What are Price Action Charts?
Price action generally refers to the up and down movement of a security's price when it is plotted over time. Different looks can be applied to a chart to make trends in price action more obvious for traders. Technical analysis formations and chart patterns are derived from price action.
Price action forms the basis for all technical analysis of a stock, commodity, or other asset charts. Many short-term traders rely exclusively on price action and the formations and trends extrapolated from it to make trading decisions. Price action can be seen and interpreted using charts that plot prices over time. Traders use different chart compositions to improve their ability to spot and interpret trends, breakouts, and reversals. Many traders use candlestick charts since they help better visualize price movements by displaying the open, high, low, and close values in the context of up or down sessions.