Price Action

Price action is a type of technical analysis that relies on the study of historical price data to identify trends and make trading decisions. Unlike other technical indicators, such as moving averages or oscillators, price action does not use any additional calculations or statistical analysis. Instead, it relies on the observation of raw price data, including candlestick patterns, chart patterns, and support and resistance levels.

Price action traders use historical price data to identify key levels of support and resistance, which are areas where the price has either stopped moving lower (support) or stopped moving higher (resistance). These levels can then be used to make trading decisions, such as entering a long position near support or a short position near resistance.

Price action traders also observe candlestick patterns, which are graphical representations of price movements over a certain period of time. For example, a bullish candlestick pattern could indicate that the price is likely to move higher, while a bearish pattern could indicate that the price is likely to move lower.

One of the advantages of using price action as a trading indicator is that it can be applied to any time frame, from short-term charts to long-term charts. This allows traders to use price action to suit their individual trading styles and risk tolerance.

However, it's important to note that price action is not a perfect indicator and is subject to interpretation, as different traders may have different opinions on what constitutes a significant support or resistance level or candlestick pattern. As such, price action should be used in conjunction with other tools and techniques, such as risk management and fundamental analysis, to form a comprehensive trading strategy.

Support and Demands zone

Support and resistance zones are key concepts in technical analysis. In simple terms, support refers to a level where the price of an asset has a tendency to stop falling and start rising again. Resistance, on the other hand, refers to a level where the price has a tendency to stop rising and start falling again.

Support levels are typically identified by looking at historical price data and observing areas where the price has bounced or reversed after declining. Conversely, resistance levels are identified by observing areas where the price has failed to break through after rising.

Support and resistance levels are important to traders as they can be used to make trading decisions. For example, a trader might look to buy an asset near a support level, with the expectation that the price will bounce and rise after reaching that level. Alternatively, a trader might look to sell an asset near a resistance level, with the expectation that the price will struggle to break through that level and start falling.

It's important to note that support and resistance levels are not exact price points and can change over time. Additionally, just because a price has bounced or reversed at a certain level in the past does not guarantee that it will do so in the future. As such, traders need to be aware of other factors, such as current market conditions and price trends, when making trading decisions based on support and resistance levels.

How to find support and demands zone ?

Support and resistance zones can be found using technical analysis techniques. Here are several steps you can follow to find support and resistance zones:

Identify trend direction: Before finding support and resistance zones, it is important to determine the direction of the trend. A rising trend is characterized by higher highs and higher lows, while a falling trend is characterized by lower lows and lower highs.

Plot historic price levels: Plot historic price levels on a chart, using either a line chart or a candlestick chart. This will give you an idea of where the price has been in the past and where it may be headed in the future.

Identify key price levels: Identify key price levels where the price has stopped moving in a particular direction and reversed. These levels can be identified by looking for areas where the price has bounced or reversed after reaching a certain level.

Plot support and resistance lines: Draw a horizontal line at the identified key price levels and label them as either support or resistance lines, depending on the trend direction. A support line is drawn at a key price level where the price has bounced higher after declining, while a resistance line is drawn at a key price level where the price has failed to break through after rising.

Confirm support and resistance levels: Confirm the validity of support and resistance levels by observing how the price reacts to them over time. If the price continues to bounce off a support level, it is considered a valid support level. Conversely, if the price continues to struggle to break through a resistance level, it is considered a valid resistance level.

Monitor support and resistance levels: Regularly monitor support and resistance levels, as they can change over time. A previously established support or resistance level can become invalid if the price breaks through it or if it is significantly breached.

It's important to keep in mind that support and resistance levels are not exact price points and can change over time. Additionally, there is no guarantee that the price will stop at a support or resistance level, so traders need to be aware of other factors, such as market conditions and price trends, when making trading decisions based on support and resistance levels.