Price action trading

Price action is the method of making decisions directly from the movement of price itself — candlestick patterns, support and resistance, trendlines and chart structure — rather than from lagging indicators.

The core idea

Indicators are all derived from price, so a price-action trader argues you should read the source rather than a delayed, smoothed version of it. The chart, kept clean, shows the live balance of buyers and sellers.

Common building blocks

• Support and resistance — levels where price has repeatedly turned.
• Candlestick patterns — pin bars, engulfing candles and inside bars that hint at shifts in pressure.
• Trendlines and structure — higher highs and higher lows for an uptrend, the opposite for a downtrend.
• Breaks and retests — price breaking a level, then returning to it before continuing.

Pros and cons

• Pro: universal — works on any market and timeframe, and deepens genuine understanding of why price moves.
• Pro: a clean chart, less clutter, fewer conflicting signals.
• Con: more subjective; two traders can read the same chart differently, which makes it harder to test mechanically.

Price action is less a single strategy than a lens. It underpins many of the systems below — a breakout, after all, is a price-action event.