Introduction
Price action trading focuses on analyzing raw price movements without relying heavily on indicators. By observing support, resistance, and key levels, traders can identify opportunities directly from market behavior.
Support and Resistance Basics
- Support: A price level where demand is strong enough to stop a decline.
- Resistance: A level where selling pressure prevents further upward movement.
- Role Reversal: Once broken, support often becomes resistance and vice versa.
Key Levels to Watch
- Psychological Levels: Round numbers (e.g., 1.2000 in EUR/USD) often act as barriers.
- Historical Highs and Lows: Provide important benchmarks for market sentiment.
- Trendlines: Diagonal levels that connect price points in trending markets.
Price Action Strategies
- Pin Bars and Rejection Candles: Indicate strong rejection at key levels.
- Breakouts and Retests: Entering trades after a level is broken and retested.
- Inside Bars: Indicate consolidation before a possible breakout.
Conclusion
Price action trading empowers traders to “read” the market without depending solely on indicators. Understanding support, resistance, and key levels provides a solid foundation for consistent trading performance.