, you know, you can actually combine these techniques together in order to make profit.
How did I do that? We had this potential resistance area for Bitcoin. This area was pretty huge for Bitcoin. As you can see, after the breakout from this level, we had them dramatic drop to the downside.
Price move down too much after that. So we have this level. This is the first thing I will pay attention to. After that, you can draw Fibonacci. You can draw this Fibonacci from the up there to the down there.
And also you are somewhere around 0.61 and 0.78 of Fibonacci. This area is potential resistance for you. This is the second confirmation.
And this is telling us that we are having some sort of strong resistance here. And the third confirmation can be the breakout from this small trend line here on the lower time frames. Okay. You can actually combine these techniques together in order to make profit in financial markets. And after that I have mentione this $40,000 area as a potential support because we had this potential support area. And also if you draw Fibonacci tool, you can see that you were somewhere around 0.5 of Fibonacci. Can you see that? 0.5 of Fibonacci.
And also you could draw this trend line after the breakout you could enter buy position and price could hit some higher levels for Bitcoin. Right now we can draw another Fibonacci tool for Bitcoin. you can see that we had a big bounce from 0.61 of Fibonacci. And also from this static support area we can draw some bearish trend lines from up here to the down here. And this is telling you that $46,000 is pretty huge for Bitcoin.
If you check some lower levels, I think this is going to be the best price action trading video of all time. If you check lower levels you can see that on this trend line of this dynamic trend line you had this static resistance area too somewhere around $46,000. So if price moves up, I'm going to sell my Bitcoin here. I'm going to wait for some lower levels because this level is pretty strong.
You can actually wait for some more confirmations. For example, imagine that you are having some sort of uptrend to the upside. You can draw this trend line too. You can draw this and after the breakout when you touch this level and after the breakout from this bearish trend line you can sell your Bitcoin and you can wait for $40,000. area. guys, I said you can, but I didn't mean that this is a financial advice.
I can, I can is better than you can. This is not a financial advice at all. And I can enter short position after this pullback and I can wait for some lower levels for Bitcoin. I think we are going to hit $40,000 area after that. And I think we are going to have a trading range in this area between $40,000 and $46,000 .I think something like this is going to happen in this area and after the breakout we can actually move to some higher levels in Bitcoin chart.
Okay. So this is what I think about Bitcoin right now. And don't forget that everything you are listening and hearing and watching here is not a financial advice. So this was the third way to use price action trading to combine price action and other things together.
You can actually combine price action with some actually indicators. Okay. For example, if I want to combine price action with indicators, we had this potential support area here. We had this long shadow here which is telling us the potential support area is somewhere around here.
So this $40,000 area is going to pretty huge for Bitcoin. And also right now you can use for example Bollinger band. So when you are using Bollinger band you can see that this $40,000 area was a potential support in Bollinger band strategy and also $45,000 and $46,000 the potential resistance for Bitcoin with this Bollinger band strategy. Okay.
And also you can even use I don't know RSI indicator. If you check RSI you could see that you had a huge divergence here for Bitcoin because we had a low here and we had a lower low in the price but we had a equal low in the RSI index which is telling us divergence in the market. And as you can see price moved up from this $40,000.
You could even draw this trend line for the RSI and you can see the beautiful pull back to this RSI line at this bottom so you can combine price action with indicators. You can combine price action with everything you want and if in order to increase your win rate you have to combine it with some other things. But don't forget that the first thing in price action trading is finding a potential support and resistance area. For example, up here we had this potential resistance area.
Okay, after that you can check RSI indicator. you will notice that you are having divergence continuously and you are having a huge divergence here and after that price can move down. But if you want to trade with only divergence you will enter short position here and price will continue the uptrend gradually. Okay, that's why you have to use price action. You have to draw a perfect level in financial markets for yourself.
After that you can enter buy or sell position. I hope you enjoy this video. If it was useful for you, give me a thumbs up and don't forget to subscribe in to my channel because we are going to have a daily live about cryptocurrency market status. We are going to cover profitable Altcoins. We are going to talk about metaverse and my live trading sessions are going to begin on YouTube pretty soon so I recommend you to subscribe and also turn on notifications because you shouldn't miss any lives because we are going to live trade with one Bitcoin and you can actually see the result of these live trades. I hope you enjoye this video.
I recommend you to share this video with some your friends that they are interested about price action, technical analysis or cryptocurrency market and I'm going to see you later.
2022-01-16 14:14
