Price action strategies differ from technical led strategies as they do not rely on signals from technical indicators. Such signals can be problematic as they are often followed by thousands of other traders around the world.
Price action strategies, on the other hand, are subjective and are drawn from a traders own perspective on the market. This causes it’s own problems as price action strategies can therefore be hard to define.
Nevertheless, many traders swear by price action techniques and here are 3 classic types.
What this indicates is a market that is struggling to move past the higher price levels so it’s a bearish sign. The pattern becomes even more bearish if the price moves underneath the shoulder line, and when it does a sell order should be entered into the market.
Pin bars occur when a market moves up or down fairly strongly, but then cannot hold onto those gains/losses. The market ends up pretty much back where it started and the candlestick ends up looking like a pin head.
It’s a classic sign that traders are winning the battle on only one side of the trend so indicates that the trend will carry on in that direction.
The wedge or triangle pattern is drawn from a significant high and low to a much more recent high and low. This pattern encompasses the whole of the recent price action and shows a market that is coming together in a consolidation phase.
The beauty of the wedge pattern is that the closer the two lines get to one another, the greater the inevitably of a breakout move. Since when the two lines come together, to form what is known as an apex point, the market will have nowhere to go but break out.
Price action strategies, on the other hand, are subjective and are drawn from a traders own perspective on the market. This causes it’s own problems as price action strategies can therefore be hard to define.
Nevertheless, many traders swear by price action techniques and here are 3 classic types.
Head and shoulders
Head and shoulders patterns form when a currency moves towards a type of ridge before moving higher once more, only to drop back towards the ridge. The two ridges are therefore the shoulders and the higher price point is the head.What this indicates is a market that is struggling to move past the higher price levels so it’s a bearish sign. The pattern becomes even more bearish if the price moves underneath the shoulder line, and when it does a sell order should be entered into the market.
Pin bars
Pin bars, also known as dojis, are a type of candlestick price action pattern that help traders judge the momentum in the market and they can work both as reversal indicators and confirmation signals.Pin bars occur when a market moves up or down fairly strongly, but then cannot hold onto those gains/losses. The market ends up pretty much back where it started and the candlestick ends up looking like a pin head.
It’s a classic sign that traders are winning the battle on only one side of the trend so indicates that the trend will carry on in that direction.
Wedge pattern
A wedge pattern can often be drawn onto a price chart to show a market that is converging and therefore readying for a breakout. Wedges are essentially triangle patterns and can also be called ascending, descending or bilateral triangles.The wedge or triangle pattern is drawn from a significant high and low to a much more recent high and low. This pattern encompasses the whole of the recent price action and shows a market that is coming together in a consolidation phase.
The beauty of the wedge pattern is that the closer the two lines get to one another, the greater the inevitably of a breakout move. Since when the two lines come together, to form what is known as an apex point, the market will have nowhere to go but break out.
Editors’ Picks
EUR/USD holds steady below 1.1800
EUR/USD moves sideways in a narrow channel below 1.1800 as the market volatility remains low ahead of the New Year holiday. On Tuesday, investors will pay close attention to the minutes of the Federal Reserve's December policy meeting.
GBP/USD retreats below 1.3500 as trading conditions remain thin
GBP/USD corrects lower after posting strong gains in the previous week and trades below 1.3500 on Monday. With the action in financial markets turning subdued following the Christmas holiday, however, the pair's losses remain limited.
USD/JPY jumps off 156.00 amid BoJ Minutes, cautious optimism
USD/JPY is on a tepid recovery to near 156.50 in the Asian hours on Monday, having tested 156.00 earlier on. The pair came under moderate selling pressure after the Bank of Japan’s Summary of Opinions from the December policy meeting. However, the Japanese Yen gave in to a cautiously optimistic market mood, lifting the pair.
Editors’ Picks
EUR/USD holds steady below 1.1800
EUR/USD moves sideways in a narrow channel below 1.1800 as the market volatility remains low ahead of the New Year holiday. On Tuesday, investors will pay close attention to the minutes of the Federal Reserve's December policy meeting.
GBP/USD retreats below 1.3500 as trading conditions remain thin
GBP/USD corrects lower after posting strong gains in the previous week and trades below 1.3500 on Monday. With the action in financial markets turning subdued following the Christmas holiday, however, the pair's losses remain limited.
Gold extends correction from record-high, trades below $4,400
Gold retreats sharply from the record-peak it set at $4,550 and trades below $4,400, losing more than 3% on the day. Growing optimism about a Ukraine-Russia peace agreement and profit-taking ahead of the New Year holiday seem to be causing XAU/USD to stay under heavy bearish pressure.
Bitcoin, Ethereum, and XRP bulls regain strength
Bitcoin, Ethereum, and Ripple record roughly 3% gains on Monday, regaining strength mid-holiday season. Despite thin liquidity in the holiday season, BTC and major altcoins are regaining strength as US President Donald Trump pushes peace talks between Russia and Ukraine. The technical outlook for Bitcoin, Ethereum, and Ripple gradually shifts bullish as selling pressure wanes.
Bitcoin Price Annual Forecast: BTC holds long-term bullish structure heading into 2026
Bitcoin (BTC) is wrapping up 2025 as one of its most eventful years, defined by unprecedented institutional participation, major regulatory developments, and extreme price volatility.
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