Markets never forget, or rather have memories. By naked eye you can see the levels of support and resistance that proved this. Markets never forget the moments of the start of a significant movement. How many times have you observed price movements experienced a correction and back again to a level or area where the movement started?
Sometimes prices ranging move around that level before continuing or reverse direction. This incident in the history of repeated movement of any currency pair, and if you understand why this is the case you certainly will not have trouble again in anticipation of market price movements.
Forex trading is about probabilities, so it is not like measuring or calculating something definite and absolute. The market will always remember every significant movement he made. It is a high probability but not always. However a high probability can be used as an assumption.
Clear evidence of the high probability seen in the formation of the bar (candlestick) or the formation of price movements (price action) occurs. Price action is a signal of the direction of the next movement. The combination between the assumptions and the formation of price action can give a clear indication of the price movement and trading signals with a high probability.
Here's an example of the daily chart stock index DAX30 (Germany):
Key resistance level (key resistance) formed between 9735.00 to 9700.00. Area between the key resistance level and downward price movements are significant in this case referred to as 'events area'. Trading signal does not have to occur at the level of the key, but can also be at the event area. As in this example a pin bar reversal looks formed on the event area is a signal to sell.
After 12 days of re-formed pin bar reversal in the event area and move the price back down. This suggests that the market is never forgotten and always respect levels and also key events that formed the area. If a trader has understood this then he will be able to anticipate when the signals are formed at levels key events in the area.
Entry is based price action signals that occur close to the level of resistance or support and event area is usually safer and often true. This is because the situation was confirmed by the memory market.
