Day 12 – Trading with Price Action: Reading the Market Without Indicators

In the last chapter, we used indicators like 50 EMA, RSI, and Bollinger Bands to identify a high-probability trade.
But here’s a reality check: Indicators lag — they tell you what has already happened, not what’s about to happen.

Great traders eventually learn to read price action — pure market movement shown on a chart, without any technical overlays.

By the end of this chapter, you will:

Understand what price action is and why it matters.
Recognize market structure, support, resistance, and trend strength.
Identify high-probability candlestick patterns.
Build a basic indicator-free trading plan.

1. What is Price Action?

Price action is simply the story of buyers vs sellers written in the form of:

Candlesticks or bars
Chart patterns
Support & resistance levels

Why use it?

No lag — real-time market information.
Works in all markets and timeframes.
Enhances decision-making even if you use indicators.

2. The Core Elements of Price Action Trading

a) Market Structure

Price action traders watch for:

Higher Highs (HH) and Higher Lows (HL) → Uptrend.
Lower Highs (LH) and Lower Lows (LL) → Downtrend.
Sideways ranges → Consolidation.

Example:

nginx
Uptrend → HH → HL → HH → HL → HH  
Downtrend → LL → LH → LL → LH → LL

b) Support and Resistance

Support: A price level where buying pressure is strong enough to stop a fall.
Resistance: A price level where selling pressure is strong enough to stop a rise.

Rule: The more times a level holds, the stronger it becomes.

c) Trendlines & Channels

Drawn by connecting swing highs or swing lows.
Help visualize trend direction and possible bounce zones.

d) Candlestick Patterns

Candlestick charts give micro-level clues about market sentiment.

Key Patterns:

Pin Bar (Hammer / Shooting Star) → Reversal potential.
Engulfing Candle → Strong momentum shift.
Inside Bar → Consolidation before breakout.
Doji → Market indecision.

3. A Real Price Action Trade Example

Let’s revisit the TATA Steel trade from Day 11, but this time without indicators.

Step 1 – Market Structure

Daily chart shows Higher Highs and Higher Lows → uptrend.

Step 2 – Support/Resistance

Recent swing low at ₹128 (support).
Resistance around ₹138 from prior swing high.

Step 3 – Candlestick Trigger

At support ₹128, a bullish hammer candle forms, closing above midpoint → strong buying signal.

Step 4 – Entry & Exit

Buy at ₹132 after confirmation candle.
Stop-loss at ₹127 (below hammer’s low).
Target at ₹138 (near resistance).
Trade hits target in 5 sessions.

📌 Trading Journal Entry

Date	Stock	Setup	Entry	SL	Target	Exit Price	R:R	Result
03-Aug-25	TATA Steel	Support + Hammer	₹132	₹127	₹138	₹138	1.2	✅ Win

4. Why Price Action Works

Reflects actual market decisions, not calculated formulas.
Shows who is in control — buyers or sellers.
Allows you to react faster than indicator-based traders.

5. Building a Price Action Trading Plan

Here’s a beginner-friendly framework:

Identify Trend: Use swing highs/lows (HH-HL for uptrend, LH-LL for downtrend).
Mark Key Levels: Plot major support & resistance zones.
Wait for a Trigger: Hammer, engulfing, inside bar near a level.
Set Stop-Loss: Always beyond the trigger candle’s low/high.
Target: Previous swing high/low or next support/resistance.

6. Day 12 Action Plan

Pick one stock and remove all indicators.
Draw support/resistance and trendlines.
Look for candlestick signals at key levels.
Paper trade at least 10 setups and log results.

Day 12 Key Takeaways

Price action is the language of the market.
Support, resistance, and candlestick patterns are your primary tools.
No lag — just real-time decision-making.
Even if you use indicators, understanding price action will sharpen your edge.

💡 Tomorrow (Day 13): We will cover Risk Management Mastery, where you’ll learn to control losses, protect profits, and grow your capital like a professional trader.

Basic Info

Day 12 – Trading with Price Action: Reading the Market Without Indicators