Price action is trading from the chart's raw material — highs, lows, and the candles between them — on the argument that every indicator is just a delayed summary of those same prices. Strip the screen back and what remains is structure: who is in control, and where that control would visibly change.
Market structure in one paragraph
An uptrend is a sequence of higher highs and higher lows. A downtrend is lower highs and lower lows. Everything else is a range. That definition sounds too simple to be useful, but it settles the most important question first — which side is winning — and it defines exactly where the answer changes: an uptrend is in doubt the moment a swing low breaks, not before. Most price-action trading is just this bookkeeping, done consistently.
Swing points are the joints of structure. A swing high is a peak with lower bars on both sides; a swing low is the mirror. When a swing breaks, ask which one: breaking a minor swing inside the trend is noise, breaking the swing that defined the last leg is a structure change. Traders call that second one a break of structure, and it is the price-action equivalent of a signal.
Candles only mean something somewhere
A long lower wick — price drove down and got bought back — is a genuinely useful piece of information at a level: at prior support, at a big round number, at the origin of a previous rally. The identical candle in the middle of a range means almost nothing. This is the single most common price-action mistake: memorizing candle names (pin bar, engulfing, inside bar) and trading them wherever they appear. The candle is the trigger; the location is the trade.
Three candle events cover most of what you need:
- Rejection — a long wick through a level that closes back on the original side. Someone tried to break it and was absorbed.
- Engulfing — a candle whose body covers the previous candle's body, showing one side overwhelmed the other inside a single bar.
- Inside bar — a candle contained by the previous one: compression, a decision pending, usually traded on the break of the parent bar.
The setups that recur
Pullback to structure. The bread-and-butter trade: an uptrend pulls back to the last broken high (old resistance, new support) or to the most recent higher low, prints a rejection there, and resumes. You are buying the trend at a defined location with the stop just beyond the swing — the whole trade has a shape before you enter it.
Break and retest. Price breaks a level everyone can see, then returns to it. Holding on the retest confirms the breakout was real order flow rather than a stop-run; entering there gives a far better stop than chasing the break itself.
The failed break. Price pokes through an obvious high, finds nothing, and closes back inside. Everyone who bought the breakout is now trapped, and their exits fuel the reverse move. Fading failed breaks at major levels is the aggressive cousin of the retest trade — same level, opposite conclusion, decided by whether the close holds.
Liquidity: why obvious levels get pierced
Stops cluster just beyond obvious swing points — under every "clean" support sits a pool of sell stops. Markets routinely trade through those points by a few pips, fill the resting orders, and reverse. This is why price action traders wait for the candle to close before treating a level as broken, and why a wick through support followed by a strong close back above it is a buy signal rather than a breakdown. The pierce was the point.
Practicing it
Take one pair, one timeframe, and mark only three things daily: the trend by structure, the two levels that matter, and what price did at them. No indicators, no predictions — just the bookkeeping. Within a few weeks the chart starts reading like a sequence of decisions rather than a squiggle, and that reading is the skill everything else in this module builds on.