What is Price Action?
Price action is a term often used in technical analysis to interpret and describe price movements of securities.
How Does Price Action Work?
Technical trading revolves around chart and pattern analysis, and when patterns change dramatically, technical traders often refer to this as price action.
Price action isn't just about the amount of a security's price change; it also describes how prices behave when they reach certain high and low points. For example, an analyst might conclude that the market as a whole is going up when a certain security or index price rises above a 52-week high and then keeps setting new 52-week highs over a period of time. Likewise, if the price action is going the other way (i.e., the 52-week lows keep getting lower over time), the analyst might conclude that the market as a whole is going down.
Why Does Price Action Matter?
Technical trading is as much an art as it is a science, and thus no two traders will interpret price action the same way. Accordingly, analysts often have different reasons, expectations for, and interpretations of any particular price action. Analysts who interpret price action correctly, of course, profit the most.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
When you look at your list of daily tasks and appointments, what jumps out? The presentation that you have to prepare? That hot stock you want to buy? The trip that you...Read More →
I think it's one of the market's biggest missed opportunities. Every day, millions of U.S. investors are missing out on the world's highest-yielding securities. That's because the vast...Read More →