All price movement in Forex comes from bulls (buyers) and bears (sellers). When a currency pair moves up it is because there are more bulls than bears and vice versa. The Forex Market (and any market for that matter) is in a constant state of struggle between bulls and bears. Price action trading is about analyzing who currently controls price, bulls or bears and if they are likely to stay in control. If your analysis shows that bulls are in control and that they are likely to stay in control, then you can buy.

Markets move in waves known as swings in the price of the instrument. No market, for example, will trend up without having some sort of retrace in price.

As their names suggest, support and resistance act as barriers within forex markets and are easily spotted on price charts either preventing price from moving higher or lower. This can be seen on any forex chart and across all time frames with those most influential areas of support and resistance potentially still existing in the market years after they were originally created.

Currency trading requires reference points which are used to determine when to enter the market, place stops and take profits. However, many beginning traders divert too much attention to technical indicators such as moving average convergence divergence (MACD) and relative strength index (RSI) and fail to identify a point that defines risk.