What is price action?
Price action is the movement of price over time, as drawn by candles on a chart. A price action trader reads that movement directly (swing points, candles, levels) instead of relying on a stack of indicators. It does not mean there is nothing else to learn: you still need a plan, risk limits and a way to review your results.
What are support and resistance?
Support is an area where falling price has paused or turned up in the past. Resistance is an area where rising price has paused or turned down. Treat them as zones, not exact lines, because price rarely turns at the same tick twice.
What is role reversal?
Once a level breaks decisively, it often switches jobs: broken resistance can become support, and broken support can become resistance. Traders watch the retest of the broken level to see whether it holds.
What is a pin bar?
A pin bar (pinocchio bar) is a candle with a long wick and a small body. A bullish pin bar has a long lower wick: price fell, buyers pushed it back up, and the candle closed near its high. A bearish pin bar is the reverse. The wick marks prices the market rejected.
What is an engulfing candle?
An engulfing candle is a candle whose body covers the previous candle’s body. A bullish engulfing candle is a green body that covers a red one. It shows that for that period buyers overwhelmed the previous selling.
Why does context matter more than the pattern?
A pin bar in the middle of a range tells you very little. The same pin bar at a level that has held before, in the direction of the higher-timeframe trend, tells you much more. Before you give a pattern any weight, ask:
- Is it at a level I marked before the candle formed?
- Does it agree with the trend on the higher timeframe?
- Where would the idea be wrong, and is that close enough to risk a small amount?
- Is there room before the next obvious level?
A simple price-action checklist
- Identify the trend on the higher timeframe (see market structure).
- Mark the nearest significant support and resistance zones.
- Wait for price to reach a zone; do not chase it.
- Look for a rejection or momentum candle that closes.
- Place the stop where the idea is clearly wrong, then size the position from that distance (see risk management).
- Save the chart and write down why you took the trade.
Common price-action mistakes
- Memorising patterns, ignoring levels. Patterns without a level are noise.
- Entering on a candle that has not closed. The wick can disappear before the period ends.
- Drawing hundreds of lines. If everything is a level, nothing is.
- Judging patterns by a few memorable winners. Count all the instances, including the failures.
How do you test whether a pattern works for you?
Record every setup you take, with the level, the candle, the stop and the result in R. After at least 30 entries, separate the ones with a clear level from those without. Many traders discover that their results depend more on the level and the stop than on the exact candle shape. The trading journal guide shows what to capture.
Educational content only. Patterns describe past behaviour and do not predict future prices.
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