Price Action Swing Trading With AUDCAD Forex Pair
Price action trading, whether in Forex, Futures, Stocks or any other instrument, is simply reading what price is telling you and then taking action if your trading plan covers what is occurring.
Learn a few price action setups, master them, repeat them consistently and you may just end up on the right side of the winning/losing fence.
But first…let me say this about trading indicators:
Trading indicators on a chart are not a bad thing if you are using them in more or less a general way and not as a prime method of deciding on a trade setup.
For that, you can use simple price action trading strategies like the one I am going to explain that just occurred in the Forex pair AUDCAD.
Can You Make Money In Forex Using Price Action Trading?
That question comes up a lot as if price action is some mysterious force that inhabits our charts. Understand that if you use an indicator, it is going to need the action of price to calculate what it spits out on your charts.
Think of trading indicators as derivatives of price action and you can understand why going right to the source, the clues left behind by price movement and structure, makes a lot of sense.
It won’t make you rich though. It can, but unless you have consistency in risk, method and can battle the demons of fear and greed, you will end up like most. Losing.
Can You Swing Trade Forex With Price Action?
You most certainly can and depending on your style, it can even be a “set and forget” type of trade which is not a bad thing. The more we stare at charts, especially while carrying a position, the more apt we are to do something stupid that falls outside of our trading plan.
Truth be told, swing trading, given the HFT’s on the lower time frames and big money position players on the higher time frames, looking for one clean swing in the market is not a bad play!
Price Action Reversal Patterns Played Out In This Trade
Remember I mentioned that swing trading is probably the best for most traders? This trade in the AUDCAD currency pair is a swing trade strategy and as I said earlier, a swing trade for me is playing for one nice swing in the market and getting out when the tables are turning.
Another thing, this trade was not just one thing. Trading Forex with confluence and price action analysis is where I think the money is to be made. I will explain that as I go through the chart.
AUDCAD Forex Swing Trading Using Price Action And Confluence
In the daily chart below, you can see the current up move took out what could have been possible resistance (PR). The highlighted candles show strong momentum into highs where price resisted further movement to the upside.
Trading Price Action In Forex
What price reject again? Well, we never really know what price will do so we should have some type of trading strategy for several outcomes.
On lower charts for day traders, you could see why traders would jump on the big green candles but without experience, they can’t say whether it is simply a blow-off or true momentum.
We can see price race into the zone and pause. Some would consider that to be a lack of strength but a consolidation at highs after a move like this is not a bad thing. In fact, depending how long the consolidation takes place the higher probability of a break upwards.
I mentioned trading price action with confluence and for me, the momentum into highs was part 1 of the confluence I needed.
Part 2 is the yellow highlighted candle. You can dial into a smaller time frame to get a better view of the price action but since I trade generally end of day, I was just looking at that candle.
What I see is a price action reversal pattern not with just the candle but the confluence of a strong momentum move into highs which will sucker in traders looking to go long. They were rejected soundly and a break of the low of that candle is the price action entry.
Was It A Set And Forget Trading Strategy?
It was in terms of setting the entry and protective stop order and letting the trade trigger. Let’s take a look at the four hour chart for a better view and you can see what actions I took.
4 Hour AUDCAD Forex Chart
Trading alerts are great and I set an order to take out partial position at 1X risk plus a little lunch money. In doing so, risk is reduced and I will get at least a partial trade. I was alerted to the profit taking which made me look at the chart and I still saw momentum. Took more risk off by adjusting my stop.
A smaller candles starts to form, which is to be expected after a move like this but as a swing trader, I want the one clean and easy swing.
Dialing into a smaller time frame so I can see the trails that price action left behind, I could see a range forming and place my stop a few pips above it.
Trailing stop hit for 117 pips giving me an average pain free trade of 94 pips. Would I really want to sit through what you can now see on the chart?
What Will Price Action Show Next?
I am out of the trade and price may just drop with momentum again but that’s fine. I was playing a reversal in a current uptrend so I expect smaller profits. If another trade setups up using price action in this Forex pair will I take it?
Depends on the context. I think you can see though how simple price action trading principles can assist you in banking profits.
Just look what this trading strategy has to say. It's a simple yet quite promising Forex trading method. Trading strategies like this can only be discovered through a long and determined observation of the price behavior. To start:Currency: ANYTime frame: 1 dayIndicators: 5 SMA, RSI 5 Entry rules: Buy when the price crosses over 5 SMA and makes + 10 pips up, the RSI must be over 50. Sell when the price crosses below the 5 SMA and makes +10 pips down, the RSI must be less than 50.Exit rules: not set. It is a very very simple system, yet with quite impressive results.Always remember to take actions/enter the trade only after the signaling candle is closed. This Strategy or trading idea can be used to create more advanced trading version.
1.New all time highs in price continue as selling pressure was absent last week. 2.Every signal is currently bullish on the $SPY chart. 3.The bullish MACD crossover worked out for another great up swing in price. 4.The Average True Range at 1.96 is the highest ATR since the November 2016 U.S. presidential election showing a wider trading range expansion for day to day trading. But the moves are still biased to the upside. 5.RSI remains at one of the highest readings for $SPY of all time at 87.19. Parabolic uptrend signal with all the closes over the 70 RSI. 6.Volume stayed healthy last week on the up days to new all time highs. 7.$SPY price has closed above the 10 day SMA for 46 straight trading days. 8.Trend following systems and buy and hold investing continue to be the winners in this market with no big dips in price or swings to actively trade. 9.All SPYder sector ETFs are near all time highs except $XLU and it had a bullish reversal back over the 350 day SMA and over the 30 RSI. 10.This is what a bull market looks like my friends, enjoy it.
H4 Bollinger Band Strategy Tools : Bollinger Bands(20)TimeFrame : H4Currency : ALL This strategy is extremely simple and I use it to detect opportunities and it is very good. If you open an H4 EUR/JPY chart and you insert the Bollinger Bands(20) indicator, if you observe the chart you will see that the bands are simply a Resistance and Support. The Upper band is a Resistance and the Lower Band is a Support. If you pay attention to the chart you will see that most of time the price hit the upper band then it retraces back to Lower Band, so how I trade is very easy, I wait till the price touches let’s say the upper band and closes under it (not above it) and wait till the candle is formed, when it finishes and the next candle opens under the previous Upper band then I enter a Short trade with target = 100 pips or until it touches the Lower Band Same thing when it touches the Lower band and the candle closes above it, and the next candle opens above the previous Lower Band then I go Long with Target = Upper band or 100 pips. You can develop this strategy as I did, and you can profit a lot, I made more than 800 pips this month. H4 Bollinger Band Strategy (Part II) Tools : Bollinger Band(20)TimeFrame : H4Currency : ANY First open a currency (per example EUR/USD) and H4 timeframe, issue suitable breaklines from the bollinger band , now wait till a candle breaks the breakLine. This break is not a trade signal we must have an extra confirmation, here come the role of the bollinger band. look at the bollinger band upper and lower, if they are both opened which means upper band is UP and lower band is DOWN, then it is a confimation of a trade.