Price Action

Price action describes the changes in an asset’s price over time as they are represented on a chart. Whether discussing commodities, equities, bonds, currencies, cryptocurrencies, or any other financial instrument, price action serves as the foundation for all technical analysis.

In order to find formations, trends, and patterns in the market structure from which to generate trade ideas, traders will use price action and chart analysis. Price action itself, which attempts to predict future price changes by using historical prices, actually forms the basis of technical analysis.

In order to generate trade ideas, price action traders mainly rely on studying the price behavior of a financial instrument. In fact, a lot of short-term price action traders will only look for trade opportunities using price action.

Several traders may also use technical indicators to support their price action research at the same time. The rationale for this is that combining price action analysis with technical indicators may produce trading signals that are more trustworthy.

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