Price Action Tip 1: Identify support and resistance levels

Identifying support resistance is the most fundamental thing when embarking on technical analysis. This is the most important thing to read the chart. But few traders pay attention to it. A lot of people are too busy with Stoch, MACD, or miscellaneous things.

Many traders think support or resistance is a certain PRICE. WRONG. It is a PRICE ZONE. See an example

Zones colored are correct support and resistance. Sometimes you hear "Support area of code XYZ is 28.76". This is FALSE. It is an area - not a price point.

Price Action Tip 2: Analyze swing points

Swing points - also known as pivot points - are the places on a chart where price reverses. But not all swing points are equally important. The truth is that you decide to buy during an interval should be based on the swing point earlier. For example:

See the highlighted area. You want to buy into the episode. Now, look at the previous swing point (yellow area). There are 2 problems with this purchase. First, the increased segment will not be much due to insufficient space. The distance between the recovery zone and the previous swing point is quite small. You need more space for the price to go in order to help you convert your stop loss to breakeven when needed.

The second problem is that the previous swing point area had many overlapping candles. This is strong resistance. Therefore, it will be difficult for the price to break this resistance. Instead, you should only trade the period when the previous high has 1 to 2 candles.

Price Action Tip 3: Watch out for big body candles

The wide range bar (WRB) marks important changes in the mood on the chart - at any time frame. It marks important pivot points and can be used to detect aversion. Look at the example below.

Price reversed when the WEB pushed up at the bottom. See the example below:

Price reversed in the area of WRB before. Why does it act like that? Because the traders who missed the train are now jumping for the next bounce chance. Buying force caused prices to reverse.

Price Action Tip 4: Narrow range (NR) candlestick warns of an imminent strong rebound

The NR candle could warn of an imminent reversal. Less volatile environments could lead to an upcoming boom

The NR candle indicates that previous momentum has decreased. The buyers and sellers have been balanced, but one side will control the next price.

Price Action Tip 5: Find the price action zone

For candlestick charts, a lower shadow or upper shadow usually means a Hammer or Shooting Star candle (if the shadow is long). Do not pay attention to the name, these shadows show one thing: the price area is pushed or rejected (reject), ie the price "does not like" this area.

Look at the example and see that the price is falling, but then the sellers have been pushed out of the lower price zone and the buyers took control.

Price Action Tip 6: The 50% Rule

How to see a candle is important. Let's see how much% it went into the previous candle. If it goes on at least 50% then it matters. And especially important when it CLOSES at least 50% of the body the day before.

All important reversals happen only when 1 candle goes in at least 50% of the previous candle (more often)

Price Action Tip 7: Gap Trap Pattern

This is important for stocks. A gap trap is when the price jumps down but closes on a bullish day when the close is higher than the opening price.

It could be seen that the price jumped at the opening of the day and attracted many people to jump into selling. Then the buyer jumps in to take the game and pushes the price up again. Sellers will get trapped.

Price Action Tip 8: Measure the length of the previous quote.

Why do that? Because it can help determine the direction to go next. See example

Price decrease ½ of the previous paragraph. This is good. If it heals stronger than that, you should pay attention to the power of the previous episode. If the previous advance is strong, it will not heal more than 50% of the previous move.

Price Action Tip 9: Days increase and decrease continuously

Usually, prices reverse after a series of continuous up or down days. For example

You should SELL after a series of continuous increases and vice versa.

Price Action Tip 10: The position of the price in a trend

You often hear "Trends are friends". "The start of a new trend is you,". Because often the price waves run "fragrant" or lie at the beginning of a new trend.

As in the above example, the price bounces up from the 2-bottom pattern (circular area). A new trend formed. Therefore, you should buy when the price bounces back for the first time (arrow), after the breakout