Price action trading is a trading strategy in which traders make trade decisions based on price movements rather than indications obtained from technical analysis.
Price Action
Price action traders believe that the price chart contains all of the information regarding the stock's movement.
What do Price Action Traders Use?
1. Candlestick Patterns
Candlestick patterns are used to judge very short term price movements. Eg. Engulfing, Hammer.
2. Chart Patterns
Chart patterns are used to judge medium term as well as long term price movements. Eg. Head & Shoulders, Double Bottom.
3. Support/Resistance
Support & Resistance Helps identify areas of supply & demand.