50 pips Price Action Analysis ~ forex exness news trading
I post my views here because I see a lot of traders struggling to understand the dynamics of forex market. I was in similar position a few years back and always glad to share my experience for the benefit of others. I cut my teeth here and I love sharign some of my new tricks here. Forex is an "organised chaos" and you need to an "helicopter eyeview" of the market to discern the pattern. 50 pips price analysis, which I explained belows, is one of the tools I now use to know the intention of the "big players". .
50 Pips Price Action Analysis (50-PAA)
50-Pip Price Action Analysis or 50-PAA is something I stumbled upon by accident. There was a day I had problem opening my MetaTrader and I had some trades running. To monitor live price action, I went to www.bbc.co.uk. There was a live forex chart on the website divided with horizontal lines which are 50 pips apart. That day price was consolidating within a very tight range of 50 pips. After about 8 hours, price was still within that 50 pips range. When price broke out of tight range it moved for about 150 pips. I found the observation interesting and replicated similar lines on my chart for closer analysis. I will now discuss some of the benefits of 50-PAA based on my analysis.
Daily Candle
50-PAA easily shows the average price movement in a single day. For example the cable generally moves about 80-120 pips per day and around 200 pips per day when breaking out of consolidation. The benefit of this is that you can fairly predict the range of a daily candle, identify consolidation, identify a breakout including support/resistance level. For example from the daily chart below it is clear that price has been consolidating between the yellow and red points (about 250 pips) for the past 11 days.
H4 Candle
As I mentioned in some of my previous postings here H4 is the key for day traders. It is easier to pick temporary support/resistance areas. Furthermore, you have the luxury of adequate notice to take a trade (this could be up to 16 hours in some cases) . From the H4 chart below, you can see where H4 candle consolidated for between 12-60 hours within a 50 pips range around support/resistance areas before a big move.
The benefit of 50-PAA for day traders is that H4 candle will give you up to 12 hours or more notice to enter the trade a good trade that would yield over 150 pips. You can then go to lower time frame at M15 to enter the trade. With this knowledge it will be easier to recognize 1st class trading opportunities and will never be under any pressure to enter into a trade.
H1, M15, M5 Candles
With 50-PAA it easy to see many H1, M15, M5 candles within a 50-pip range and easily recognize a break out or a continuation of a strong move.
Using this analysis it becomes easier to understand price movement without any complicated and confusing indicator.
See the relevant charts below as usual.
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