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.

  1. Why is On-Balance Volume (OBV) important for traders and analysts?

    Traders and analysts use on-balance volume (OBV) as a means of relating price changes and fluctuations in trading volume. ... Read Full Answer >>
  2. What is the McGinley Dynamic Indicator formula and how is it calculated?

    The McGinley dynamic indicator, created by technician John McGinley in 1990, offers a creative solution to some of the shortcomings ... Read Full Answer >>
  3. Are Bollinger Bands® useful for analyzing securities with very low volatility?

    Technical trader John Bollinger invented Bollinger Bands as a volatility indicator that can be added to a price chart. Bollinger ... Read Full Answer >>
  4. What are some of the most common technical indicators that back up Doji patterns?

    The doji candlestick is important enough that Steve Nison devotes an entire chapter to it in his definitive work on candlestick ... Read Full Answer >>
  5. Tame Panic Selling with the Exhausted Selling Model

    The exhausted selling model is a pricing strategy used to identify and trade based off of the price floor of a security. ... Read Full Answer >>
  6. Point and Figure Charting Using Count Analysis

    Count analysis is a means of interpreting point and figure charts to measure vertical price movements. Technical analysts ... Read Full Answer >>
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