Characteristics of Price Behavior – Part 2

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Welcome to our video about ‘Forex Trading Training Series’ brought to you by ForexMinute. This is Video #2 – Characteristics of Price Behavior Part 2.

[00:26] – In our previous video, I taught how price trends in uptrends and in downtrends; and how when price uptrends and downtrends, price forms a stepping motion of rallies and retracements. They create highs and lows; for an uptrend, higher highs and higher lows, and for a downtrend, lower lows and lower highs.

[00:55] – Personally, I love Trends. Am I trading heavily if all surround identifying a trend and trading a trend? As price moves strongly in one particular direction and I’ve been on a long and short position accordingly. But prices is not always trending; sometime it can move in a sideways direction which we call a ‘Range’. When price ‘ranges’, it moves repeatedly up and down but the general direction or the overall direction of price is sideways. Just as Trends can be traded, Ranges can also be traded.
[01:39] – This is a very basic demonstration of Range. Price moves up and down repeatedly between two areas of the market. And even though it is moving up and down, the general direction of price is sideways. It is not moving in a steady upwards direction or downwards direction but instead in steady sideways direction.

[02:12] – So why does Price Range? There are number of reasons why Price Ranges, just as there are number of reason why Price Trends. But two reasons could be low volatility, like Overnight Sessions on particular forex currency pairs (and we will look at that in a minute in a real life price chart); and the other reason could be Indecision in a particular market. There is no stronger buying power or selling power in the markets which drives price in one particular direction, but instead Indecision.

[03:00] – So let us look at the real life price chart! This is a chart of the Euro/US Dollar. It is a 15-minute chart. The Euro is heavily traded in the European or London sessions; the US Dollar is heavily traded in US or New York session. There is a 5 hour difference between London and New York so both session overlaps at night hour, and it is clearly demonstrated in the volatility of this currency pair during UK and American night hours. You’ll see this trade movement with its currency pair to the left; and to right, this is price movement during daylight hours. This price movement here is nighttime hours, and you will notice that price is moving steadily up and down but in a general sideways direction.

If we zoom in, we can add up a couple of lines to make this clearer. One there, and the another down there; we have this up and down motion but we’re moving in a general sideways direction.

[04:34] – Let’s look at today’s price action! Zoom Out; you’ll see there has been great movement during daylight hours; now we’ve reached the evening, prices have gone very quiet. And more often and not, when there is slow volatility, price will range. So we may see price range throughout this evening and at the early hours of tomorrow’s morning.

Let us look at the Range on the higher time frame; let’s go to a daily chart.

[05:27] – This is a daily chart of the EUR/USD and price is ranging. Once again I’ve marked the top and bottom area of the horizontal line to show clearly that the price is moving in sideways direction. As mentioned at the beginning of this video, I love Trends! And I love to trade Trends. And in upcoming videos, I will show you how to trade Trends. And I will also show you how to trade Ranges.

[06:07] – To summarize: Price Trends – it can be uptrends and downtrends; Price Ranges – it can move in a sideways direction; both market types can be traded for profit. This was video number 2 – the Characteristics or Price Part 2. Our next video is ‘Characteristics of Price Part 3’.

This course was brought to you by www.forexminute.com. Please feel free to check out our website and continue watching these videos.

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Jonathan Millet is currently the proud CEO of ForexMinute.com, the brand new financial news portal which is making waves among Forex traders around the globe for the innumerable Forex resources it offers. He also holds the position of Binary Options Consultant at ForexMinute.com. Before ForexMinute.com was around, Jonathan was a successful Forex dealer and chief market analyst at Forexyard. He has also worked as a Forex trader. His other specialties include advising financial companies of how to stay head of the competition.