What is Price Action Strategy In Forex?

Price action strategy is a trading method that helps to foresee the market’s movement through trading signals or by spotting trading patterns of a primary market. Price action in trading forecasts the market in the future by studies of the performance of a security, index, or currency. For example:- if your price action inform you about the price might be increasing ,then you might need to take a long position,or if you think that price will decrease, you might take a short position. Price action trading includes determining the key indicators that affect your investments and also watching trading patterns. Several traders utilize various price action strategy to foresee the market’s movement and create short-term profits in future.

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Essential Price Action Trading Strategies

There are several price action strategies that we used for future forecasts. Some popular price action strategies are as follows:- 

  • Long wick Candlesticks
  • The Hammer
  • Inside Bar 
  • Trend line Trading 
  • Spring at support 


A candle in the market define through its body and wick. The body represents the space between the opening and closing prices, while wicks mean the high and low extremes. Long wick candles are the highly choice for trade analysts. For example, A long upper wick candle represents that the buyers tried to take some distance in the period to push the prices higher, but sellers managed to return prices close to the opening price and opposed the attempt. A price action trader can support the sellers again in the next period through this information. Price action traders should watch the Long stick candles because it is one of the best strategy for price action


The hammer is a candlestick that peeks like a “hammer”. It develops in this form because they open, high, and close each other, while it acts as a hammer candle, and the low is long. Traders typically consider hammer as a trend reversal.


When the breakouts happen, the challenge for traders is to find if it is a real one or a fake one. An Inside after breakout design is when one or more candle exchange within the highs and lows of the big breakout candle. Thus the name “inside”. The psychology for the setup is that market players are forced to share any profit breakouts and are willing to support and close the new trend moving ahead.Atlast,This price action strategy shows the comparison between the candles.


Trendline trading utilizes the lines to show the optimal moments to join trades in trending markets. A trendline is removed in an uptrend from a specific swing low to the next one and then launched into the future. A perfect price point for entering the uptrend represents the retracement to the trendline. In markets, outline the support and resistance areas where you will using in horizontal trendlines.


Traders usually call their strategies for the visual formed through the used indicator on a chart. For example, “spring at support” means a sudden increase in the price of an asset after it hits or reaches close to its asset price, or the market will help that asset at the lowest price.


The strategy of Price action trading  links to recorded data and past price movements. All technical analysis methods such as charts, trendlines, price brands, high and low swings, and technical levels like support and resistance, breakout, and candlestick are selected as per trader and trading strategy. The traders can observe the tools such as price bands, bars, breakouts, trendlines, or complex combinations, including candlesticks, channels, volatility, etc.

4 Important Tools for This Strategy


When the price of assets moves with a particular movement, it warns the traders to find a likely new trading option once it fails that movement.

For example:-For the last 20 days, assume that a stock has traded between $10 and $1, then it moves beyond $11. This difference in movement warns the traders that the perhaps sideways movement has ended and that a potential move from $12 to $13 or some higher has formed.

Breakouts arise from various patterns, including head and shoulders, ranges, and flag patterns. A breakout doesn’t suggest that the price will resume in the expected direction. In that situation, it is called a false breakout.It also shows an opportunity for trading in the opposite direction of the breakout.


Candlesticks charts are one of the best tools for price action strategy. It is the chart of graphical representation that indicate the trend, open, close, high and low price of an asset. Traders use candlesticks in multiple strategies. For example, some traders utilize the engulfing candle trend methods when the analyst uses candlestick charts.


An asset can be trading all over the day, with prices continuing to rise or fall. Traders guide these changes as “bullish” trends where the cost increases or as bearish trends where the price drops.

Support and Resistance

It connects to all of the above tools; traders utilize the price support and price resistance areas to specify good opportunities for trading. Support and resistance areas appear when the price has managed to change in the past. Such levels may evolve appropriate again in the future.

How Does Price Action Trading Strategy Work 

Numerous experienced traders following the price action trading. They support the  various options for identifying trading designs, stop losses, entry and exit levels and connected statements. Just keeping one method on numerous stocks may not provide good trading options. Most plans involve a two-step process.

  • Determining a scenario: A stock price reaching into a bull/bear stage, channel range, breakout, etc.
  • Within a scenario, specifying opportunities for trading: Overshoot or retreat once stock is in a bull run. This is an entirely personal selection and can range from one trader to another, even providing the exact design.
  • As per the traders’ view, a stock gets it’s increased and then reverts to a little lower scenario. The trader can select whether they think it will make a double top to reach higher or drop by following a regular reversal.
  • The trader places on  a floor and top for a specific price of stocks based on the idea of lower tendency and absence of breakouts. Suppose the price of stocks lies in this field. In that situation, the trader can carry positions considering the fixed ceiling or floor as support and resistance levels or bring an alternate idea that the stock will breakout in any direction.
  • A determined breakout scenario living met and opportunity of trading living in times of continuance breakout which is going further in the similar direction or breakout pull-back
  • As it can be noticed, the price action trading is near supported via the analysis tools. Still, the last trading call is conditional on the signal trade.Providing flexibility rather than implementing rigid rules to be followed.


All beginners traders bring the edge of understanding price action trading because it can help you choose how you execute the trading. If you are interested in educating yourself by learning a trade, you only need to start the learning method first. Price action trading is the best strategy where you can easily analyze the charts. It also helps to create a short term profit. But keep in mind that it doesn’t guarantee profits; it makes a good trading technique through time and practice.

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