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                     price action trading method

price action trading is a strategy to predict future price movement and signals which spot the pattern. the traders who have figure out further movement of price. price action is just high and low game plan. if we go deeper, possibly,  we would be able to catch up catch-up solid trading opportunity. typically, price action used to short-term and day traders. the long-term traders use the weekly and monthly charts when view the price action.

Tape Reading 

 The tape reading was more popular two decades ago. this tape reading has transmuted as price action. the stock market legend Jessie livemoore was using in his trading journey. the price action shows the market participants sentiments and express trend strength. it is one of the Technical analysis component. the technical analysts who analysis chart pattern, support & resistance, and technical indicators. if not having solid understand of the price action, your technical analysis skill will not provide perfect results 

what is price action     

price action is a movement of price direction or characteristics of price changes. higher high, higher low, lower high, and lower low are mainly establish the pattern. each patterns have different attribution, for example, Head & shoulder pattern signals that stock might go to downside. likewise, plenty of chart pattern appear into chart. 

higher high and higher low indicates that stock is going to upward as well as lower high and lower low indicates downward pressure. when we look at the technical chart, should count Red candle and Green candle. Green candle signifies positive closing price, the Red candle signifies negative closing price. if Green candle amount excess than Red candle that stock trend is being strong. by contrast, if Red candle numbers excess than Green candle we need to consider as week trend.

 

perhaps, if prices are moving zig zag, we should use Fibonacci retracement level. further, we see combine with other technical tools like RSI. 

The price is moving into 45 degree without a major correction, the traders will pick the stock when stock closed in a new high or stock move closer to support level. learning price action strategy you need more patience unless stock selection process may lead failure. once you understand this strategy your predicting skill will grow ultimately.

patterns and price action  

when establish some pattern, which patterns will show trend continuation and trend reversal. flag

above the Tech mahindra chart shows the uptrend by subsequent flag pattern .

The flag pattern duration should not exceed above 7 days. unless, it will lose trend strength.

candle stick pattern 

we look at the candle stick altogether, which shows different pattern. two or three when come together some times it may be trend continuation pattern or trend reversal pattern. specifically, pin bar, Hammer, Doji, and morning star would indicate that price reversal. as well as, Three white candle, inverse Hammer, and morbazu would show the trend continuation. in addition, few more candle show the uncertainty of price action.

 the recent and past candle stick pattern will be consider as price action. further, we should analysis one or two years price momentum. if stock consistently move upward for two years or more. that means long-term and midterm investors are still holding the position. still have not occur institutional selling in that particular stocks. otherwise, price momentum has not given strong movement for last two years that means that stock price quickly react to the market volatility.