Understanding market structure patterns is important in any price action forex trading strategy, so make sure to watch today’s video so that YOU can spot these patterns in the market yourself.
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One of the most misunderstood but one of the most important aspects of trading is that of market structure. Having the ability to properly identify market structure is one of the easiest ways to take your trading to the next level. When you’re aware of the current structure of the market, then you can adjust the trades you take to increase their probability and see much better trading results.
So what exactly is Market Structure? Market Structure is simply a way of categorising price movement, so that we can more accurately determine what the market is likely to do next, {which we’ll be going over shortly}. The fact of the matter is that PRICE HAS MEMORY. Markets do not move in a completely random fashion, day after day. But rather they move in similar ways that they have moved in the past, and if we can effectively identify this price movement then we can greatly increase the probabilities of the trades we take.
So the first type of price movement you will commonly see is the uptrend. In an uptrend price will be forming a pattern of making higher highs and higher lows. So we have a low here, and a high here. Price pulls back and reverses at this point, making a higher low than the previous low. It then pushes upwards further, which gives us our higher high. This swing high is higher than the previous swing high.
These price moves to the upside are called impulses. And these smaller price moves to the downside are called pullbacks. When an impulse move ends and a pullback begins, these turning points in the market will give us our swing highs. And when a pullback ends and the next impulse move beings, this will give us our swing lows. It’s quite common to see previous swing highs in the uptrend form a level of support, and when price pulls back into support it will often reverse and continue higher.
This is the basic market structure of an uptrend. But please note, this is just an illustration of an IDEAL uptrend. In a live market, price movement will NOT always be this smooth, so make sure to keep that in mind.
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Beauty Flow by Kevin MacLeod
Link: https://incompetech.filmmusic.io/song/5025-beauty-flow
License: http://creativecommons.org/licenses/by/4.0/
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DISCLAIMER:
Foreign exchange trading on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts. Past performance is not indicative of future results. The information presented today is not meant for use in live trading.
This video is not a recommendation to anyone on how to spend or invest their money. Take all videos as my own opinion, as entertainment, and at your own risk. I do not assume any responsibility or liability for any errors or omission in the content of this channel. This content is for educational purposes only, and is not tax, legal, financial or professional advice. Any action you take on the information in this video is strictly at your own risk. TradingBeacon.com and all individuals affiliated with this channel assume no responsibilities for your trading and investment results.
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