Price goes from point to point. One of the objectives of a trader is to identify places where price reverse and indications of a price reversal.
In Basic Price Action you have these component parts:
1) Support/Resistance
2) Direction
Up and Down in the markets are relative.
Direction Definition:
The symbolization of price movement from one point to another.
Each Arrow Symbolizes a price movement. Each Grey Spot Symbolizes a place where that price movement stopped and another one began.
On an actual chart it would look like this
Now this is not 100% accurate in terms of identifying all the movements, I have focused more on the significant movements but this is just a basic demonstration of the theory.
What as a trader we are trying to do is capitalize on these movements.
The purpose of a strategy is to try predict movements.
A traders objective is the be more right than he is wrong (Which translates to maximizing wins and minimizing losses)
Hopefully this clears up basic market structure and direction.
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