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Nial Fuller

NIAL FULLER
Professional Trader, Author & Trading Coach

Price Action Technical Analysis Reveals the Footprint of Money

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By in Forex Trading Strategies By Nial Fuller Last updated on | 77 Comments

Price action is the movement of price over time, this movement leaves behind a ‘footprint’, the footprint of money. This footprint, once understood properly, reveals to us the story on the chart… 

Price action analysis is the act of analyzing and making sense of the footprint of money on the chart. By understanding this footprint, we can begin to put together a ‘story’ of the market, one bar at a time. These footprints are price bars, and they show us the behavior of all market participants; the ‘big boys’, smart money, hedge fund managers, and even the not so smart money.  

By analyzing and following the footprint left behind as the price action develops over time, we can read what is happening on a chart, what has happened and what might happen next. Reading a chart is not just about “technical analysis”, it’s about understanding and making use out of the psychology of the market that is ‘hidden’ in the price bars. In this lesson, you will discover what reading the charts bar-by-bar and then using that to get a bird’s eye view, will do for your trading… 

The psychology of price bars and reading the market like a book 

Price action, for those who are new here, is essentially the ‘footprint’ that is left behind as price moves over time, this price action footprint is visible by looking at a price chart of any market or trading instrument. For an expanded definition of price action, read my introduction to price action here. 

Each individual price bar is essentially a reflection of the collective psychology of all market participants for the time period the bar represents. For example, on a daily chart time frame, each price bar is showing whether bulls or bears won the battle that day. We can drill-down further and dissect each price bar according to how long or short its tail / wick / shadow was as well as the total length of the bar and a few other features.

The psychology of individual price bars is something that has been studied for hundreds of years, ever since Munehisa Homma, the first price action trader, began using candlestick charts in the 1700’s. Homma discovered that by tracking the price movement of a market over time (price action / footprint of money), he could actually see the psychological behavior of other market participants and use that data to develop a trading strategy.  

Moving beyond indicators, trading systems and all the online trading hype, by simply reading a ‘naked’ price chart we are able to read the market like a series of chapters in a book; the story reveals itself from left to right over time.  

What are the primary focus points when reading a chart from left to right? 

  • Reading the price action and technical analysis of charts will reveal a lot of data and it’s much more than just bars and lines, it’s psychology, market sentiment and bringing it all together to form an actionable plan of attack. 
  • We can interpret the story by reading the charts like a book, from left to right; what happened earlier in the chart / book usually has an impact on what is happening currently and what might happen next. 
  • Each individual price bar has something to say and plays a role in the story the chart is telling you.
  • The most obvious piece of data we see when we look at a chart is the direction of the market or the trend. We also will easily notice whether the market is making big directional swings or smaller / shallower swings. Note: Currently, many markets are experiencing big / deep directional swings. 
  • We also want to make note of whether a market is respecting technical levels (support / resistance, moving averages, etc.) consistently. By analyzing the footprint of money and reading the story on the charts, we can see whether a market is respect key technical levels and if is is, this means it’s a good time to look for trades. Currently, we are in a structured market that is respecting key levels, trending well and signals are forming with price moving in the direction of the signal more often than not. 
  • We want to take note of how price is behaving around key levels, if it’s not respecting them, then what is it doing? Is it shooting past them without so much as a thought? If so, that tells us a lot as well, it tells us that the direction of the level break has a lot of momentum being it, so look to trade in that direction. 

Each of the points above are things we want to look for as we read the chart from left to right. They each help us to understand the psychology of the chart and give us the ability to ‘paint’ a picture of what might happen next. Think of the story the market is telling you as a “window into the future”; you don’t always know what the future will hold, but when you study past events and how they connect to current events, you can make a very good educated guess.  

Our aim, as price action analysts, is to see and read the market by using the price action analysis model; bars, levels, trends, interpreting price action signals, etc. The day-to-day flow of money and day-to-day price strength vs. weakness is revealed by individual daily and weekly price bars (I use candlestick bars).  

For example, price action analysis allows us to spot potential ‘traps’ in the market, like false breakouts and fakey patterns, these patterns reveal where the market is being manipulated by the “smart money players” and which direction it may reverse into. In this way, the price action, the footprint of money, allows us to see inside the smart money minds; to actually see what they’re thinking based on what they’re doing. This is how we read the psychology of the market on a bar-by-bar basis. We will look at some chart examples of this to follow… 

How to Read the ‘Footprint’ of Money…

Now, let’s get into the nitty-gritty of this, let’s walk through 4 different charts and analyze the price action from left to right. These charts will go from easy to more difficult so that any newer traders reading this get a better feel for how I follow the footprint of the price action to develop a story on the charts, so that I can make an educated guess as to where to look for my next trade… 

Chart 1. – Reading the chart from left to right 

In the chart below, we are reading the story on the AUDUSD daily chart time frame: 

Figure 1. – The first thing we are noticing, starting from the right side of the chart is that the overall daily chart trend was down, lower highs and lower lows were being printed. This gives us our bias – bearish, we are looking to sell.  

Figure 2. – Next, we want to identify obvious horizontal levels of support or resistance, drawn at the major market swing points / turning points. These levels are where we will focus our attention in the future for potential price action trade setups. 

Figure 3. – Notice, a small bearish pin bar formed, at the existing swing point (previous swing low which is now resistance), this pin is in-line with the downtrend as well. Thus, we have a T.L.S. setup or Trend, Level, Signal, and when you get all three of these it’s like a golden hen that will often give golden egg trade setups.  

Figure 4. – After the powerful down move that took place following the previous pin bar signal, price retraced higher over the next few weeks, back up to re-test that previous swing low / resistance level. We can see that after a brief pause back at that resistance, price sold-off heavily again, providing traders who missed the first move with a potential second-chance entry into this down-trending market. 

Chart 2. – Analyzing individual price bar psychology 

In the chart below, we are following the smart money price footprint on the daily Gold chart: 

Figure 1. – Notice the false breakout above the level near 1360. There was an existing resistance level near 1360 from back in 2017. The upper tail on the bar indicates the psychology of the market – buyers ran out and became exhausted, the amateurs bought into the breakout of the level only to see the bigger players come in and push price lower. 

Figure 2. – We can see two obvious bullish pin bars that formed near a key support at 1307 area. We would be leaving both this 1307 support and 1360 resistance on our charts to watch the price action at these levels into the future. At this point, a clear trading range was established and the story on the chart is that price is oscillating between these levels and the weaker hands are getting flushed out at the boundaries of the range by trying to anticipate a breakout before it actually happens.  

Figure 3. – Yet another false breakout of resistance, you can see how repetitive humans are and how they do not learn – they will do the same thing over and over, the good thing is, you can profit from their ignorance! Watch for these long tails at key levels, especially in trading ranges, and fade them or trade the opposite way, back into the range.  

Figure 4. – Notice, after several days of consolidation near the trading range support, after a moderate pop higher price formed a bearish tailed bar, a clear warning sign that price would not make another surge up to the trading range top. After this warning signal, we can see price capitulated, finally breaking down and out of the trading range for good. When you see a powerful close outside of a range, followed by several more days of consolidation / closes outside the range, as we see here, then it’s safe to assume the breakout is real. 

Figure 5. – Now that the breakout has been confirmed we can look to trade in-line with that direction (down). Notice after a few weeks of consolidating under the range support, price tried to poke back up above it, only to get pushed lower by bears, forming a small pin bar sell signal before another big sell-off.  

Chart 3. Price bars reveal contrarian opportunities 

In the chart below, we are analyzing how price bars can reveal contrarian trading opportunities. 

Figure 1. – After a very aggressive and some might say “scary” sell-off, the S&P500 reversed dramatically, putting in two long-tailed bullish bars that to the professional, indicated an up-move was coming soon. Most amateurs were still feeling the intense sell-off and not ready to buy at this point. Again, pay more attention to WHAT THE PRICE ACTION is telling you than what your feelings are telling you. At the time, this would have been a very contrarian feeling buy entry – everyone had just liquidated shorts and were afraid to buy. Just remember, when everyone is afraid, you want to buy, when no one is afraid, you should be getting afraid and looking to sell! 

Figure 2. – After a nice move higher from the aforementioned bullish tailed bars, price pulled back to that same support area, forming a couple more obvious bullish tails that showed a false-break of that support, again indicating an up move was likely in store. 

Figure 3. – If the previous two opportunities were not obvious enough, we got a third one, a very nice-looking pin bar buy signal at the same support level as the last two opportunities. Notice how trades like this can take weeks or months to develop, but when they do, you need to act. Having followed this story on the chart up until that last pin bar formed, you would have known what to do at the time – BUY!  

Chart. 4. What can we learn from failed price action signals? 

In the chart below, we are looking at what failed price action signals can tell us. 

Figure 1. – Looking from left to right, we can see a clear uptrend was in place as price bounced from $99.00 support in Crude Oil. Thus, we would have been looking to buy this market on bullish signals. 

Figure 2. – After a modest pullback, a bullish pin bar formed, price pushed higher as we might expect, netting anyone who traded this pin bar a nice profit. 

Figure 3. – As price pulled back again and formed a similar pin bar to Fig. 2. we saw little to no follow-through. Instead, price just consolidated for several days after this pin bar formed, even forming a couple bearish tails within that consolidation. Once we saw price close under the low of the pin bar, we knew that pin was likely to fail / failing. We can see what happened next. A failed price action signal like this can often be a signal unto itself, telling us to look at the opposite side of the market now.  

I hope from the above images you can begin to understand how I analyze the story on the charts and how important individual price bars can be. The best way to get more familiar with the process of interpreting the story the market is telling you, is by analyzing the footprint the price action leaves on the charts.  

I recommend you track this in a trading journal by making a daily diary of your favorite markets, noting down the things discussed above; trend, key levels, any signals that formed and what happened after them. Doing this five days a week like I do in my daily members market commentary, is an excellent way and really the only way to maintain the intimate connection to the market that you need to accurately understand what the market is saying to you.  

Starting tomorrow… 

When you open your charts tomorrow, I want you to refer back to this lesson and get a pen and paper out. Begin to analyze the market from left to right, as I have done for you here. Keep your trading journal / diary in a notebook and you will begin to understand what I mean by the ‘story’ the market is telling. You will start feeling a connection with the market, and if you do this long enough you will develop your trading intuition which will act almost as a ‘sixth sense’, helping you to quickly identify high-probability trading opportunities in real-time, as they form. 

The primary points to take away from today’s lesson are:

  • Price action is literally the ‘footprint’ of money across a chart, allowing us to see the behavior of all market participants.
  • We can learn how to interpret this price action and the market psychology it represents to put together the ‘story’ being told on the chart.
  • Individual price bars each play a role in the market’s story, so learning to interpret their meaning is critical.
  • Begin analyzing your favorite markets every day and tracking your notes in a trading diary. This will help you better understand the story the market is telling and what might happen in the next ‘chapter’.

Final Thoughts:

Mastering the art of reading price action has taken me 16+ years, thousands of hours of study and thousands more hours of real live trading screen time. This blog and the 500+ lessons I have authored, as well as my Professional Price Action Trading Course are here to help you dramatically fast-track your knowledge and help you achieve trading success sooner. All of the trading tutorials I have produced for my students since 2008 are the exact type of real world education resources I wish I had access to when I started my trading journey all those years ago. If you apply yourself and stick with the core philosophies of reading price action bar by bar and keeping your overall trading methodology simple, then your chances of making it in the world of professional trading are increased substantially.

Cheers to your future trading success, Nial.

What did you think of this lesson? Please leave your comments & feedback below!

If You Have Any Questions, Please Email Me Here.

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About Nial Fuller

is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 20,000+ students since 2008. In 2016, Nial won the Million Dollar Trader Competition. Checkout Nial's Professional Trading Course here.
  1. MUNGE GATHURI September 18, 2019 at 1:23 pm

    This is an article that need to be reread as many times upto the point it is engrained the sub- conscious mind thankyou again for the great article.

    Reply
  2. caroline Alegbe September 18, 2019 at 2:25 am

    Thanks for this write up.

    Reply
  3. Yakawonya Rutson September 16, 2019 at 4:44 am

    Always out with a winner post A teacher to cherish Thanks many thanks over

    Reply
  4. eessien edet September 16, 2019 at 1:15 am

    Hi Nial,
    I enjoy reading your wisdom-filled articles on trading the financial markets. I have been trading for some years now, picking up useful trading nuggets along the way. Your latest article is, as usual, content packed.

    Thanks Nial for your awesome trading insights.

    Essien.

    Reply
  5. Nour September 15, 2019 at 11:45 am

    Nial, you are the godfather of the Forex trading.

    Reply
  6. NKAMA September 15, 2019 at 12:55 am

    You are too much sir. By this you have solved most of my problems.

    Reply
    • Ekpebo Edwin September 19, 2019 at 7:36 am

      Thanks for all the vital information on retracement trading- entry signals, stop loss placing and profit taking. You sure opened my mind to new idea.

      Reply
  7. Medi September 14, 2019 at 5:29 pm

    You tha God sent!

    Reply
  8. NGUYEN QUOC THANG September 14, 2019 at 1:28 pm

    Pls support me to explain more about ” Event area ” in the line ” Retrace Entry Back to an Event Area or Prior PA signal.

    Thank you
    THANG

    Reply
  9. Mahmudul Hasan September 14, 2019 at 1:32 am

    Super Nial bro…..

    Reply
  10. Diário de um Poupador March 5, 2018 at 1:32 am

    Hi, i am a brazilian guy who trades for years. I pause my trades during some years, and i came back about 2 months ago. I’ve been trying a strategy with short take, and it has given to me a lot of profits. I am trying to make my mind strong to ignore the market’s movement after i book profit. You have said a very right thing here: the market always makes a retraction.

    This article was very good, thanks. Keep it that way. God bless you.

    Reply
  11. Solomon Olusegun Oyeniyi December 13, 2017 at 9:24 am

    Thank you for this article.

    Reply
    • Liton khan September 16, 2019 at 12:14 am

      Very nice Boos.ok go forawd.

      Reply
  12. GANDUS December 4, 2017 at 6:10 am

    Great always to hear you big brooother Nail. God bless you. timely article for me. love

    Reply
  13. Noor Azman Abd Aziz November 26, 2017 at 2:10 am

    Nice and very interesting. This article answer the questions why i always close trades with losses while actually I have been profitting during the trading session.

    Reply
  14. Sboniso Malambule November 24, 2017 at 6:22 pm

    ive bee reading your lessons im impressed

    Reply
  15. Azmi Yusoff October 17, 2017 at 2:52 pm

    Interesting article. This happen everytime. The idea of wanting to wait a little more time may cause us to lose what is supposed to be a profit instead.

    Reply
  16. Ayanda Mabuza September 18, 2017 at 10:56 am

    reading such artecles really opens my mind.Thanks Nail

    Reply
  17. Roy Peters September 1, 2017 at 2:39 am

    This happened to me recently on Eurgbp. Up 200 pips and thought it’d go higher. Next day market came down and I booked only 40pips!
    I learn a big lesson.

    Reply
  18. Rafari July 31, 2017 at 1:29 am

    ok, its been almost 2 years since I start to learn how the market move. I can say most of your articles give me a vision about how to, what to do and don’t. It’s cool because I start move to learn draw some major snr, I got stuck on making it, but your articles show me some clever way to draw “a key level” and some short term. I’ll try my best to practice it everyday !!!

    Thanks Nial, You’re Awesome !

    Reply
  19. kgothatso July 28, 2017 at 6:00 pm

    U ar really a genus.sir u teached me that i should take a risk than to lose the chance **#great things come to those who hustle (lovely)$$$$$

    Reply
  20. Alan Gillanders June 25, 2017 at 3:25 am

    Hi Nial,
    Thanks for the lesson. This has been my problem for some time. Greed. Always waiting to take more with a small investment. My profits evaporate and majority of times end in a loss.
    In the last 6 weeks I have been taking the small profits. 100 – 200 points instead of trying to get 500-1000 points. seems to be working ok. Thanks again

    Reply
  21. oluwatosn Matthew June 23, 2017 at 5:50 pm

    That’s a good trading guide. Thanks nial.

    Reply
  22. Ages Justice June 22, 2017 at 5:40 am

    Keep it up Mentor. God bless you more!

    Reply
  23. Louis June 21, 2017 at 11:43 am

    This is exactly what was missing from my trading. Realistic exit plans. Thank you Nial.

    Reply
  24. endurance oki June 21, 2017 at 8:05 am

    thank you sir for your well prepared article. Im a victim of this very situation , i’ve almost hit my profit target then i said i should let the profit run but to my very face , the profits were evaporating until i closed the trade .

    Reply
  25. DAVID SHUBE June 20, 2017 at 7:48 pm

    Thanks Nial, booking profits on-time is right, cos too much emotional traits is involved when one realized that the trade is going to retrace unexpectedly.

    Reply
  26. PEERALLY June 20, 2017 at 6:21 pm

    Thank you, Nial.

    Reply
  27. Kate M June 20, 2017 at 6:49 am

    Thanks Nial, way to go. You keep writing evolving lessons like these, Ill always have something to learn. And again an opportune time to write this particular article, I think you are the Yoda of trading:)

    Reply
  28. Lucas Obiora June 19, 2017 at 9:07 am

    Thanks Nial, that’s an eye opener to me, I have that problem of letting profits run into losses, thank you very much for the article.

    Reply
  29. Kay June 19, 2017 at 8:49 am

    Thank you Nial, well explained and organized article. Definitively help me to prepare my Profit plan. Regards

    Reply
  30. smg June 19, 2017 at 3:17 am

    Thank you

    Reply
  31. richadi36 June 19, 2017 at 2:07 am

    Thanks Nial. I really got immense knowledge about booking profits.

    Reply
  32. Suleiman Bhadmus June 18, 2017 at 11:14 pm

    Amazing,am definitely going to include all this point in my trading plan. Though am still on demo, but what have learned from this article in very key to a successful trading.
    Thanks a lot Mr.Nail Fuller.

    Reply
  33. Matt June 18, 2017 at 5:25 pm

    This happened to me last week. Was up 700 proffit and closed with 700 loss because i had such an attachment to what i thought was a fullproof longterm move in one direction so i wanted to ride the waves but it looks like it wasnt the long term move in that direction i thouht it was.

    Reply
  34. akhtar butt June 18, 2017 at 4:44 pm

    Hi, Dear Nial Fuller, , excellent, well-explained with reality and experience. Thank, cheer

    Reply
    • Bebe April 30, 2019 at 7:57 pm

      Excellent article,Thanks Nail

      Reply
  35. Akpos June 17, 2017 at 6:46 pm

    Nice….this has been my bane in trading. Not booking profit….

    Reply
  36. John Promise June 17, 2017 at 6:02 pm

    Thanks Nial. My mentor.
    Remain blessed.

    Reply
  37. Thendo June 17, 2017 at 4:58 pm

    Thanks Nial.. great advise. Am looking forward to not closing or closing when the trade goes against you but hasn’t hit your stop loss…

    Reply
  38. Luis June 17, 2017 at 12:20 pm

    Thanks so much Neil as always, great article!, mm please i have a question, what about the case that all the other trading books and gurus says about let profits run until at least 1:2 Risk reward ratio? , because they say if i close before that 1:2 im cutting my profits and that can damage me in the long run! , but in the real life im bored to wait sometimes for a 1:2 and when im at 90% to achieve that profit target the markets turns down eliminating all my profits and making a loss for me, but when i book the profits i see my account growing, what you can reccomend me about that?.

    Reply
  39. Bruno June 17, 2017 at 10:48 am

    Before reading the whole article, I’m writing this! Just the header alone struck the cord. Toy, Nial, are a mind reading mentor! I’m at that stage in my trading where my edge is consistently delivering profits! But, yes, most times, these profits evaporate. Alot is happening around the political and business world and price is fluctuating between these events. Yes, price still does was it’ll do, but the whipsawing is alarming! I can’t say enough how soothing this article is to me because I make sizeable % of my Acct only to watch some diminish or disappear, even into losers.

    Thank you for this article.

    Reply
  40. Mavhungu Lufuno June 17, 2017 at 9:14 am

    Amen

    Reply
  41. Elpadrino June 17, 2017 at 4:54 am

    Thanks Nial #Legendary

    Reply
  42. Alin June 17, 2017 at 4:20 am

    I am one of those loosers who do not book much profits on the trades, because I’m setting
    way too large TPs. Thanks for the posting!

    Reply
  43. Shankara Motay June 17, 2017 at 3:59 am

    Thank you very much

    Reply
  44. Rongsquare June 17, 2017 at 12:44 am

    Amazing thank you Nail

    Reply
  45. Mike Coe June 16, 2017 at 11:27 pm

    Your articles just keep getting better and better, Nial! Great stuff! Thank you very much.

    Reply
  46. Siyabonga Mkhize June 16, 2017 at 11:10 pm

    Powerful thank you sir

    Reply
  47. KRISTOFA OKENTA June 16, 2017 at 9:37 pm

    Good Teaching As Always.
    Thank you For Sharing Your
    Heart With Us.

    Reply

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