Reading price action is an art. Reading price action will be based on how you understand how buyer and seller interaction is represented by price on a chart.

Many pure price action traders will remove all technical indicators from their charts and trade only on price. Some consider price action trading the purest form of technical trading and technical indicators are price-based.

Reading price action on a chart can allow a trader to see a lot. As:

Major support and resistance levels
Higher highs identify an uptrend

Lower highs identify a downtrend
Trend lines are used to identify horizontal and cross support and resistance areas for price action on charts. Many chart patterns are built by looking at price action and identifying breakouts from these areas of support and resistance.

Chart patterns can signal a trend breakout, reversal, and continuation by reading price action's support and resistance levels.

Price action can be read from all timeframes from day trading minute charts to listing monthly charts for position trading.

Many trend traders create trading systems based solely on Price Action responses. Take for example the famous trend trading system Turtle.
  • This is a breakout trading system. System 1 gives an entry point when the price breaks the 20-day price range and exits at a breakout of the 10-day price range in the opposite direction of the entry.
  • System 2 gives an entry point when the price breaks the 55-day price range and exits when the price breaks the 20-day box in the opposite direction of the entry.
  • There is no trade with a risk higher than 2% of capital, stops and losses are planned accordingly.
Legendary trader Nicolas Darvas was one of the first to read price action making millions when trading in an uptrend. Darvas' system looks for stocks that are hitting all-time highs. He will quantify the trading range of support and resistance to draw a box around that. The breakout above the top will be a buy signal and the stop loss is below the low of this box, which is also the exit of the trade.

Nicolas Darvas is a pure price action trader and does not use technical indicators, only using prices as the basis for making a trading strategy.

Many legendary traders have used pure price action trading systems to simply understand the dynamics of buying and selling, simplifying the process of analysis and trading.

That is the simplest information we get from reading price action. Understanding the buying and selling pressures of market price action is already very valuable information for our trading strategy.

▶️Telegram :
📚Edu Station :
⛑Support Form :