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
There are few places investors can turn to for a guaranteed return. The very idea of a no-risk return sounds almost mythical in this era of volatility and uncertainty. Stocks and...
Read More →
Editor's note: This article is updated as of Sept. 21, 2012, to reflect the latest information, according to the...
Read More →
Many of us wish for less complexity in our lives. From relationships to finances, we crave simplicity. But life doesn't really allow for that most of the time. You're juggling your...
Read More →
Fearing a double-dip recession and another stock market fall, investors withdrew a whopping $33.1 billion from...
Read More →
There are few places in America that aren't subject to some type of natural disaster. Whether it's severe weather like tornadoes and thunderstorms, floods, earthquakes or wildfires, or water...
Read More →
