I Wasted $5,000 on Trading Education, Only This Price Action Trading Course Delivered

If your chart looks like a Christmas tree or some  form of abstract art…you might have a problem! That’s why in this guide, we'll strip  away all the noise, and focus on the pure essence of trading - Price Action. The philosophy behind price action analysis Price action trading is all about simplicity.

The core idea is that price charts already reflect all the buying and selling decisions  of market participants, so you don't need fancy indicators cluttering up your charts. Everything you need to make trading decisions is right there in the "naked" price action. As a price action trader, you will adopt a "less is more" approach.

By stripping your charts down to the core, you will focus on what matters most - the only  leading indicator there is - price itself. So what exactly is price action?  In simple terms, it's the movement of price on your chart over time.

Price action gives clues about what buyers and sellers are doing. Their behavior is  visible right there on the candlestick charts. Market structure Let’s start with the market structure.

Market structure refers to the overall "map"  of the market - the patterns of highs and lows, and the price swings connecting them over time. If you look at any price chart, you'll see the market structure laid out before your eyes, the  static record of how price moved in the past. When prices keep rising or  falling, that creates a trend.

In an uptrend, each new high is higher than the  last one. We call that a break of structure. At the same time, each low stays  above the previous low point.

That bullish momentum continues until the  price finally dips below a prior major low, which is a change of character. You can tell a trend is losing steam when the price fails to make  a new high after the latest rise. That's a sign buyers may be losing their grip.

In a downtrend, you'll see the opposite - lower lows and highs that can't  quite reach the last high. This bearish pressure from sellers  keeps pushing the price down. The trend stays in place as long as  those lower highs and lows keep coming.

But if the price manages to top the last high, the  trend could be reversing to bullish territory. Sometimes, the market takes a breather  and moves sideways between trends. This happens when the highs and lows  are roughly equal, creating a tight range.

We call this a consolidation period. The price stays stuck bouncing between supply and demand until it finally breaks out above the  usual highs, or below the normal lows of that channel. That's when a new trend could be born.

For a trend to flex its muscle, it needs to keep printing those new highs and lows. But only one candle testing highs doesn't mean much. If you see several candles  close above past resistance in a row, that's a stronger case for buyer control.

And the reverse is true for downtrends - a few candles breaking below support strengthens  the argument for seller dominance. Another thing to watch is how far each new swing  travels. If every wave is bigger than the last, this tells you the dominant force are  gaining momentum with every cycle.

The growing imbalance between supply and demand  is fueling increasingly larger price movements. So even if the market has entered a sideways  phase, seeing progressively larger waves suggests the current bigger trend may still be healthy. Speed matters too - a swift move to new highs or lows over fewer candles is more powerful than  a gradual climb or descent.

It's a sign of intensifying pressure driving the price. One of my favorite tools is using trend-based Fibonacci extensions  to project future structure levels. You draw it from the lowest to highest point of a  cycle, then to the low of the pullback in between.

This gives you clear targets for  where the price might stall out if the trend continues as expected. So while the price action might seem chaotic at times, market structure  can give you a roadmap to follow. By tracking the progression of higher highs  and lows, measuring the magnitude of each wave, and noting the speed of the price movement,  you can assess the health of the current trend.

Combine that with trend-based Fibonacci  extensions, and you've got a solid foundation for reading future price action. Support and resistance Support and resistance are the next critical  concepts you must master. Consider them as price zones where the market tends to pause,  reverse, or break through with conviction.

A support is simply a price level where  demand is strong enough to prevent the price from declining further. When price reaches a support level, buyers become more inclined to buy and sellers  become less inclined to sell. There's a belief that the price is low and likely to rise.

If lots of traders subscribe to this view and act on it, it becomes a self-fulfilling  prophecy - their buying pressure causes the price to bounce off the support level. The inverse is true for resistance. This is a price level where supply is strong enough  to prevent the price from rising further.

At resistance, sellers are keen to sell and  buyers become less interested in buying. The general belief is that price is high and  likely to drop, so if enough traders act on this premise, their selling pressure will indeed cause  price to fall back from the resistance level. But here's the thing - these levels are not  set in stone.

They are more like zones than precise prices. Picture them as rubber bands  - they can bend, but if the market pressure is strong enough, they will eventually snap. This is where the concept of breakouts comes in.

A breakout is when price bursts through a  support or resistance with strong momentum. It signals that the balance between buyers  and sellers has shifted significantly. If price breaks above resistance, it means  buyers have gained the upper hand and are willing to buy at even higher prices.

If it breaks below support, sellers have taken control and are  willing to sell at even lower prices. The psychology around breakouts  is simple. Before the break, you often see the market testing the level  multiple times, like it's probing for weakness.

Each test causes an increase of activity,  as traders anticipate a potential break. False breaks are common. This is where price  pierces the level briefly, only to snap back - these are known as "bull traps" above  resistance and "bear traps" below support.

But when the genuine breakout  happens, it's usually with conviction. The move can be swift and sizable, as traders  on the wrong side rush to exit their now-losing positions, while breakout traders jump in  to establish new positions. This burst of activity adds fuel to the directional move.

Here's a key point though - after a breakout, the old resistance level can become  the new support, and vice versa. This is because traders who missed the  initial breakout will often look to enter on a pullback to the breakout point. Also, traders who went short on the break of resistance may look to close to their  losing positions on a dip back to that level.

When it comes to finding the best levels,  there are some key things to look for. First and foremost, you want to identify the  major swing highs and swing lows on the chart. These are the extreme turning points where price  reversed after a significant move up or down.

Swing points are natural places to draw  support and resistance lines because they represent shifts in supply and demand. Not every swing point is equal. To qualify as a strong level, you want to see price  respecting that level multiple times.

Ideally, you'd like to see at least two  clear rejections of the level. This could be two bounces off a support level or  two rejections of a resistance level. The more times price respects the  level, the more significant it becomes.

Another clue is how obvious the level is on  the chart. If a support or resistance level is really important, it should jump right  out at you. You shouldn't have to strain your eyes or use fancy indicators to see it.

The best levels are usually the ones that are so clear, they almost seem to "glow" on the chart. The significance of the move away from the level is also key. If price just barely pokes through  a level and then slightly reverses, that's not as significant as if it rockets away from the level.

The more decisive and strong the move away from the area, the more you can trust that level. Here's another factor to consider - has the level acted as both support AND resistance? If a level  has been respected from both above and below, that's a sign of a very significant price area.

For instance, if price bounces off a level, breaks above it, and then comes back to test  it from above and bounces again, that shows the level is important to market participants. Recency is also important. While support and resistance levels from the past can  still be relevant, the most important levels are usually the most recent ones.

Levels that price has interacted with in the last few days or weeks will generally be more  significant than levels from months or years ago. Candlesticks analysis When it comes to candlesticks, most price action books will advise you  to memorize a plethora of candlestick patterns or spend hours staring at charts. I’m gonna give you a better method to read them.

First and foremost, when you open up a  chart, take a look at the recent candles and focus on their spread. The spread is the difference between a candle's opening and closing price,  which forms the real body of the candle. This spread reveals the market sentiment  for that particular time period.

A wide spread indicates strong  market sentiment, while a low spread indicate less trading activity. Next, you look at the upper and lower wicks of candlesticks, also known as shadows. These wicks reflect the buying and selling pressure in the market.

Consider them as  'rejection' areas, where the market simply didn't accept the prices represented by the wick. The length of the wick, whether at the top or bottom of the candle, should  always be a main point of focus. It instantly reveals strength, weakness, or  indecision in the market, and most importantly, it shows you where buyers  or sellers are stepping in.

Now, considering the spread of  the candlesticks and their wicks, here are the key patterns you should focus on. When the body of the candle takes up at least half of the entire bar range,  you're looking at a trend bar. Trend bars are the heart and  soul of market fluctuations.

They represent strong market sentiment  and suggest a likely continuation in the direction of the candle. When you analyze a chart, pay attention to instances of consecutive  trend bars closing in the same direction. If you spot several trend bars in a row, all  pointing in the direction of the prevailing trend, it's a clear sign of strength in that direction.

If you notice an absence of trend bars over the past ten or so candles, the  market is likely consolidating. A trend-based long wick candle is characterized  by a candle with a wick sticking out in the same direction as the moving trend. The  smaller the body and the longer the wick, the better the quality of the candle.

Large wicks indicate price moved a lot during the candle but got rejected, signaling supply  or demand. The upper wick acts as resistance, while the lower wick acts as support. In an uptrend, if a Long Wick Candle forms at a key support level, it means sellers tried to push  prices lower but failed to close with momentum, causing the wick to stick out.

This suggests a  potential continuation of the previous trend. The length of the wick is the first point of  focus because it instantly shows strength, weakness, and indecision in the market. The Momentum candle is characterized by a larger spread compared to the previous candles,  showing a clear directional movement in price.

In an uptrend, you'll notice each  candle getting larger and larger, moving a greater distance per candle.  This shows a gain in bullish momentum. Similarly, in a downtrend, each candle gets larger  and larger, moving a greater distance per candle, indicating a gain in bearish momentum.

When you see consecutive candles increasing in size, it's a clear signal that the trend  is gaining momentum in that direction. In an uptrend, it means buyers are in full  control, and there aren't enough sellers to cause wide swings in the opposite direction. In a downtrend, growing candles show sellers are dominating the market, and there aren't  enough buyers to counter their pressure.

An Inside Bar is characterized by a bar  that neither takes out the high nor the low of its predecessor. An Inside Bar is easily  recognizable, due to its relatively small spread. The Inside Bar signifies a loss of  momentum and uncertainty in the market.

The smaller candle suggests  consolidation after a larger move, as neither buyers nor sellers are able to push  the price beyond the previous bar's range. The Inside Bar is also hinting at a  potential breakout in either direction. When an Inside Bar forms at a crucial spot,  such as a major support or resistance, its break can trigger quite a few  traders in and out of position.

When you see several candles in a row failing  to break through a specific price level, each forming long wicks in the same direction,  you're looking at a multiple candle rejection. In an uptrend, if multiple candles try to push  above a resistance level but fail each time, closing with long upper wicks, it's a  clear sign of rejection at that level. These wicks form a “selling pressure” zone.

Multiple Candle Rejections show the repeated failure of price to breach a key level, suggesting  a strong buying or selling presence at that point. When buyers try to push prices higher but fail  multiple times, it indicates that sellers are stepping in aggressively to defend that  level. The long upper wicks represent the failed attempts of buyers to gain control.

Similarly, when sellers try to drive prices lower but encounter repeated rejection,  it suggests strong buying interest at that level. The long lower wicks signal the  inability of sellers to close below that price. These wicks form a “buying pressure” zone.

As price approaches a key level, you'll notice the candles getting smaller in  size. Their spread gets lower and lower. This pattern of successive candles decreasing in  size is a clear sign of Decreasing Candles.

Decreasing Candles indicate a loss of momentum as  prices approach a critical point in the market. The smaller candles suggest that the distance  traveled per candle is getting shorter, which is an early signal that the  current trend is losing steam. For example, in an uptrend approaching  resistance, Decreasing Candles show that buyers are losing control and momentum.

In a downtrend nearing support, Decreasing Candles reveal that sellers  are losing their grip on the market. To increase the quality of your trade setup,  look for Decreasing Candles that finish with multiple long wick candles at the key level. This  combination suggests a strong loss of momentum and increases the likelihood of a successful trade.

With this method, you’ll soon realize that reading price action isn't about  memorizing dozens of candlesticks. It's about observing price bars as  they form and understand what the market has done and is currently doing. The context of the price move is crucial.

A candle can have a completely different meaning  depending on where it appears in a price trend. Is it at the beginning, middle, or end of  a trend? Is it at a support or resistance, or in the middle of a consolidation phase?

Always analyze candlesticks in the context of the overall price move, never in isolation! Pullbacks Now let’s talk a bit about pullbacks. A pullback is a temporary price movement that goes against the prevailing trend.

It's a period of price retracement or correction before the trend resumes its original direction. Pullbacks occur when price moves in the opposite direction of the trend for at least one bar. The psychology behind pullbacks involves a temporary shift in market sentiment. 

During an uptrend, a pullback occurs when bearish pressure briefly overcomes  bullish pressure, driving prices lower. However, this doesn't necessarily  indicate a trend reversal. If the lower prices fail to attract enough  selling pressure to break the previous swing low, it suggests the pullback is merely a  correction within the larger uptrend.

As sentiment shifts back to bullish, more  buying enters the market, shorts will cover their positions, and the uptrend will resume. Not all pullbacks are created equal. We can classify them into two main types based on their  depth: shallow pullbacks and deep pullbacks.

Shallow pullbacks are corrections  that typically retrace only about 25% to 30% of the current leg of the trend. They indicate that the trend is still quite strong, as the countertrend moves are relatively  minor. However, because the pullbacks are so shallow, it can be tricky to time your entries  and define your risk when trading these.

On the other hand, deep pullbacks  are corrections that retrace roughly 50% or more of the current trend leg. These are often viewed as more favorable trading opportunities, as they allow you  to get into the trend at a better price, with a more attractive risk-to-reward ratio. One of the main benefits of trading pullbacks is the potential for higher probability entries.

When a strong price action signal occurs at a key level following a pullback, it indicates  a high likelihood of the trend continuing. Confirmation is key when trading pullbacks. Look for candlestick patterns to confirm the pullback is ending and the  trend is likely to resume.

In an uptrend, the more subdued the bearish  pressure during the pullback, the higher the odds of a successful trend continuation. If done correctly, trading pullbacks will allow you to buy low in uptrends  and sell high in downtrends! Breakouts and Fake Breakouts When it comes to breakouts and false breakouts, you need to understand  how to distinguish between the two.

A true breakout can lead to a powerful  new trend, while a false breakout can trap traders on the wrong side of the market. One key thing to watch for is how price behaves after breaking out of a trading range. If it quickly reverses and comes back into the range, that's a sign  of a potential false breakout.

Often, these false moves are engineered by large  institutional traders to build liquidity, before driving the market in the opposite direction. To avoid getting caught in these traps, it's wise to wait for a retest of the  breakout level before entering a trade. Look for price to hold outside  the breakout level on the retest, ideally with strong volume supporting the move.

In a true breakout, price should continue in the breakout direction, making new highs or lows. However, if the breakout fails and price remains stuck in a larger trading range, that's a sign  that the attempted trend change has failed. Another thing to consider is the overall market  context.

In a bull market, upward breakouts tend to be more reliable and profitable, while  bear markets favor downward breakouts. Trading with the prevailing trend  will tilt the odds in your favor. Remember, the market doesn't have to  respect the levels we draw on our charts.

False breakouts will occur with  varying degrees of aggression! Chart patterns recognition There are two main types of chart patterns that every price action trader should know:  reversal patterns and continuation patterns. Reversal patterns signal that the  current trend may be coming to an end and the price could change direction.

The Head and Shoulders is the most popular reversal patern. It often signals that an  uptrend is about to reverse into a downtrend. The opposite is an Inverted Head and Shoulders  which can form at the bottom of a downtrend, hinting at a potential bullish reversal.

Double Tops and Bottoms should be your main focal point. These form when price tests  a level twice, but can't break through, suggesting the trend is losing momentum. A Double Top often leads to a bearish reversal, while a Double Bottom  can result in a bullish reversal.

Triple Tops and Bottoms are similar,  with the price testing a level three times before reversing. Continuation patterns suggest that the current trend is just taking  a breather before likely resuming. Flags and Pennants form quite.

These  appear as brief consolidations or pullbacks against the prevailing trend. They usually lead to the trend continuing once price breaks out of the pattern  in the direction of the prior trend. Triangles are usually continuation patterns, with  the trend expected to resume in the direction it was going before the triangle formed.

Rectangles are my favorite continuation patterns. These are sideways channels where  price bounces between support and resistance. I like to trade false breakouts that occur  contrary to the prevailing trend.

So in an uptrend, look to trade false breakouts  below support, and in a downtrend, trade false breakouts above resistance. While knowing these classic patterns is important, you need to look at them  through the lens of price action. Simply memorizing patterns is not  enough - you must understand the market dynamics and psychology behind them.

This means paying close attention to market structure and the key levels on the chart. Look for price zones where the market has changed direction multiple times before. If a chart pattern forms near one of these key levels, it can add  significance to the pattern's signal.

The overall trend is also crucial.  Trend is your friend, as they say. In an uptrend, bullish continuation patterns are  more likely to succeed.

In a downtrend, bearish continuation patterns have a higher probability. You always want to trade in the direction of the path of least resistance. When a reversal pattern forms, it's signaling that the trend may be in trouble.

But it's not a  guarantee – often times, reversal patterns will fail, and the prior trend will resume. Don't jump in on the first sign of a reversal - wait for price to confirm it. During pullbacks or retracements against the main trend, continuation patterns can offer low-risk  entries if you expect the trend to resume.

Again, look for fakeouts, against the current  trend - when a pattern breakout fails and price quickly reverses. These are good opportunities  to enter, capitalizing on trapped traders, how thought the trend was about to change. No two patterns are exactly alike in the real world.

As you analyze more and more charts, you'll  develop a keener eye for the subtleties that separate successful patterns from failures. You'll start to recognize how certain patterns tend to play out in specific  markets, timeframes, or conditions. Of course, no pattern is guaranteed.

Approach  patterns with the combination of respect and skepticism they deserve! Volume Price Analysis Price Action becomes 10 times more  effective with the help of volume. Volume is the lifeblood of the markets. 

It reflects the actual buying and selling pressure behind every price move. When you're looking at a chart, the price bars show you what's happening, but  the volume bars reveal why it's happening. Volume tells you about the intensity, urgency  and commitment behind the price action.

Here's how you can use volume to confirm or  question what you're seeing in the price: First, look for convergence  between volume and price. In an uptrend, rising prices should be accompanied  by rising volume. This shows genuine buying interest that can sustain the move.

In a downtrend, falling prices with increasing volume signal strong selling  pressure that could drive prices lower. Be wary of divergences. If prices  are rising but volume is falling, it's a warning sign.

The uptrend may be  losing steam. Buyers are less committed. An upside breakout on low volume is suspect.

Likewise, if prices are falling but volume is drying up, sellers may be losing control.  The downtrend could be nearing exhaustion. Look for volume spikes near support and  resistance.

Major players often show their hand at key levels. If there's a volume  surge as price tests a support level and holds, that's often a sign of strong demand absorbing the  selling pressure. The support is likely to hold.

Also, track volume during  breakouts. A valid breakout, up or down, should occur with an expansion  in volume. This confirms the price action.

But a breakout on low volume is more likely to  fail, trapping traders in the wrong direction. Also watch for climactic volume. After a strong  run-up, a huge volume spike with a wide-range price bar can signal buying exhaustion - a  "buying climax.

" Supply may be taking over. The uptrend is in jeopardy. The reverse is true  for a selling climax after an extended decline.

Monitor the volume patterns in consolidations.  Is volume contracting as the price range narrows? This can be a sign of decreasing volatility  and building pressure for the next move.

Look for high-volume reversal bars. A  wide-range bar on massive volume that reverses an existing trend is a red  flag. For example, a bearish momentum bar with huge volume after an uptrend is  a sign that sellers have taken control.

Think of volume as the fuel and price as  the vehicle. A rally or decline can only go as far as the fuel in the tank. As a price action trader, you always want to be on the stronger side of the market -  the side with more aggressive volume behind it.

And, if you want to really take  your trading to the next level, make sure to check out these next videos.