Trading and Investing 101 Trading
Investing Tips Supply and Demand Price Action Technical Indicators
Candlesticks Chart Patterns
summary Double Top Double Bottom Triple Top Triple bottom Head And Shoulders Inverse head and shoulders
Mentality
Trading Plan

What Is Price Action?

Price action is the movenment of a stock or any other commodity price plotted over a certain amount of time. On a trading chart it is totally up to you on what time frame suites you the best. People that want to only invest the best timeframe to use is the monthly time Continuation and reversal patterns are a form of price action. With making how to read price action better we can break it down into 4 different elements.
  1. Rally Base Rally
  2. Rally Base Drop
  3. Drop Base Drop
  4. Drop Base Rally

Rally Base Rally

Rally Base Rally price action is set to be a bullish formation. The price will rally base out than rally again. When buying it you would want to see the price oull back to that basing formation. In the picture above it is showing where exaclty to set your demand zone, where that basing formation is at. As stated before we want to see price approaching this demand level slowly with no momentum. When it gets back to this area look for a bullish candlestick at this demand level to take it to a new high or the previous high that was made.

Rally Base Drop

Rally Base Drop price action is set to be a bearish formation. Price will rally to the supply zone than it will drop from this level. With the price action dropping from this supply zone it shows that there are strong sellers at the supply. When it returns back to the area it dropped from, it would show a great opportunity to take a short trade.

Drop Base Drop

Drop base drop pattern is set to be a bearish price action formation. The price will be pushed down to a demand level, Than will consolidate on this demand level. The price will than breakdown again showing the bears are still strong and you should be looking to keep shorting the move. When price comes back to this consolidation price range look to go short.

Drop Base Rally

Drop Base Rally pattern is set to be a bullish price action formation. The sellers will push price down to a certain demand level. The price will than bounce off this demand showing the buyers are strong at this demand level. When price returns to this demand level look to buy.