Best Strategies for Price Action Patterns For Profitable Trading
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An Overview of Price Action

Price action is a study of the security's historical price movement. Traders using price action trading strategies can get the chance to identify any clues regarding where the market could move next. Price action indicators are commonly studied using price bars or candlesticks, providing market details like open and closing prices, high and low levels, and periods. Bearish F&O trading strategies also play a significant role in these strategies. 

Analyzing this information is the prime thing about this price action trading. You can also get a clear idea of these by studying the actions of all the sellers and buyers actively involved in this trading market. Therefore, properly analyzing market participants' actions can offer traders clear insights into their decisions.

The Best Price Action Trading Strategies

In this section, we will discuss some of the best price action trading strategies that work as Options strategy builder, and you can even ensure trading success by applying those.

1: Pin Bar Pattern

Pin Bar Pattern - SpeedBot

The pin bar pattern is an excellent candlestick pattern with a long lower or upper wick. This indicates either the low or high price that is being rejected. On the other hand, the pattern even suggests that the currency pair price generally moves in the opposite direction when it stays in the presence of the wick.

2: Breakout Entry Pattern

Breakout Entry Pattern - SpeedBot Algo Trading App

The breakout entry pattern usually refers to the price action strategy. It occurs right after the price hike or after the sudden price dip. The retracement strategy suggests that currency pair price spikes can lead to either a support or resistance movement, enabling traders to trade in up or downtrends.

3: Trend Following Retracement Entry

Trend Following Retracement Entry - SpeedBot Algo Trading App

The trend-following one is an excellent trend-following approach. It guides you with some accurate and ideal entry price levels. It also easily determines the overall market trend, and you can even get the chance to retrace the prices and know the current trend's direction. Price retracement is also a temporary reversal in the current market trend.

4: Inside Bar

Inside Bar

The inside bar strategy even consists of two bars. On one hand, the inside or second bar is always smaller than the first bar, known as the mother bar. This strategy aids traders in trading breakout price levels in trending markets and serves as a reversal signal. An Options trading app helps businesses here.

5: Cup and Handle

Cup and Handle Strategy by SpeedBot Trading App

On the other hand, the cup and handle strategy helps the traders easily identify a market reversal along with a trade that works against the current trend. Also, during a bullish reversal, the trend involves a sudden increase in currency pair prices, followed by a steady decrease, and a return to the upward trend.

6: Inverse Head and Shoulders

Inverse Head and Shoulders

The inverse head and shoulders are another strategy. It is used to indicate a perfect bullish reversal. This also indicates the end of the downtrend and the way of the uptrend. However, this pattern usually consists of three elements:

Left Shoulder: It is the first one of these patterns, and it is also characterized by a price high and then a pullback.

Head: In this pattern, this is the second part, characterized by a higher price followed by a larger pullback.

Right Shoulder: This is the third and final part of this pattern. A lower price characterizes this, followed by a pullback, which is similar to the left shoulder.

7: Island Reversal

On the other hand, the island reversal strategy is usually used to indicate the potential trend reversals. Also, it takes place during the currency pair price gap when it goes up or down and also creates a gap in the price chart and another in the opposite direction. However, remember that a price gap goes up or down when the opening price is significantly lower or higher compared to the last day's closing price.

8: False Breakout

In case of a false breakout, the currency pair usually takes place to break through a process. It involves moving through a critical level of support or resistance. If you want to trade with this strategy, you need to identify either a support or resistance level, and you also need to wait for the current market prices so that you can break below or even check the above levels. 

A false breakout occurs when a price breaks through and reverses in the opposite direction, either increasing below the support level or falling above the resistance level.

A Step-By-Step Guide On How To Trade on Price Action?

If you want to know how to trade on price action, follow the step-by-step method for a clear insight.
  • First, you need to identify the existing trend in the market.
  • Then, you need to identify the proper trading price action opportunities. To trade, place long orders in a strong uptrend and short orders in a strong downtrend, with weak uptrends suggesting short orders due to expected downtrend reversal.
  • Now, you need to monitor the market besides checking the currency pair's price action. In this way, you can understand the trend better and get the chance to make further trading decisions. 
  • At last, you need to combine the price action strategy easily with a forex price chart or the indicator to confirm the trend's direction and have more successful orders. This is considered an excellent Options strategy builder.
Moreover, remember that Price action trading is a simple strategy pattern where no complicated technical indicators are involved. Also, you can have a clear idea of the asset's price movements that any trader can learn easily. This is another reason why the algo trading market has witnessed significant growth and it has reached 70-80% in the U.S. equity markets. 

Price action signals on the other hand are considered more reliable and consistent compared to some different signals. These are based on some real-time price movements. Also, traders can get the chance to make some more informed decisions about when to make entry or exit from a trade.


Price action trading is considered a powerful tool, and traders use numerous strategies worldwide. It also provides a systemized and more actionable way to analyze the trading market, providing a complete focus for a trader. Also, the more focused a trader is, the more likely they are to identify and trade on repeated buyer and seller behavior patterns.

Creating an ideal set of price action trading rules is essential to ensure consistency in performance. An excellent options trading app can offer great support. This will allow you to trade easily in a virtual environment, and you can even get the chance to open a free demo trading account that helps you to trade assuredly when you go live.


Aashutosh Chandra 18 March, 2024
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