Most traders look at a chart and see lines. I look at a chart and see decisions made by real money. Every bounce at the same price tells you something. Every breakdown through that same level tells you something different. Reading price action is not about indicators stacking up. It is about understanding what price is doing at the levels that matter.
The video above walks through the full breakdown. Here is the written version.
Why levels matter more than indicators
A support level is not a line someone drew on a chart. It is a price where buyers stepped in before, repeatedly, with enough size to stop a move lower. The market remembers those prices because the participants who traded them remember them.
When price returns to that level, you have a decision point:
- Does price hold and bounce again?
- Does it crack through, stall, and then fail the retest?
The answer to that question is the trade. Not the indicator, not the moving average, not the news. The answer is in what price does at the level.
Bounces versus breakdowns
Here is the practical split I use when I am watching a setup form.
When price holds the level: Buyers are still defending it. If the bounce is clean, meaning price does not chop sideways for hours before recovering, that tells me conviction is present on the buy side. Calls can offer the opportunity. You want the level to be the floor under the trade.
When price breaks the level and fails the retest: This is the flip. Price cracks support, rallies back to test it from below, and then rolls over. That test converts former support into resistance. Sellers are now in control at the exact price where buyers used to be. The setup shifts to puts.
Same level. Two completely different trades. The level gives you the location. Price action tells you the direction.
What to watch for at the level
These are the behaviors I watch in real time when price approaches a key area:
- Speed of approach. Price that arrives fast and reverses fast shows strong buyers. Price that grinds slowly through a level shows weak defense.
- Volume at the test. A bounce on thin volume is less reliable than one with real size behind it.
- The first retest. After a bounce, a pullback that holds above the level is a second confirmation. After a breakdown, a retest that stalls below the level confirms the flip.
- Time spent at the level. The longer price consolidates at support without breaking higher, the weaker the buyers. Healthy levels get defended quickly.
None of this requires a complex system. It requires watching what price is actually doing rather than waiting for a signal light to turn green.
The trade follows the signal
I get asked constantly what I look for before entering a trade. The level provides the location. Price action provides the signal. I do not force a call setup when the breakdown tells me puts are right, and I do not chase a put setup when the bounce is clean.
If you want to go deeper on reading setups and building these reads into a repeatable process, check out the masterclass. The full framework for finding levels and timing entries is in there.
Watch the full breakdown
The video above covers this concept with real chart examples and walks through both sides of the level, the bounce and the breakdown, so you can see exactly what to look for.
Watch “How to Read Price Action” on YouTube, and subscribe to the channel so you catch the next lesson when it drops. I also publish a free stock watchlist with the levels I am watching each week.
Nothing here is financial advice. All trading involves risk of loss. Do your own research and never trade with money you cannot afford to lose.
