We use cookies to give you the best possible experience on our website. By continuing to browse this site, you give consent for cookies to be used. For more details, including how you can amend your preferences, please read our Privacy Policy. Do you sometimes feel lost and confused seeing price action abruptly turn around seemingly out of the blue, and head in the opposite direction?

This feeling can be highly frustrating, but every cloud has a silver lining: This article offers a simple 3-step guide on how to approach and dissect the market structure of any Forex, CFD, or commodity graph.

Foreign exchange market - Wikipedia

The reason is straightforward: This tends to happen especially when:. Traders need to be aware of the major price zones to avoid trading into keys levels and perhaps even be prepared to trade away from those levels i. Here are a few important examples:. The concept of trend indicates the overall direction of the chart. Is the price moving up, down, or sideways? The chart is considered to be trending when the price is moving up bullish or down bearishwhereas sideways movement is known as a range, or non-trending chart.

Trend is an important aspect of reading the chart as it offers traders the ability to understand which direction is stronger because the trend is likely to continue unless there are visible reversal patterns see next paragraph. The trend can be best captured by trend channels and a long-term moving average MA like, or sma, or Fibonacci MAs, such as 89 and ema.

Patterns are repetitive price movements that provide more information to the trader. They provide more information about potential reversals, trend corrections, trend continuations, ranges, and breaks out of ranges.

For instance, bull flag chart patterns indicate that the price is much more likely to continue with the trend, especially, if the price manages to break flag resistance with strong candlesticks indicating that the bulls are holding control. There are many discovered and surely undiscovered patterns for traders to find and use, but be aware of patterns that lack internal logic.

The price flows naturally from one level to another as it chooses the path of least resistance. At each spot, the price could continue with its momentum or respect the support or resistance level. Price action follows the same rhythm as the flow of the river down the mountain: Understanding the market structure means understanding the path of least resistance in a more comprehensive way, which is beneficial for both discretionary and system traders.

This will forex market structure uk traders to forex market structure uk out setups showcasing less potential to succeed and focus on those more prospective ones. Chris Svorcik Follow ChrisSvorcik on Twitter for spot options binary trading systems latest market updates!

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