Understanding price action

Price action develops by how buy and sell orders are filled. We can interpret these orders in the bars on the charts we trade with some simple understanding of what is occurring within the bar. If we have a bar that stops going higher we understand that it hit sell orders at that level. In the same manner if that bar stops going lower then we understand that it hit buy orders. That one bar does not give direction the next bar does. When the next bar opens and heads higher then the previous bar we know we have more buyers then sellers if we did not then we could not have gone above the sellers. We also understand because we have more buyers then sellers when the third bar opens it should not go lower then the bar that just closed. Now in saying this the close of the bar matters. For us to see commitment in the buyers going above those sell orders we want the bar to close above the previous bar. This thread is for the traders interested in reading a chart without using indicators or oscillators.

 

Im going to add in the short opportunities that were available using the same knowledge as the original example

 

And the long opportunities based on the original example

 

You do realize that price action trading has tons of information via Google research with tons of chart examples on Google, Stocktwits and Tradingview ???

Plus, there's many in-depth conversations about such at all the popular discussion forums including here at Elitetrader.com

Yet, its not a topic that has been beaten into the ground like trading with indicators.

Regardless, carry on because I do like looking at charts.

wrbtrader

 

exit ideas are of interest

 

Thank you

 

ok exits - we trade level to level/ we trade to the buy orders or to the sell orders. I never anticipate that price will move beyond the next level. Base hits go further then home runs. Let me see if I can find something more current these are historical views - the line chart cuts out all the noise and lets you see what is really going on

 

here is a 15 min view - once the buyers took over price ran up to the nearest sell orders and presently price is still struggling with this area and has lost their buyers again

 

ES 2800 Friday trendline break and retrace

 

Gaps between bars e.g. close of one bar higher than close of the previous bar. Close of one bar higher than high of the previous bar. Or close of one bar higher than the high or close of the previous bar...These sort of gaps have a story to tell.