Price Action: Technical and Fundamental Analysis

This course is an introduction to the elements needed to understand the elements needed to :

Technical and fundamental analysis are the two primary forms of analysis used in trading. Technical analysis can be further classified into two categories, namely price action and technical indicators.

In this article, we will explore both types of technical analysis, discuss the similarities and differences between the two, and lastly their feasibility.

• Price action relies on candlestick charts for trading insights, whereas technical indicators use past price data to identify market trends and trading signals.
• Price action provides a straightforward view of the market but demands skill to interpret patterns, while technical indicators simplify signal generation yet may lag behind real-time data.
• The preference for price action or technical indicators depends on the trader’s style; some prefer the simplicity of price action, while others favour the clear, calculated signals from indicators.
• What is Price Action?

  Price action is a type of technical analysis that involves using only candlestick charts. Price action traders rely on candlestick formations to identify support and resistance levels, supply and demand zones, Fibonacci retracements, and other technical patterns.

  Traders who use price action prefer clean charts without indicators and focus solely on the formation of candlesticks on selective timeframes. They believe that each candlestick tells a story and provides sufficient information to generate trade ideas.

• What Are Technical Indicators?

  Technical indicators are tools that traders use to showcase financial instruments in a different light. The information produced by technical indicators is based on candlestick formations. Since a candlestick must close before an indicator can register the information, technical indicators are naturally lagging.

  Technical indicators can be used to identify trends, overbought and oversold conditions, and potential reversals in price. They can also be used to generate trading signals, either on their own or in combination with other indicators.

  Trend, oscillators, and volume are the three major categories of technical indicators. In addition, there are custom indicators that traders can use that produce a unique set of information.