Price Action Indicator Guide

The price action indicator in Metatrader enables you to quickly and accurately detect FX price structures. To explain, it simply illustrates the way a Forex or a crypto market moves. This Tradingview indicator simply follows the “action” of the “price”. To clarify, movements concern trends and key price levels. The Price action MT4 indicator helps to identify forex chart structures. Because charts and indicators are built from price action. We will discuss some price action forex formations for MT5 charts also. In short, this article is an overview of the price action trading on the candlestick chart.

What is price action indicator ?

The price action indicator seeks to analyze price movements using charts. Firstly, traders use price action trading structures to build base judgments. Subsequently, to make rational decisions. To clarify, judgments concerns two major concepts. The first is direction identification itself. The second is trend breakouts and pullbacks projection. In conclusion, the price action trading system for crypto and Forex markets needs a trend basis to start the analysis. In short, the price action trading employs candlestick and chart formations on your candlestick chart.

Candlestick chart example

Traders use several kinds of charts like Metatrader or Tradingview charts. These charts enhance their ability to detect directions. Consequently, to forecast breakouts and pullbacks. But, many traders use candlestick charts rather than line charts. Because they serve to better visualize price movements. To clarify, a candlestick chart plots:

Open prices. At the beginning of each candle.
High prices. The highest price during a timeframe.
Low prices: The lowest price during a timeframe.
Close prices. At the ending of each candle.

In conclusion, traders usually apply Tradingview Price action indicators to candlestick charts to develop a trading methodology that follows the raw action of the price.

Why is price action indicator popular among forex traders ?

The price action is a forex trading system. That is why price action forex scalping is very popular among forex traders. Firstly, the forex market is extremely liquid. Consequently opening and closing trade positions might be easier and faster. Secondly, the forex exchange is volatile for scalping and intraday traders. But, it infrequently experiences significant scalping and/or intraday highs and lows. Consequently, new and/or risk-averse traders prefer to trade forex. Finally, The maturity of the forex exchange makes it easier to detect recurring price action patterns and predict the movement of directions. Generally, we talk about forex price action scalping.

How accurate is price action trading ?

Traders should note that price action can take two forms. On the one hand, it can take the form of a candlestick formation. For example, a hammer on your MT4 chart. Consequently, the candlestick itself can be a price action signal. On the other hand, it can take the form of an entire price structure. For example, a double-top on your MT5 chart.

Both price action forms may be extremely telling and helpful. But, sometimes they may also be misleading. Thus only experienced traders succeed in trading price action pullbacks.

How do you use the price action indicator ?

One bad habit is to use the price action much earlier to the structure completion. Consequently, traders have better initiate the trade when the price action totally confirms the structure through the neckline. To explain, the neckline is a price level found at the pattern completion. So, it can act as a supporting or a resistant level for such structures. Only experienced chartists enter the trade before the neckline confirmation. In fact, they realize their own estimations for this level. However, accurate price action trading requires patience until the chart structure completion. Which results in a more accurate projection of the price activity.

Besides, forex traders must set money management orders as a very important part of their price action system. Because price formations do not last forever. To clarify, they are just transitory phases that often occur at the end of price movement. Another crucial aspect is to employ price action tools with S&R grades as confirming signals.

Download the Price Action indicator for MT4

The MT4 Price Action Indicator is a MetaTrader 4 indicator that helps traders to recognize chart structures that produce an apparent price action. Then, the same indicator draws bullish and bearish signals to forecast forward price rates. Consequently, it informs chartists in which direction would be the most profitable trades. In short, this forex tool gives prospects for diverse patterns, which may be hard to notice with the naked eye. Also, the higher the number of candles constituting the structure delivered by the price action MT4 indicator, the more reliable is the price action signal.

Download the Price action indicator for MT5

The MT5 Price Action Indicator is a MetaTrader 5 indicator that highlights important candlestick forms at which significant price changes are expected to occur. To explain, it draws colored arrows beyond or below the candlestick form to indicate the forward price action direction. Yet, the arrow signal should not be considered in isolation as a buy or sell indication. Accordingly, you have better confirm the price action candle on the MT5 trading chart. So, the price action indicator for MT5 shows the future price activity based on candle structures.

Download the Price action indicator for Tradingview

The Tradingview price action indicator enables traders to quickly spot price designs to initiate quality trades. So, instead of manually drawing chart structures, this forex tool does it for you. Below is an example of a price action structure on the Tradingview platform.

Conclusion

Trading chart patterns in Metatrader is very simple. Because the price is both the guide and the signal. In fact, it is a reactive price action trading in MT4. Traders are highly using price action indicators to predict future price movement and build price action strategies. These Tradingview indicators could be as simple as double bottoms. Yet, as complex as head-and-shoulders.

Key takeaways

Chart structures are price action analytic tools in MT4.
There are Bullish, Bearish, and Neutral candlestick formations in MT5.
Price action forex structures in Metatrader should be used in combination with each other to provide more coherent recommendations.
Chartists use Price Action tools to trade pullbacks. But they are sometimes seen as a consolidation phase, just before the trend continuation.
There are multiple price action tools, such as the volume-weighted-average-price.
The price action indicator can be used with different timeframes. Also, the trading system can be used with various trading instruments.

May 15, 2023