Price action is the language of markets. Before indicators, before news, before analysis — price moves. Learning to read what price is doing, where it has come from, and where it tends to go gives you a structural edge that no indicator can replicate. This module covers the foundation: structure, levels, candles, and triggers.
Price action analysis strips the chart back to its raw elements: who is in control, where did price react before, and what is price doing right now at a meaningful level. Three concepts underpin everything else:
Every chart is in one of three states: trending up, trending down, or ranging. The structure tells you which direction to favor and which setups to skip. Trading against structure is the most common avoidable mistake.
A Break of Structure (BOS) occurs when price breaks a key swing high (in a downtrend) or swing low (in an uptrend). This is the earliest signal that trend direction may be changing. A BOS alone is not enough — wait for a retest of the broken level to confirm before entering.
Price breaks above the most recent lower high in a downtrend → potential trend reversal to bullish
Price breaks below the most recent higher low in an uptrend → potential trend reversal to bearish
Price made lower highs (LH) and lower lows (LL) — a clear downtrend. When price then pushed above the most recent LH (yellow dot), that is the BOS. The level flips to support. A retest at the same price confirms the shift before the next leg up.
Price made higher highs (HH) and higher lows (HL) — a clear uptrend. When price then pushed below the most recent HL (yellow dot), that is the BOS. The level flips to resistance. A retest confirms the shift before the next leg down.
Support and resistance are price areas where the market has historically paused, reversed, or accelerated. They exist because traders remember them — and when price returns, those same participants act again at the same levels.
Price reversed here before — institutions remember.
$50,000, $100,000, $3,000 — psychological magnets.
Where price spent time trading sideways becomes a future reference.
38.2%, 50%, 61.8% of the prior move attract institutional orders.
When a support level is broken convincingly, it flips and becomes resistance. The same happens in reverse — broken resistance becomes support. This is called role reversal and creates the cleanest re-entry setups.
Each candlestick encodes four data points: open, close, high, and low. The body shows the range between open and close; the wicks show how far price traveled beyond that range before closing back. Wicks reveal rejection — the more extreme the wick, the more decisive the rejection.
Long lower wick shows buyers overwhelmed sellers. Price rejected lower levels hard.
Best at: At support or after a downtrend
Long upper wick shows sellers overwhelmed buyers. Price rejected higher levels hard.
Best at: At resistance or after an uptrend
Open ≈ Close. Neither buyers nor sellers won the session. Market is undecided.
Best at: After a strong move — signals possible reversal
A large green candle fully engulfs the prior red candle. Strong shift of momentum to buyers.
Best at: At support after a bearish move
A large red candle fully engulfs the prior green candle. Strong shift of momentum to sellers.
Best at: At resistance after a bullish move
The second candle's range is completely within the first (mother bar). Market is coiling.
Best at: Breakout direction signals next move
A key level alone is not a reason to enter. You need a trigger — evidence that price is reacting to the level as expected. Three entry trigger types cover the majority of high-probability setups:
The most straightforward trigger. Level + candle = entry. Works best when the level has been respected multiple times before.
Often offers the best R:R because the stop is tight and the target is the next major level. Requires patience — the retest may not come immediately.
Catches trend reversals early. Higher risk than the other two (not yet confirmed trend), but high reward when correct. Only trade this when the BOS is strong and clean.
Higher timeframes dominate lower ones. A support level on the daily chart carries far more weight than a support level on the 15-minute chart. Use this top-down hierarchy to avoid taking low-timeframe entries against a higher-timeframe trend.
What is the dominant trend? Are we at a major S/R level? This context overrides everything below.
Identify the key levels and structure relevant to your trades. Is daily trending up, down, or ranging?
Find the specific setup within the daily structure. Where is price relative to key levels on this timeframe?
Refine the exact entry, read the trigger candle, and define the precise stop level. Do not use this alone.