Definition
Price action refers to a security's price movements and is the foundation of technical analysis. Price action traders analyze historical price patterns, candlesticks, and chart formations rather than indicators. They believe all relevant information is reflected in price, making it the purest form of market analysis.
Example
A price action trader notices the stock repeatedly bounces off $50 support, enters long when it tests that level again.
FAQ
What is Price Action?
The movement of a security's price plotted over time.
Why is Price Action important?
Price Action helps investors evaluate technical analysis and make more informed decisions.