90 Price Action Term You Need To Learn

Most Used Terms

Accumulation

Accumulation is the process of gradually acquiring an asset over time, typically through small increments. It is done by investors who believe that the asset is undervalued and that its price will eventually rise. Accumulation can be carried out by individual investors or institutions such as hedge funds.

There are several ways to identify accumulation in trading. One way is to look at trading volume. If the volume is increasing, it indicates that there are more buyers than sellers in the market. This is a sign that accumulation may be taking place.

Another way to identify accumulation is to look at price movement. If the price is rising but the volume is not increasing, it suggests that accumulation may be occurring. This means that buyers are willing to pay higher prices for the asset even though there may not be a significant number of sellers willing to sell.

Accumulation is generally viewed as a bullish sign due to the presence of strong buying interest. However, it's important to note that accumulation does not guarantee that the price of the asset will rise. There are many other factors, such as economic news, political events, and natural disasters, that can affect the price of an asset.

Range

Range refers to the price range within which an asset trades over a specific period. Ranges can be used to identify potential support and resistance levels and determine the overall market trend. Some things that can be identified by looking at ranges in price movement include

Support and Resistance Levels

Ranges can be used to identify potential support and resistance levels. Support is a price level where there is a high probability of buyers entering, preventing the price from falling further. Resistance is a price level where there is a high probability of sellers entering, preventing the price from rising further.

Trend

Ranges can be used to determine the overall market trend. If the price is trading within a narrow range, it may indicate a consolidating or ranging market. If the price shows an upward or downward trend, it signals a trending market.

Entry and Exit Points

Ranges can be used to identify potential entry and exit points. For example, a trader may consider buying when an asset moves out of a support range or selling when it falls out of a resistance range.

It's important to remember that ranges are not always reliable indicators of future price movements. The price of an asset can break out of a range at any time, and there is no guarantee that it will continue trading within the same range.

B

Bias

Bias is the tendency, often unconscious, to prefer one thing over another. In trading, it refers to a trader's prejudiced view about the direction of the market. For example, a trader who expects an upward movement in the market may be more likely to enter a long trade, even if technical analysis suggests otherwise. Bias can be a significant obstacle in front of successful trading. It can lead investors to make poor decisions, such as entering trades that are not in line with market trends or taking excessive risks.

Bounce

Bounce refers to the temporary reversal of a downtrend. It is often driven by a combination of factors such as increased buying pressure, short covering, or technical support levels.

Some factors that can lead to bounces in price movement include

Increased buying pressure When there are more buyers than sellers in the market, prices may rise. This is known as buying pressure.
Short covering Short covering occurs when traders who have bet on a decline in an asset's price close their positions by buying back the asset. This can contribute to a rise in prices.
Technical support levels Technical support levels are price levels where buyers have previously come together to purchase an asset. When prices reach these levels, a bounce may be triggered.

It's important to note that bounces do not always result in a complete reversal of the overall trend. Prices may bounce back from a support level and then continue to fall. However, bounces can present opportunities for traders to enter the market or take profits.

Break Of Structure (BOS)

A Break of Structure occurs when the price of an asset moves outside a specific price range or pattern. This can be a sign that the trend is potentially changing, providing traders with opportunities to enter or exit the market.

There are several ways to identify a break of structure, and one of the most common approaches is to use technical analysis tools such as trendlines, moving averages, and Fibonacci retracements.

Some factors that can cause a break of structure include

Fundamental factors Changes in economic data, news events, or company earnings can lead to a break of structure.
Technical factors Technical indicators like moving averages and Fibonacci retracements can also signal a break of structure.
Mass psychology Market psychology can play a role in the occurrence of a break of structure. For example, if a large group of traders expects a trend to continue, a break of structure may occur when these traders are forced to sell their positions.

It's important to note that a break of structure doesn't always result in a complete reversal of the trend. In some cases, the price may simply pull back to the previous price range or pattern. However, break of structure events can be valuable tools for traders attempting to identify potential changes in market trends.

Breaker Block (BB)

Breaker Block refers to a support or resistance level where the price of an asset reverses its previous trend. It typically occurs when market makers and other major investors act to close their positions, leading to a reversal in the price.

This term is used in technical analysis and can be employed to predict price movements. It represents a support or resistance level that reverses the direction of the previous trend, initiating a new trend.

Breaker Blocks can form in both upward and downward trends. In an upward trend, the Breaker Block acts as a resistance level, preventing the price from rising further. In a downward trend, it acts as a support level, preventing the price from falling lower.

Breaker Blocks are similar to Order Blocks but are interpreted differently. Order Blocks represent levels where the price of an asset acts as a support or resistance level before changing the direction of the previous trend. In contrast, Breaker Blocks represent levels where the price of an asset changes the direction of the previous trend, initiating a new trend.

Breaker Blocks tend to have a higher accuracy rate in technical analysis, but they come with higher risk. On the other hand, Order Blocks are less risky. Therefore, the choice between using Breaker Blocks or Order Blocks will depend on your investment strategy and risk tolerance.

Breakout (BO)

A breakout is a sudden and sharp movement of an asset's price, surpassing a previous resistance or support level. Breakouts can occur in both upward and downward directions and can take place in any market.

In an upward breakout, the price of an asset rises above a resistance level, indicating that buyers are in control and there is a high likelihood of the trend continuing upward. In a downward breakout, the price of an asset falls below a support level, indicating that sellers are in control and there is a high likelihood of the trend continuing downward.

Breakouts can be a powerful tool for investors as they may signify a change in trend and provide an opportunity to enter or exit a position. However, it's important to note that breakouts are not always successful, and it is crucial to use other technical analysis tools to confirm a breakout before entering a trade.

Buyside Liquidity (BSL)

Buyside Liquidity refers to the level of liquidity available to buyers at a specific price level. It indicates that there are a significant number of buyers at a particular price level. This situation can facilitate the entry of buyers into the market and may contribute to an increase in prices.

Investors can take advantage of buyside liquidity by placing orders at price levels where liquidity is high, potentially ensuring that their orders are executed quickly and at favorable prices. This reflects the idea that there are enough buyers willing to transact at a given price, providing a smoother and more efficient execution of buy orders.

C

Candlestick

Candlestick refers to specific terms and definitions used to analyze candlestick patterns. These patterns can help identify potential trading opportunities and confirm the strength of other technical signals. Candlestick patterns are widely used in technical analysis to interpret price movements in financial markets.

Change of Character (Choch)

Change of Character is a technical analysis concept used to identify potential reversals in a trend. It suggests a shift or change in the behavior of the market, signaling that the existing trend may be losing strength or undergoing a transformation. Confluent Levels Confluent levels are price levels in the market that coincide or overlap with other significant factors such as Fibonacci retracement levels, pivot points, or other technical indicators. These levels are considered more important as they represent a convergence or coming together of multiple factors.

Consolidation

Consolidation is a period during which prices trade within a narrow range. It can occur after the end of a trend or before the start of a new trend. Technical factors such as moving averages or support and resistance levels can also contribute to price consolidation. Traders using the Price Action methodology often look at consolidation as a potential trading opportunity. It can be a sign that the market is gearing up to break out of the range and initiate a new trend.

Key characteristics of consolidation include

Price Movement Prices trading within a narrow range indicate consolidation.
Volume During consolidation periods, volume is often lower compared to the preceding trend.
Moving Averages Moving averages may frequently intersect during consolidation periods.

Consolidation is generally considered by experienced traders as a potential trade opportunity. However, it's crucial to recognize that not all consolidations lead to strong trends, and false breakouts can occur. Therefore, risk management and careful analysis are important when considering trades during consolidation periods. Traders often wait for a clear breakout from the consolidation range before entering a position.

D

Daily Open (DO)

The Daily Open represents the price at which an asset initiates trading on a specific day. It is a significant technical indicator because it can be used to identify potential support and resistance levels and evaluate the overall market trend.

Demand

Demand signifies the willingness of buyers to purchase an asset at a specific price. When there is strong demand, prices tend to increase because buyers are willing to pay higher prices for the asset. Areas where the price has previously turned around after a decline are often defined as "Demand Zones" or "Support Areas."

When the price approaches a demand zone, traders often encounter buying pressure, believed to lead to a continuation of the price increase. This buying pressure can result in a reversal of the price and an upward movement.

Distribution

Distribution refers to a stage in a market cycle where smart money or institutional investors sell their positions and distribute them to retail investors. It typically occurs after a prolonged uptrend, as smart money anticipates a reversal in the market and a downward movement.

Draw on Liquidity (DOL)

Drawing on Liquidity is a term frequently used in trading and investment contexts. It denotes the action of executing trades in a way that minimally impacts market prices. Essentially, it involves conducting trades of significant size without causing substantial price movements.

When traders or investors "draw on liquidity," they aim to execute a trade without causing the asset's price to move adversely against them. Essentially, they seek to buy or sell a significant amount of an asset without pushing the price in a direction that would harm their trade.

E

Entry Price (EP)

Entry Price is the price at which a trader enters a trade. It represents the specific price at which an investor buys or sells an asset. The entry price is crucial because it is the factor that significantly influences the risk/reward ratio for traders.

Equal Highs (EH)

Equal Highs is a trading concept that refers to the occurrence of two or more consecutive candlesticks having the same high price. This candlestick formation is often viewed as a reversal signal because it suggests a weakening momentum in the current trend.

Equal Lows (EL)

Equal Lows is a trading concept that involves two or more consecutive candlesticks having the same low price. Similar to Equal Highs, this candlestick formation is often considered a reversal signal as it indicates a diminishing momentum in the current trend.

Equilibrium (EQ)

Equilibrium is a trading concept that signifies a balance between supply and demand, resulting in a stable price for an asset. It implies that there is an equilibrium between sellers and buyers, and the price is not expected to move significantly in either direction.

Expansion

Expansion refers to an increase in the price range within which an asset is traded. The rise in volatility and trading volume can be attributed to various reasons. Expansion can be a sign of a trend as it indicates significant momentum in the market. However, it is crucial to remember that expansion can also signal a potential reversal as it may indicate that the market has entered overbought or oversold conditions.

F

Failure to Return (FTR)

Failure to Return is a Price Action Trader strategy that identifies potential reversals by looking for situations where the price fails to return to the previous support or resistance level. It originated from the RTM methodology. The underlying idea behind FTR is that if the price cannot return to the previous support or resistance level, it may be a sign of weakening trend and an impending reversal.

Fair Valuation

Fair Valuation is a concept in technical analysis that represents the price considered as the true value of an asset. It is based on a variety of factors such as the fundamentals of the asset, past price movements, and current market conditions. Fair valuation is used to identify potential trade opportunities. The idea is that if the price of an asset is trading below its fair value, it may present a potential buying opportunity. Conversely, if the price is trading above its fair value, it could be a potential selling opportunity.

Fair Value Gap (FVG)

Fair Value Gap is a Price Action trading strategy that identifies potential reversals by looking for situations where price gaps upward or downward and then fails to return to the previous trading range. The concept behind FVG is that if the price gap opens and does not return to the previous trading range, it indicates an imbalance in the market, and a reversal might be imminent.

Fibonacci Retracement Levels

Fibonacci Retracement Levels are based on the Fibonacci sequence, where each number is the sum of the previous two numbers. The most commonly used Fibonacci retracement levels are 23.6%, 38.2%, 50%, 61.8%, and 78.6%. In the Price Action trading system, traders use Fibonacci retracement levels by first identifying significant price movements, such as a reversal or a breakout. They then draw retracement lines connecting the high and low points of the price movement. Fibonacci retracement levels are then drawn onto these retracement lines. Traders believe that the price is likely to retrace to one of the Fibonacci retracement levels before returning to its original trend.

G

GAP

Gap refers to a significant price movement of an asset opening at a substantially higher or lower price compared to the previous closing. Gaps can occur due to various factors such as news, economic data releases, or technical analysis. There are two main types of gaps

Breakout Gaps Occur when the price of an asset breaks through a significant support or resistance level. This type of gap is often seen as a sign of strength and may indicate that the price is likely to continue moving in the direction of the breakout.
Common Gaps Occur when the price of an asset opens at a significantly higher or lower level without an apparent reason compared to the previous closing. This type of gap is generally considered a sign of weakness and may suggest that the price is likely to change direction.

Gaps provide valuable information to traders about the strength or weakness in the market and can be used as part of technical analysis to make informed trading decisions.

G

Golden Pocket

Golden Pocket is a strategy that identifies potential reversals by observing situations where the price retraces to the 61.8% Fibonacci retracement level of the last upward trend. The idea behind the Golden Pocket is that if the price retraces to the 61.8% Fibonacci retracement level and then makes an upward move, it signals the continuation of the upward trend.

H

High Volume Nodes (HVN)

High Volume Node refers to a price level where a significant amount of trading activity has occurred. These nodes are often viewed as support or resistance areas, indicating that the price may pause or reverse at these levels. High volume nodes can be identified by examining the volume bars on a chart, with each bar representing the number of shares or contracts traded at each price level. High volume nodes are typically marked by a large volume bar or a cluster of volume bars.

Higher High (HH)

Higher High is a technical analysis term used to describe a situation where the price of an asset reaches a level higher than its previous high.

Higher Low (HL)

Higher Low is a technical analysis term used to describe a situation where the price of an asset establishes a new low level that is higher than its previous low.

Higher Time Frame (HTF)

Higher Time Frame refers to longer time frames, typically daily, weekly, or monthly charts. These charts display price movements over extended periods, with each candle representing a longer timeframe. For example, on a daily chart, there might be a single candle representing all the trading activity that occurred throughout one day.

I

Imbalance (IMB)

Imbalance refers to candlesticks with a large body and little to no wick, indicating significant buying or selling pressure during the period the candle is open. In the Price Action Trade system, imbalance candlesticks are often used to identify potential reversals in the market trend.

Indecision Candle

Indecision candle, resembling structures known as "doji" with small bodies and long wicks. This indicates that there is a significant amount of buying and selling pressure during the period the candle is open, but neither side has gained a clear advantage. Indecision candles are typically used to identify potential reversals in the market trend. For example, an upward indecision candle following a period of downward price movement may signal that the market is about to initiate a new upward trend.

Intraday Trade

Intraday Trade refers to a trader buying and selling a financial instrument within the same trading day. This allows the trader to close all positions before the market closes, avoiding overnight risks and negative price gaps between days in securities.

K

Kill Zones (KZ)

In the context of the Forex market, it actually refers to specific time intervals characterized by high volatility that provide optimal trade entry opportunities. There are four kill zones defined by Inner Circle Trader (ICT), each having its unique characteristics and being most suitable for specific currency pairs and timeframes.

Asia Range Kill Zone
London Open Kill Zone
New York Open Kill Zone
London Close Kill Zone

L

Left Shoulder Kink (LSK)

Left Shoulder Kink, Quasimodo pattern's small, rounded top occurring in the left shoulder. It is often interpreted as a sign of weakness in an uptrend and can increase the probability of a reversal. The Quasimodo pattern is a reverse pattern similar to the head and shoulders pattern, but the left shoulder in the Quasimodo pattern is higher than the right shoulder, making the left shoulder kink a significant feature of the model.

Leverage

Leverage is the use of borrowed funds to increase the potential return on investment. It is a double-edged sword as it can also increase losses. In a trading system, leverage is used to allow investors to control a position larger than what they could with their own funds. This can be done by borrowing from a broker or exchange.

Liquidity (LQ)

Liquidity is the ability of an asset to be quickly converted into cash. The primary goal of markets is to keep prices in balance and correct when imbalances occur. Market structure is always focused on being balanced and adhering to science and mathematics. Liquidity is the most crucial factor in maintaining this balance, ensuring fair prices in the market.

Liquidity Void (LQV)

Liquidity Void is a sudden departure from a level that creates large-bodied candles that have not yet been filled by other candles. This is considered inefficient price movement, and it is expected that the price will fill these bodies before continuing towards large-bodied candles.

Low Volume Nodes (LVN)

Low Volume Node is a price level with low trading volume on the chart. It represents a level where trading activity is scarce, and trader interest has diminished.

Lower High (LH)

Lower High is a technical analysis term used to describe a situation where the price of an asset reaches a higher level than the previous low.

Lower Low (LL)

Lower Low is a technical analysis term used to describe a situation where the price of an asset reaches a lower level than the previous low.

Lower Time Frame (LTF)

Lower Time Frame consists of charts ranging from 1 minute to 15 minutes. While trading on lower time frames allows for many trading opportunities, it is not recommended for beginners and intermediate-level traders. Lower time frames have faster price movements, making trading riskier.

M

Market Structure Break (MSB)

Market Structure Break is a critical moment when the price gives the first sign to traders that the trend may reverse. These breaks can be identified on all timeframes, but their effectiveness in changing the market direction increases on higher timeframes.

Market Structure Shift (MSS) Market Structure Shift is represented on the chart by a level where the previous trend is broken, and this break usually occurs with imbalance candles. If the price is in an uptrend, the level of the market structure shift is where a lower low is made.

Maximum Pain Level (MPL)

Maximum Pain Level represents a strong potential support and resistance area in the "Quasimodo Pattern" model. This is because the likelihood of the underlying asset's price surpassing the maximum pain level is less compared to other levels.

Mitigation Block (MB)

Mitigation Block represents a price level where the rise or fall in the price of an asset is likely to stop, often consisting of numerous orders placed at that level.

Monday High

Monday High denotes the highest level reached on a Monday. It is a trading strategy that uses Monday's price movement to identify potential trading opportunities for the rest of the week, popular among investors following the ICT (Inner Circle Trader) methodology.

Mitigation

Mitigation refers to the process of reducing the risk of loss. It can be done through various techniques such as setting stop-loss, using technical analysis, and diversifying your portfolio.

Monthly Open (MO)

Monthly Open is a trading strategy that uses the monthly price as a fundamental indicator. It is popular among investors following the ICT (Inner Circle Trader) methodology.

Monday Low

Monday Low represents the lowest level reached on a Monday. It is a trading strategy that uses Monday's price movement to identify potential trading opportunities for the rest of the week, popular among investors following the ICT (Inner Circle Trader) methodology.

N

Naked Point of Control (nPOC)

Naked Point of Control is the price level where the highest volume of contracts is traded, regardless of whether it's a long or short position. It serves as a measure of market liquidity and can be used to identify potential support and resistance levels.

O

Optimal Trade Entry (OTE)

Optimal Trade Entry is the point at which an investor takes a trade with the highest probability of success. It can be determined using the Fibonacci drawing tool and often corresponds to the area between a 61.8% to 78.6% retracement of the expansion range.

Order Block (OB)

Order Block is an area where a large amount of pending limit orders is waiting to be filled. Order blocks are identified on a chart by observing previous price movements and looking for areas where significant moves or sudden changes in direction occurred.

P

Point of Control (POC)

Point of Control is the price level in a volume profile where the maximum number of contracts is traded. The volume profile is a charting tool that displays the volume traded at each price level over a specific period.

Point of Interest (POI)

Point of Interest, also known as Point of Entry, refers to a price level where there is significant interest from buyers and sellers. It involves identifying specific price levels where a significant change in the market direction is likely. This could be a level where the price has previously bounced or reversed, a Fibonacci retracement level, or another technical indicator.

Pullback

Pullback is a temporary reversal in the upward price movement of an asset or security. It is a retracement or a short-term decline before the prevailing trend resumes.

Q

Quarterly Open (QO)

Quarterly Open represents each quarter of a year.

Q1 (January, February, March)
Q2 (April, May, June)
Q3 (July, August, September)
Q4 (October, November, December)

Quasimodo (QM)

Quasimodo is a reversal pattern consisting of three peaks and two valleys. The middle peak is the highest, while the outer two peaks are at the same height. The second valley is lower than the first one. Quasimodo gets its name from Victor Hugo's "The Hunchback of Notre Dame" due to its resemblance to the hunchback's hump.

R

Range

Range is the difference between the highest and lowest prices of an asset over a specific period. It can be used to identify potential trade opportunities and set stop-loss and take-profit levels.

Range High (RH)

Range High is the highest price reached by an asset over a specific period. It is often used to determine support and resistance levels and to assess whether an asset is overbought or oversold.

Range Low (RL)

Range Low is the lowest price reached by an asset over a specific period. It is used for determining support and resistance levels and assessing whether an asset is overbought or oversold.

Relative Equal Highs (REH)

Relative Equal Highs is a trading pattern where an asset's price reaches a new high, but the trading volume is lower than in the previous high. This could be a sign that the upward trend's momentum is slowing down, indicating a potential reversal.

Relative Equal Lows (REL)

Relative Equal Lows is a trading pattern where an asset's price reaches a new low, but the trading volume is lower than in the previous low. This could be a sign that the downward trend's momentum is slowing down, indicating a potential reversal.

Resistance

Resistance is a price level where selling pressure is expected to outweigh buying pressure, preventing the price from rising further. It typically forms from a previous high in the market.

Retest

Retest is when an asset's price returns to a previous support or resistance level after a breakout.

Retracement

Retracement is a temporary reversal in the overall price trend of a security. It is considered one of the four phases that a price goes through.

Return to Origin (RTO)

Return to Origin is when an asset's price returns to its initial starting point after a certain period of fluctuation.

Reversal

Reversal is a change in the direction of the price trend, shifting from an upward to a downward movement, or vice versa.

Reward

Reward represents the potential profit a trader can gain from a trade, calculated by the difference between the entry and exit prices.

Risk / Reward (RR)

Risk / Reward ratio represents the potential profit of a trade relative to its potential loss. A high RR ratio indicates that potential profit is much greater than potential loss, while a low ratio suggests the opposite.

S

Scalping

Scalping is a trading style specialized in profiting from small price changes and quickly gaining profit from reselling. It requires a trader to have a solid exit strategy because a significant loss can wipe out many small gains the trader is trying to achieve.

Sellside Liquidity

Sell-side liquidity refers to the ability of sellers to easily sell their assets without significantly impacting the price. It is the opposite of buyside liquidity, which is the ability of buyers to easily purchase assets without significantly impacting the price.

Stop Loss

Stop loss is an order placed with a broker to sell a security when its price reaches a specific level. This level is called the stop price. The stop loss order is designed to limit the trader's loss in a security position.

Supply

Supply refers to the total quantity of a good or service that can be bought or sold. It is determined by a variety of factors, including the production capacity of suppliers, production costs, and demand for the good or service.

Support

Support represents a price level where buyers are willing to step in and are eager to purchase an asset, preventing the price from falling further. Support levels often form in areas where significant buying activity occurred in the past.

Swing

Swing refers to a short-term price movement lasting from a few days to weeks. Swing trading is a strategy that involves identifying and trading these short-term price movements in the direction of the prevailing trend.

S### wing Failure Swing failure is a technical analysis pattern that occurs when the price of an asset, after a sustained move in one direction, fails to reach a new high or low. Swing failures can be used to identify potential trend reversals.

S### wing High Swing high is a technical analysis term representing the highest price reached by an asset over a specific period. Swing highs are often used to identify trend reversals and support levels.

Swing Low

Swing low is a technical analysis term representing the lowest price reached by an asset over a specific period. Swing lows are often used to identify trend reversals and resistance levels.

Supply & Demand

Supply & Demand represents the willingness of buyers and sellers to purchase or sell an asset at a specific price. The law of supply and demand states that the price of an asset will increase when demand exceeds supply and decrease when supply exceeds demand.

Support & Resistance

Support & Resistance are technical analysis terms representing price levels where an asset is likely to find support or face resistance. Support is a price level where buyers are likely to step in, while resistance is a price level where sellers may enter the market.

T

Take Profit

Take profit is an order to sell an asset when it reaches a specific price. This is done to lock in profits and prevent losses in case the market moves against the trader's position.

V

Value Area High (VAH)

In Volume Profile trading, Value Area High is a technical analysis concept. It represents the highest price level where a significant volume has been traded during a trading session.

Value Area Low (VAL)

In Volume Profile trading, Value Area Low is a technical analysis concept. It represents the lowest price level where a significant volume has been traded during a trading session.

Volatility

Volatility expresses the degree of price fluctuations in an asset. A highly volatile asset experiences rapid and frequent price changes, while a low-volatility asset sees slower and less frequent price changes.

Volume Profile Volume

Profile is a technical analysis tool that uses trading activity volume to identify support and resistance areas, as well as potential trading opportunities. It is based on the idea that an asset is more likely to find support or resistance at price levels where a significant amount of buying or selling activity has occurred.

W

Weekly Open (WO)

Weekly Open represents the price at which an asset first traded during a specific week. It is calculated by taking the opening price of the first candle of the week.

Y

Yearly Open (YO)

Yearly Open represents the price at which an asset first traded during a specific year. It is calculated by taking the opening price of the first candle of the year.