Price Action Analysis in Trading - Trading With Smart Money

20/02/2021 Price Action Analysis in Trading- Trading with Smart Money
Price Action
Price Action Analysis
 How to Study Candlestick
 Candlestick Analysis
Back to: Trading with Smart Money
 Price Action Analysis
 Advanced Price Action
Analysis Price Action Analysis in Trading
 Thrust Pullback and
Measuring Move Analysis In this article, I am going to discuss Price Action Analysis in Trading. Please read our previous
 How to Trade with Smart article before proceeding to this article where we discussed Candlestick in detail. As part of this
Money article, we are going to discuss the following pointers in detail which are related to Price Action
 Supply and Demand Analysis in Trading.
Zone Trading
1. What is Price Action Analysis?
 How to Day Trade with
2. Understanding the advance features of CANDLESTICK
Trend
 Multiple Time Frame The ultimate guide you will ever need to understand CANDLESTICK and its characteristics. Once you
Analysis complete this article, then you will no need to recognize any CANDLESTICK patterns.
 Head and Shoulder
Pattern What is Price Action Analysis?
 How to Trade with
Support and Resistance
The Price Action Analysis is the movement of price in the chart. Candlestick format shows clear price
action, I mean what buyers and sellers are doing in that period. Their activity clearly shows in
 Advanced Candlestick
CANDLESTICK
Analysis
 Trendline Trading So to learn price action we have to learn all the basic and advanced feature of candlestick
Strategy
 WRB Trading Strategy
5 steps to candlestick analysis
Day Trading Strategies
Step1: The size of the body (high to low)
 VWAP Trading Strategy
 Gap Trading Strategy BODY:
 Intraday Open High Open
Low Trading Strategy 1. Narrow
 PIN BAR Trading Strategy 2. Average
 Trading with Sideways 3. Wide
Price Action Area
 Pullback Trading Strategy
 Intraday Breakout Trading
Strategy
Risk Management
 3 Techniques for Risk
Management in Trading
Stock Selection & Live

Scanner
 How to make own Day
Trading Scanner
Find the body of your timeframe. The candle body shows a lot of information such as
 Stock Selection for
Intraday Trading
A long body is showing strength
Intraday Trading Course A narrow-body shows weakness
2020 When consecutive bodies become larger and larger, it shows an increase in momentum
 Intraday Trading Course When consecutive bodies become smaller and smaller, it shows slowing momentum
If up or down move with greater than average body candle it shows volatility high
https://dotnettutorials.net/lesson/price-action-analysis/ 1/13
 Multiple Timeframe How to compare?

Analysis for Intraday
Trading 1. current candlestick with respect to the previous candle
2. current candlestick with respect to the same swing
 VWAP Trading
3. current candlestick with respect to the previous swing
 Opening Range Trading
Strategy Step2: The length of wicks
 Opening Range Breakout
Larger wicks show that price has moved a lot during the duration of the candle but it got
Volume Price Action rejected, shows the presence of supply or demand
Analysis At major support and resistance levels. Candlewick becomes larger it indicates volatility. This
 Volume Analysis in generally happens after long trending phases before a reversal happen from support and
Trading resistance level
 Volume Price Action One more thing: the longer the shadow, the more likely prices will move in the opposite
Analysis direction of the shadow
 Volume Spread Long wick candles do not always signal a reversal if the wick of rejection candle engulf by
Analysis in Trading
subsequent move it fails, it called reverse rejection
If it appears between the trend it shows trend cont. ( as a small pullback in smaller time frame)
 Candlestick Pattern
While a single long long wick indicates possible of prices moving in the opposite direction of the
Analysis
wick, a cluster of multiple wicks indicate that prices are likely to move in the same direction of
 Finding Entry
the wick created and if the body closing the direction of the trend
Opportunity using
Volume Spread Analysis
 Spring and Upthrust
Trading Strategy
 VSA Trading Strategy
Option Chain Analysis

 Option Chain Analysis
Indicator
 RSI Trading Strategy
BTST
 BTST Trading Strategy
TECHNICAL ANALYSIS
MASTERCLASS
 Technical Analysis
 Market Structure
 Understanding Market
Structure through Swing
 Supply and Demand
Trading
Step3: The ratio between wicks and bodies
Understanding the relationship between the open and close when compared to the high and the low of
the present bar
Open price tells us where the balance between buyers and sellers at the opening of that period
Close price tells us where the balance point was at the end of the period
Etep4: Volume contains
WYCKOFF BASIC LAW
1. THE LAW OF SUPPLY AND DEMAND: When demand is greater than supply then the price will
rise to meet this demand and conversely when supply is greater than demand then the price will
fall
2. THE LAW OF CAUSE AND EFFECT: The effect will be indirectly proportional to the cause other
words a small amount of volume action will only result in a small amount of price action. If the
cause is large then the effect will be large vice a Versa
3. THE LAW OF EFFORT VS RESULT: Similar to newton’s third law. Every action must have an
equal and opposite reaction, in other words, the price action on the chart must reflect the
volume action below. Effort (volume) seen as the result (price), where validated and anomaly
comes to consider
Wide spared candle
Price action –
Strong BULLISH market sentiment. The price action has risen sharply higher and closed at or near
the high of an up candle.
Volume Action–
The associated volume should, therefore, reflect this strong sentiment with a ‘strong’ volume.
As we can see in the above example is, if the volume is above average(effort vs result), then
this is what we should expect to see as it validates the price. The smart money is joining the
move higher and everything is as it should be.
If the volume is below average or low, this is a warning signal. The price is being marked higher,
but with little effort. The move is not genuine. If we are in a position, we look to exit. If we are
not in a position we stay out and wait for the next signal to see when and where the smart
money is now taking this market.
Narrow Spread Candles
Price action – weak market sentiment
Volume Action–
A narrow spread candle should have low volume – again effort vs result.
NARROW SPREAD CANDLE WITH HIGH VOLUME. If the volume had represented buying,
how can the spread be narrow? There are only two possible explanations for a narrow spread
up candle on a very high volume.
1. Either the professional money is selling into the buying [see the end of a rising market]
2. There is a trading range to the left and the professional money is prepared to absorb the selling
from traders locked into this old trading range
Step5: RELATIVE OR 2 CANDLE PRICE ACTION
DIRECTION OF CANDLE
The relationship of each bar high/low relative to the previous bar
1. An up bar starts an upswing and confirms the end of a downswing

2. A down bar starts a downswing and confirms the end of an upswing
3. The inside bar does not break the previous high low, hence they do not affect the direction of
the current swing
4. Outside bar breaks both the previous high and low, it introduces uncertainty in the market
structure. Outside bar in the upswing cont the upswing and the outside bar in the downswing
cont the downswing. Typically an outside bar not end or start a price swing without down bar or
a break below the swing low an upswing will cont
DIRECTION OF TREND WITH RESPECT TO CANDLE POSITION
Context or Background
CANDLESTICk should not be analyzed in a vacuum. A candlestick always must be analyzed in the
context of what has happened in the past.
Context is what current candlestick shows with respect to the previous candlestick
The current candlestick larger or smaller than previous ones? Which shows momentum
increases or decreases
Is the size-changing meaningfully or not? Buying or selling pressure
Is volatility increases or decreases
Is the change happening during an active trading period or not? For example, candlesticks in
mid-period generally dead or inactive.
TESTING PRICE LEVELS
The concept of testing refers to the market moving towards a price level to “test” if the price level will
accept reject the market’s advances.
The high and low of each price bar are natural support and resistance levels and the wick generally
acts as a supply and demand zone. The test of these levels or zones show the undercurrents of the
market and is critical for reading price action.
THREE PRICE BARS/expectation
With a clear read of 2 BAR PRICE ACTION (DIRECTION, CONTEXT, TESTING), we are able to form
an expectation of the market in the third candle. We would expect the market to move in a certain way
in the third bar with our read of 2 bar price action. The confirmation or failure of our expectations of the
third bar reveals more about the market and adds to our price action analysis.
To form expectations, we need to make a very simple assumption about how the market should
behave and should not behave. Essentially, the market has momentum and inertia. bearishness
should follow bearishness and bullishness should follow bullishness. When it does not obey this
assumption, we have to cautious, Maybe a possible change in market direction.
Some more examples
In the next article, I am going to continue the discussion of Price Action Analysis. Here, in this
article, I try to explain Price Action Analysis in Trading i.e. the step by step process to study
CANDLESTICK and how to find swing high and swing low and characteristics to find swing high and
swing low. I hope you enjoy this Price Action Analysis in the Trading article. Please join my Telegram
Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney
← Previous Lesson Next Lesson →

Candlestick Analysis Advanced Price Action Analysis
12 thoughts on “Price Action Analysis”
PHILANI
JANUARY 1, 2020 AT 2:11 AM
Hi ilike this explanations is very clear
Reply
SULAIMAN
JANUARY 1, 2020 AT 4:02 AM
Waw like it
Reply
BIKASH
FEBRUARY 8, 2020 AT 6:10 PM
Thanq
Reply
ANAND ADAKE
clear and deep,thank u sir.
Reply
PRADEEP
DECEMBER 25, 2020 AT 11:03 AM
Awesome sir
Reply
DILEEP DHURVEY
Well knowledge
Reply
BIKASH
FEBRUARY 17, 2020 AT 10:47 AM
Thanq dileep
Reply
RAJADURAI G
MARCH 18, 2020 AT 12:18 AM
Very nice explanations..I get more knowledge and clarity in trading after read your each post..
Reply
RASHID
APRIL 26, 2020 AT 9:03 PM
Very helpful. I like it.
Reply
Pingback: How to Study Candlestick – PIPCARTEL TUTORIAL
SATISH JAGDHANE
OCTOBER 18, 2020 AT 8:41 PM
Never seen such excellent training whether paid course or free. Kudos to Teacher
Reply
YUSUPH MASHOOD
NOVEMBER 22, 2020 AT 11:01 AM
Good and excellent teaching thank uou
Reply
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20/02/2021 Price Action Analysis in Trading- Trading with Smart Money

 Supply and Demand Analysis in Trading.

Stock Selection & Live

 Multiple Timeframe How to compare?

Option Chain Analysis

Step3: The ratio between wicks and bodies

Etep4: Volume contains

WYCKOFF BASIC LAW

Wide spared candle

Narrow Spread Candles

Price action – weak market sentiment

Step5: RELATIVE OR 2 CANDLE PRICE ACTION

The relationship of each bar high/low relative to the previous bar

1. An up bar starts an upswing and confirms the end of a downswing

DIRECTION OF TREND WITH RESPECT TO CANDLE POSITION

TESTING PRICE LEVELS

THREE PRICE BARS/expectation

Some more examples

← Previous Lesson Next Lesson →

12 thoughts on “Price Action Analysis”

Hi ilike this explanations is very clear

clear and deep,thank u sir.

Very helpful. I like it.

Pingback: How to Study Candlestick – PIPCARTEL TUTORIAL

Good and excellent teaching thank uou

Name* Email* Website

© Dot Net Tutorials | Website Design by Sunrise Pixel

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