Price Action is a method of analyzing financial markets based on the study of an asset’s price behavior, without the use of indicators or other analytical tools. This approach focuses on analyzing price movements on a chart, such as candlestick patterns, chart patterns, support and resistance levels, trends, and other aspects to make trading decisions.
Key Aspects of Price Action:
Clean Chart: Analysis is conducted without indicators, based solely on price movement, allowing traders to see the market “as it is.”
Patterns: Traders use various price patterns (e.g., “head and shoulders,” “double top,” “pin bar”) that may indicate trend continuation or reversal.
Support and Resistance Levels: These levels help identify areas where the price is likely to encounter a barrier (support or resistance) and where reversals or strong movements may occur.
Trends: Price Action analyzes the direction and strength of trends to assist traders in making entry and exit decisions.
Market Context: This method also considers the overall market context in which patterns and levels form, for more accurate decision-making.
