First of all What is Price Action?
Swing traders look at price action as the art of looking at candles on their charts to determine the direction of a stock. Technical indicators can also be used, but mostly it’s about just looking at the price itself.
Tip #1. Identify support and resistance.
If you can identify support and resistance levels in technical analysis you will realize this is the most important aspect to chart reading. How many traders pay attention to this? Well, the very good traders do! Too many traders base their opinions on indicators such as Stochastics, MACD and other nonsense without realising price pays, and the different levels of the chart are more important.
Back 100 years ago, there was no such thing as indicators, and the top trader would go of the tap, and areas of support and resistance in the charts. In fact, this was the main reason technical analysis was born, as there is no other way to predict the price movements before they happened, but as soon as these terms were invented, it helped trader recognize familiar patterns, and enable them to trade and make consistent weekly profits without fancy software.
Tip #2. Analyze the swing points
Swing points are often referred to as pivot points. These are the areas of a stock charts where important short term reversals take place. Not all these pivot points are created equal, so it’s mandatory that you base your decisions, on the most recent pivot points and not pivot points that occurred more than 12 years ago.
Tip #3. Wide range candles are great.
Wide range candles are candles that mark important changes in sentiment on every chart, and in many timeframes. They market important points of price action where buyers and sellers disagree. They can often be used to mark important changes in a trend, or mark reversals. It’s a pattern that larger hedge funds or professional traders look for when watching and trading the markets.
The reason this is a great thing to look out for a trader, is that in every time frame you can see the major reversals points, and it’s like a big green light for those traders who missed out on the initial major move. This is the point where a trader would then have the option or a second and third chance to get in.