Glossary
Price action
The movement of a security’s price over time, and the style of analysis that reads it directly from bars and levels rather than indicators.
On this page
Price action is the raw record of how a security's price has moved: its opens, highs, lows and closes, and the shape they make over time. The term also names a trading style that reads that record directly, using candles, swing points and support and resistance levels instead of relying on derived technical indicators. Its appeal is simplicity: every indicator is calculated from price, so price action traders go straight to the source.
How it works
Price action analysis looks at a few recurring features:
- Swing structure. A series of higher highs and higher lows defines an Uptrend; lower highs and lower lows define a Downtrend.
- Key levels. Prices where the market turned before often matter again as Support and Resistance.
- Bar shape. A long lower wick shows sellers pushed price down and buyers pushed it back, as in a hammer. A large body closing near its high shows one side in control.
- Context. The same candle means different things at the top of a long rally and in the middle of a range.
What to watch for
Price action is subjective. Two traders can draw different levels on the same chart, and it is easy to remember the setups that worked and forget the ones that failed. Many practitioners write down precise rules, test them with Backtesting or Paper trading, and keep a journal so the reading stays honest. Volume often helps: a breakout on heavy Trading volume tends to carry more weight than one on light trading.