A:

Price action refers to the day-to-day fluctuation in the price of an asset. Traders gauge a stock's price action by monitoring patterns and indicators to help find order in the seemingly random movement of price.

Technical analysis is the study of past price movements. Hundreds of indicators have been designed to help predict an asset's future direction. Common chart patterns include the ascending triangle, the head and shoulders pattern and the symmetrical triangle.

In trading, no two people will analyze every bit of price action in the same way. As a result, many traders find the concept of price action to be elusive. Like other areas of active trading, gauging the price action of a stock is completely subjective. For more information on this topic, see Basics of Technical Analysis.

RELATED FAQS
  1. Where do I place my target when the price of a stock breaks out of a technical chart ...

    Technical chart patterns such as ascending triangles, head and shoulders and double bottoms have rapidly grown in popularity ... Read Answer >>
  2. What are the main opportunities that arise when a stock exhibits a continuation pattern?

    Learn about continuation patterns and the opportunities they can present. Use these trading strategies to profit from these ... Read Answer >>
  3. How do I build a profitable strategy when spotting a Symmetrical Triangle pattern?

    Understand the basics of the symmetrical triangle chart pattern including formation and how to use this pattern to create ... Read Answer >>
  4. How are Symmetrical Triangle patterns interpreted by analysts and traders?

    Understand the basics of the symmetrical triangle and how analysts and traders interpret this continuation pattern when establishing ... Read Answer >>
  5. What trading opportunities does an ascending triangle offer?

    Recognize and utilize an ascending triangle formation on a chart to determine trading opportunities that anticipate a market's ... Read Answer >>
  6. Why is the Ease Of Movement Indicator important for traders and analysts?

    Read more about the ease of movement indicator, a technical momentum oscillator created by Richard Arms to track price changes ... Read Answer >>
Related Articles
  1. Trading

    Use Price Action Trading Strategy for Results

    Bored by the fixed rules of technical and fundamental analysis? Price action trading allows you to customize your own trading strategy.
  2. Trading

    Continuation Patterns: An Introduction

    Those random movements in the charts actually form patterns. Learn the basics of what these patterns are.
  3. Trading

    Triangle Patterns Suggest These 3 ETFs Are Headed Higher (XLV, EWJ)

    Bullish chart patterns such as the popular ascending triangle suggest that the bulls are in control. Watch these stocks: XLV,EWJ.
  4. Trading

    Most Commonly Used Forex Chart Patterns

    These chart patterns provide entries, stops and profit targets that can be easily seen.
  5. Trading

    Continuation Patterns - Part 2

    Take a closer look at triangles, which appear in ascending, descending and symmetrical forms.
RELATED TERMS
  1. Ascending Triangle

    A bullish chart pattern used in technical analysis that is easily ...
  2. Technical Rally

    An upward movement in a security's price following a declining ...
  3. Triple Top

    A pattern used in technical analysis to predict the reversal ...
  4. Technical Indicator

    Any class of metrics whose value is derived from generic price ...
  5. Technical Analysis of Stocks and Trends

    The academic study of historical chart patterns and trends of ...
  6. Descending Triangle

    A bearish chart pattern used in technical analysis that is created ...
Hot Definitions
  1. Profitability Index

    An index that attempts to identify the relationship between the costs and benefits of a proposed project through the use ...
  2. Restricted Stock Unit

    Compensation offered by an employer to an employee in the form of company stock. The employee does not receive the stock ...
  3. Operating Ratio

    A ratio that shows the efficiency of a company's management by comparing operating expense to net sales. Calculated as:
  4. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  5. Pro Forma

    A Latin term meaning "for the sake of form". In the investing world, it describes a method of calculating financial results ...
  6. Trumpcare

    The American Health Care Act, also known as Trumpcare and Ryancare, is the Republican proposal to replace Obamacare.
Trading Center