What is Price Action?

Price action is the pattern of the movement of the price over time. Basically, when you look at a chart live, what you’re seeing is price action (PA).

Common skills used by PA analysts are determining psychological levels and other levels of resistance and support. Based on these, a trader could make a prediction about the future move of the currency pair whose chart he’s looking at.

One of the best things about PA analysis is that it is quite simple (detractors would say “simplistic”) and, thus, it frees the trader from the clutter of charts crowded with all sorts of lagging indicators (all indicators are lagging, meaning they show you what had happened), ichimoku clouds, and what not.

Price action shows you a live picture of supply and demand of currencies. Compare analyzing a simple naked PA chart off the platform, with having to dig into fundamental economic reports wit a gazillion of variable to take into account and/or stare at crossing points of 20-day moving average with a 100-day moving average and see what the reading of the RSI indicator is.

PA can significantly facilitate your trading and better your experience while you’re at it. Many novice traders mix themselves up by getting bogged down into overcrowded charts and lots of technical analysis stuff that in reality doesn’t help them. If you were to ask most experienced hands in forex what techniques and strategies they use to consistently beat the market, you will see that their strategies are surprisingly (to you) simple.