Introduction :

My first thoughts on Forex were that it is driven by hydraulics - pressure. I am a technical trader and have maintained this standing and built my practice around it. I am sure there are many theories on price movement, however, I shall share my personal view.


Content :

The best way to describe my opinion on price movement is through the analogy of a labyrinth of walls and mazes. To me, the price is not random but rather like a Bouncing Ball arcade game. Each wall offers a degree of pressure and drives the price in a direction. Some walls will offer a lot of pressure, some walls just a little. If the price is coming off a strongly pressurized wall, it might fly through a lesser wall. But mostly there will at least be a pause at a wall, no matter it's strength, although not always and often, if it has already bounced, it might pass through a second time without argument. As the price moves in a direction, it will bounce off many walls, back and forth, until it comes to rest against a support or resistance that is too strong. At that point, it will reverse and begin the process again.

The truly exhausting thing about Forex is that there are so many walls, from the 1 Minute range to the Monthly range, from Bollingers, MVA's, price barriers, Pivots etc, that it is a terror to maintain cognition of all during the day. What I found is that knowledge of everything is useful before one can create a true understanding of the movement of the price. And so, in my endeavors, I have spent time with each - following the pressure and importance. It's a suggestion I favour and do not be afraid to love the time !

A further suggestion is the use of a Momentum Indicator to find confirmation of whether a boundary has not yielded. I have always favoured MACD and Stochastic for this use. Since the pressure of a price is not really discernible, one needs to convert it to data, to be secure.

The true genius of price movement comes through the correlation between pairs. My understanding in this department is still under review, however, I find that whilst price movement between pairs can lose synchronization, it will always revert to the bias at strategic points. So, if one can identify these points, then one can enter safely. And risk management is everything.


Conclusion :

In a nutshell, this is my outline of price movement. I can offer that, because I have concentrated on this understanding for the time I have, it is a joy to see the movement of the price in the day and I anticipate that, as I continue to trade, it will further blossom in my mind... It has become a friend instead of a nightmare.


Happy pipping.
Translate to English Show original