Price Action Trading Strategies

Overview

• Topic: 12 best price action trading strategies
• Focus: Price action chart analysis, pattern trading
• Resources: Free ebook available (22 new trading strategies, screenshots, detailed explanations)

Key Trading Patterns

1. Inverse Head and Shoulders

• Type: Trend continuation pattern
• Market Trend: Long-term bullish
• Key Features:
  • Structure: Left shoulder, head, right shoulder
  • Resistance Level: Flat resistance at the top indicates strong buying pressure
  • Higher Lows: Shift from lower lows to higher lows shows bullish momentum
• Entry Trigger: Breakout above the neckline with high momentum candles
• Stop Loss: Below the right shoulder or breakout neckline
• Retests: Common after breakout; watch for bullish momentum to confirm trend continuation

2. Double Bottom

• Type: Reversal pattern
• Market Trend: Long-term bearish
• Key Features:
  • Previous strong bearish leg followed by a double bottom formation
  • Market is in a neutral phase until it breaks previous swing high
• Entry Signal: Breakout above previous swing high (change of character)
• Retest Approach: Preferable to wait for a retest after breakout for better confirmation

3. Flag Pattern

• Type: Trend continuation pattern
• Market Trend: Bullish
• Key Features:
  • Price moves sideways after a strong upward move
  • Flat flags indicate strength; steep flags are less favorable
• Entry Trigger: Breakout above the trend line or a fresh high
• Note: Patience is key; wait for confirmation before entering

4. Flat Top Triangle

• Type: Trend continuation pattern
• Market Trend: Bullish
• Key Features:
  • Lows forming upwards; flat resistance at the top
  • Less selling pressure indicates bullish potential
• Entry Trigger: Wait for explosive breakout; place stop loss below the triangle

5. Cup and Handle

• Type: Continuation pattern
• Market Trend: Bullish
• Key Features:
  • Initial wave of selling followed by accumulation of buying interest
  • Handle represents a minor pullback before breakout
• Entry Trigger: Look for strong breakout momentum after the handle formation

6. Liquidity Run / Stop Run

• Type: Reversal pattern
• Market Behavior: Market approaches resistance, triggering stop losses
• Key Features:
  • Wait for strong bearish signals after initial breakout failure
  • Break below previous lows confirms new trend direction

7. Fake Out

• Type: Reversal pattern
• Market Trend: Downtrend
• Key Features:
  • Strong rejection of breakout; wait for close below previous lows
  • Confirmation comes with strong movement in the opposite direction

8. Triple Top

• Type: Reversal pattern
• Market Trend: Uptrend
• Key Features:
  • Market makes higher highs with decreasing strength
  • Look for break below the last swing low for entry
• Entry Strategy: Breakout and retest after confirming reversal

Conclusion

• Trading Approach: Proper analysis of patterns, waiting for confirmations is crucial in trading success.
• Recommendation: Adjust trading strategies based on the observed market behavior and patterns.