Price Action & Moving Averages | The Best Forex EA Bot

Alan Solar here, the passive income guru in this video tutorial explains to you how the other moving averages work and why the price reacts in certain ways to these moving averages.

So on the screen you can see the phone settings of the different moving averages. We've already set the phone up to have these moving averages. You already know that we use the candlestick analysis and the 8 exponential moving average and the stochastic indicator to make our basic decisions of when to enter and when to exit the trade. Those are the indicators that you use when you want to enter and exit.

Only the other moving averages are there to show you why the price is.

Behaving in such a manner as this is going to absolutely astound you. It freaks me out every time I watch the chart and see the price behaving the way it's behaving. So let's have a look at.

A chart and you'll notice that the price generally.

Seems to hug these moving averages. It seems to hug these moving averages. And then when it gets to a certain point specific moving average, it either touches the moving average and then retraces. That's the one thing that it does. And if it does break through the moving, the moving average, it will then go to the next moving average. It'll either touch that moving average and then retrace back to another moving average. And if it actually goes through that moving average, then it will go to the next moving average, which is absolutely astounding. It's hilarious to watch. So let's, let's change our chart to a bitcoin chart because that's what's working on the weekend and I'm recording this on the weekend. So let me just add the bitcoin.

Chart to my phone.

Right, so I've got a one minute chart over here and as you can see, there's a little bit of chaos with the price of the currency and it seems to be hugging the, these, these three moving averages. Now in my opinion, what's going to happen here because the, the price is actually opened below the red 8,8 exponential moving average, we can expect the price to go down to the yellow if it, if, if it, what is possibly going to happen is because we don't predict what's going to happen, but we use the moving averages, the 8 exponential moving average and the candlesticks to give us.

A better advantage, a super advantage over everybody else. And we can then tell what's going.

To happen with the currency.

So as you can see, we're below the 8 exponential moving average and I think that the price is going to come down to the yellow. It's either going to go to just a little bit above to this red over here because this is where the support is. If it does break this, this line over here, then it will go up. So at the moment the price opens, if we can just see the price actually opened above the 8 exponential moving average. Sorry, so I'm incorrect. So you can expect the price to go up, it will go up to about here and then it will then retrace back to the 8 exponential moving average. If it breaks this 8 exponential moving average, it will go down to the yellow. Okay. It will stop on the yellow and then it will retrace back to the support line over here. If it breaks below this, this yellow line and the yellow line, as far as I know, is the 34 on this chart, it will then go down. If it breaks the 34, it will go down to over here. So as you can see, check it out, check what's happening. So let's just draw a line. Not sure if you can hear this video because it is hailing outside. So check it out. That's the line that's as high as it's gone.

In the last couple of minutes. We're not expecting it to break through that line at all. So this is again on a one minute time frame, which will basically give you like an idea, okay, of how these, how these moving averages react. So let's wait for the year, for the currency to do its thing and hopefully you'll see that the price will hit this, it'll hit that line. Okay, gone above the line. So let's go and check it out. Possibly it's going to retrace back to the 8 exponential moving average. As you can see, it's coming back down again. Okay, so it hit that. This line over here we call the line of resistance.

So it's gone up a little bit. Let's look to see, let's put in another line. We always look left to see the history of what's going on. So.

The next point, if you look back in the chart, we always look for points of support and point of resistance. Okay, so let's go and put some lines in to understand where the chart, where the price could possibly go in this time. So let's expand it now. Okay, now we have our points of support and resistance and this will give us an advantage and it will tell us exactly what's going to happen with this chart. So in the stochastic, we're in an almost in an overbought position, which is telling the other traders that it's now time, okay, to get into a short position.

Okay?

Now, the further we are away from the 8x position exponential moving average, okay, we know that the price has more of a chance to retrace back to the 8 exponential moving average. So the further the price is away from the 8 exponential moving average, the bigger the chance is of it retracing back to the 8 exponential moving average. So let's minimize it and see what happens. So the price came to a high of just below the. The white Bollinger band. The Bollinger band also acts as a line of support and resistance. It didn't quite make it to the top of that other line, that other line that we put there, the line of. Of resistance. Okay? So there you can see the price. It came up, it came down, it hit your lines of support and then retraced back down. So it's very interesting to see. Look at that. Retraced all the way back to the 8 exponential moving average. And let's just enlarge it. Let's see what's happened here. The price opened, okay, below the 8 exponential moving average. So I'm expecting the price now to go down to the blue. If it hits the blue, okay, it may stop on the blue and then go up. If it breaks the blue, it'll go down to the red. If it stops on the red, it'll go back to the blue and go about the blue. Or it'll hover in between here. If it goes below the red, it will then go down to the, to the purple. Okay? But the fact is, is that it is open below the 8 exponential moving average, which means that we're in a bearish trend. We can expect the price now to go down, okay? Because we were. If you look at the stochastic, we were in an overbought position. Now we're checking that the other traders are following the trend, okay? They've now taken their profit, and now everybody's gone short. We can expect the stochastic to go into an oversold position, which is between the 0 and the 20 in the next couple of minutes. So let's wait and see what happens in the next couple of minutes with this currency. So there we go. You can see that there was a little bit of a gap down, okay? The price has now hit the red. Okay? Unbelievable how this works. Hit the red, and then you see that the red acted as a line of support. It may not carry on acting as A line of support.

It may carry on going south. We don't predict at the moment. We stay. If you're on a four hour time frame and you can see that the time frame the Doji opened below the 8 exponential moving average, we stay in the trend until.

The currency opens above the 8 exponential moving average. So at the moment we're below the 8 exponential moving average, which means that we're in a downward trend. So this red line is the 200 moving average, which is acting as a support line now. So it was too much of a support. And now the next candle has still opened below the 8 exponential moving average, which means that we're still in a downtrend. Okay? So I wouldn't go long yet. I would only go long in the next candle if the next candle opens above the 8 exponential moving average. Let's wait and see. Right? So there you go. There's the next candle still below the 8 exponential moving average, which means that we still in a downward trend. We're going to wait for the next candle to see what happens. As you can see, there are your dojis. So your dojis are telling you that that the sentiment is coming to an end. Okay, and now we need to wait and see what the next candle is. Possibly the next candle is going to open above the 8 exponential moving average. No. So we follow the rule here. If you see a doji below the 8 exponential moving average, we still stay in the trend until we see a doji above the 8 exponential moving average. Okay? So you can see that this 200 is acting as huge support. Do you see that? It didn't drop below this 200. The red line. It stuck to the 200. So this 200 is a major, major line. Okay? The 200 is a huge line. And we use that 200 to base major decisions on. When you see the currency on this major line, the 200 exponential moving average, you really need to wait and see what the next candle is going to do. Okay? So the 200 is acting as a huge support. Okay. It's not breaking through the red line. Okay. Very, very interesting to see that. So why does the price fluctuate up and down? Okay, why do you see that the price goes up and the price goes down. What's influencing it besides these moving averages? And this is the next video that I'm going to show you, which is extremely interesting. So stay tuned for the next video that's going to tell you about orders. Buy limits, sell limits. And.

It'S going to give you a Huge advantage of understanding more about reading a forex chart.

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