Price action

In my last webinar I did for bulls on wall street, I mentioned how price action plays a big rule into how I trade.  It is a very tough thing to explain.  In lamest terms, price action tells you if a price moving in a certain direction has been accepted or not.  If it is accepted, it should continue in that direction.

Here is a quick post about how I used price action today, confirming my bias of a bear flag.

My thinking on NFLX was it was already extended and profit taking was most likely taking place.  I let it dump and put in a bear flag.  You could have argued it was rounding up, which I was thinking in my head.  But as soon as it was rejected at these higher levels, that price action told me it was going to head lower.  It did so in a hurry, giving it a nice $1.50 on the initial move.

Facebook did pretty much the same exact thing.  My bias already was that it was building below a bunch of resistance (Previous support became new resistance)  Once I saw my wick, I knew it had failed and was off to the races to the down side.

I think this is a pretty good example of  what I mean about price action.  I hope this helped explain a few things.  Go Pens!