For successful trading in financial markets there is a huge amount of profitable strategies that allow you to get a stable result. Despite this diversity, many traders prefer to use the Price Action system, which is based on studying price behavior and finding specific patterns.
Price patterns can be formed as one bar or a candle, and several ones. The more bars involved in the model, the more significant it is. One of the most common patterns is a figure that has a double name - trade or base.
Moreover, this model received its second name due to the fact that it forms the basis for a strong price movement. A haul is called because the price is traded in a very narrow channel.
In most cases, the trade pattern is formed at significant price levels. If there is no such close, the probability is very high that in the future the place of formation of this model will turn out to be a significant price level.
You can meet trading on absolutely any timeframe, but remember that the longer the time interval, the stronger this model. In this regard, for successful trading, it is recommended to use charts with a time period of one hour or more.
The model of trading on the chart has the appearance of a narrow price corridor, in which the bodies of candles stand in the same range, without going beyond it. In the forex market the shadow of candles can go beyond the channel.
As a rule, the size of the corridor ranges from 10-15 points to 100, depending on the timeframe used. A model is considered formed if it has 3-4 bars or candles. The more they will be, the much stronger will be the exit of prices from the model.
Like all other Price Action setups, trade is best sought at strong price levels. This gives a more accurate signal to enter and set Stop Loss. This model can be traded both on a rebound from the price level, and on its breakdown.
In the first case, we are seeing a certain trend in the market, but the price rests on the level and cannot be fixed at least 3-4 bars behind it. This is a great signal to enter a position in the opposite direction of the current trend in the market.
Since the setup is based on the candle bodies, when installing Stop Loss, it is recommended to take into account that the likelihood of candle tails is high outside the pattern range. Thus, Stop Loss is placed at 15-20 points from the trade limit.
In the case of a level breakthrough, we can observe the following picture: a certain trend prevails in the market, it comes up against the level, but the price was able to consolidate itself behind the level and began to form a base.
In this case, it is necessary to open a deal in the direction of the current trend, after 3-4 bars are formed in the model. As in the first case, Stop Loss is placed at the level and placed at a distance of at least 15-20 points from the price level.
The Price Action Base Pattern or Procurement is a very common model, which is most often formed at significant price levels and precedes a strong price movement in the market. You can meet it on any financial instrument, as well as on any timeframe.
For a more stable profit it is recommended to use at least hourly charts or higher. Since the figure is formed near key levels, depending on its formation, it can be traded both on the rebound from the level and on its breakdown.
When to close the profit? There are two options that a trader uses depending on his trading style. In the first case, take profit is set at the nearest price level. In the second case, the output is made at Stop Loss, which gradually moves beyond the price.
Thus, when a new base appears, Stop Loss is placed under it. If the movement continues in the direction of the current trend, it is necessary to add to the position. And so it continues until the base is disrupted in the opposite direction.