What is 'Price Action'

Price action is the movement of a security's price. Price action is encompassed in technical and chart pattern analysis, which attempt to find order in the sometimes seemingly random movement of price. Swings (high and low), tests of resistance and consolidation are some examples of price action.

The candlestick and price bar are important tools for analyzing price action, since they help traders visualize of price movement. Candlestick patterns such as the Harami, engulfing pattern and cross are all examples of visually interpreted price action.

BREAKING DOWN 'Price Action'

No two people will analyze every bit of price action the same way, and that is why a lot of traders find the concept of price action so elusive. Quite literally, price action is everything that a security's price does, and just like every other facet of analysis, it is purely subjective.

RELATED TERMS
  1. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  2. Pattern

    In technical analysis, the distinctive formation created by the ...
  3. Outside Reversal

    A price chart pattern in which a security's high and low prices ...
  4. Breakout

    A price movement through an identified level of support or resistance, ...
  5. Technical Rally

    An upward movement in a security's price following a declining ...
  6. Bullish Harami

    A candlestick chart pattern in which a large candlestick is followed ...
Related Articles
  1. Trading

    An Introduction To Price Action Trading Strategies

    For traders who want a mix of technical analysis with their own control in decisions, price action trading offers the perfect fit. Here's how it works.
  2. 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.
  3. Investing

    How To Interpret Technical Analysis Price Patterns: Triple Tops And Bottoms

    Triple and double tops and bottoms may be tough to spot, but once you learn them, they can be powerful patterns.
  4. Trading

    What Your Trading Charts Aren't Telling You

    You may be missing some key statistics when following charts in the market.
  5. Trading

    Candlesticks And Oscillators For Successful Swing Trades

    Take advantage of short-term price moves by pinpointing reversals.
  6. Trading

    Continuation Patterns: An Introduction

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

    Using Bullish Candlestick Patterns To Buy Stocks

    These five popular candlestick chart patterns signal a bullish reversal in downtrend.
  8. Trading

    Most Commonly Used Forex Chart Patterns

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

    (Un)Mapping the Trend

    Much has been said about using trend analysis to gauge the market, but what do we really know about the concept "trend"?
RELATED FAQS
  1. What does it mean when there is "price action"?

    Price action refers to the day-to-day fluctuation in the price of an asset. Traders gauge a stock's price action by monitoring ... Read Answer >>
  2. What types of data are necessary to make a technical analysis?

    Understand what technical analysis is, the basic theory behind employing it and what data inputs are needed to conduct it. Read Answer >>
  3. Are continuation patterns useful in forex trading and stock trading?

    Learn what a continuation pattern is in technical analysis and why it is useful in forex and stock market trading, and discover ... Read Answer >>
  4. How are Piercing patterns interpreted by analysts and traders?

    Understand the candlestick piercing pattern and the common interpretation of market reversal assigned by traders and market ... Read Answer >>
  5. 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 >>
  6. What are common strategies traders implement when identifying a Bearish Engulfing ...

    Learn how to spot a bearish engulfing pattern, and learn some of the trading strategies you can implement to take advantage ... Read Answer >>
Hot Definitions
  1. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  2. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  3. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  4. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  5. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  6. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
Trading Center