📈 Price Action Trading Mastery Skill

Master pure price action trading - trade what you see, not what you think

Coverage: Candlesticks | Chart Patterns | S/R | Market Structure | Order Flow

Markets: Forex | Crypto | Stocks | All Markets

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📚 Table of Contents

1. Price Action Fundamentals
2. 50+ Candlestick Patterns
3. Chart Patterns Library
4. Support & Resistance
5. Trendlines & Channels
6. Market Structure
7. Order Flow & Supply/Demand
8. Multi-Timeframe Analysis
9. Entry & Exit Strategies
10. Price Action Trading Plans

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1. Price Action Fundamentals {#fundamentals}

🎯 Why Price Action?

Advantages:

✅ No lagging indicators
✅ Works on all markets
✅ Works on all timeframes
✅ Clean charts
✅ Direct market reading
✅ Institutional trading method
✅ Universal across brokers

Core Principles:

1. Price discounts everything (all info in price)
2. History repeats itself (patterns work)
3. Markets trend (follow direction)
4. Support/Resistance matter (levels hold)
5. Volume confirms price (strong moves = high volume)

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2. 50+ Candlestick Patterns {#candlestick-patterns}

🎯 Single Candle Patterns

1. Doji ⭐⭐⭐

Description: Open = Close (small body)
Meaning: Indecision, potential reversal
Context: More powerful at S/R levels

Types:
- Standard Doji: Equal wicks
- Gravestone Doji: Long upper wick (bearish)
- Dragonfly Doji: Long lower wick (bullish)
- Long-legged Doji: Long both wicks (high indecision)

✅ Trade: Wait for confirmation on next candle

2. Hammer / Inverted Hammer ⭐⭐⭐

Hammer:
- Long lower wick (2-3× body)
- Small body at top
- Appears at downtrend bottom
- Signal: Bullish reversal

Inverted Hammer:
- Long upper wick
- Small body at bottom
- Appears at downtrend bottom
- Signal: Bullish reversal (needs confirmation)

✅ Entry: Above hammer high + confirmation
❌ Avoid: In middle of trend

3. Shooting Star / Hanging Man ⭐⭐⭐

Shooting Star:
- Long upper wick
- Small body at bottom
- Appears at uptrend top
- Signal: Bearish reversal

Hanging Man:
- Long lower wick
- Small body at top
- Appears at uptrend top
- Signal: Bearish reversal

✅ Entry: Below pattern low + confirmation

4. Marubozu ⭐⭐

Description: Large body, no/small wicks
Types:
- Bullish Marubozu: Green, opens low, closes high
- Bearish Marubozu: Red, opens high, closes low

Meaning: Strong trend continuation
✅ Trade: Follow the direction

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🎯 Two-Candle Patterns

5. Engulfing Pattern ⭐⭐⭐⭐⭐ (Most Reliable!)

Bullish Engulfing:
1. Previous candle: Bearish (red)
2. Current candle: Bullish (green) completely engulfs previous
3. Location: After downtrend
4. Signal: Strong bullish reversal

Bearish Engulfing:
1. Previous candle: Bullish (green)
2. Current candle: Bearish (red) completely engulfs previous
3. Location: After uptrend
4. Signal: Strong bearish reversal

✅ Entry: Above/below engulfing candle
✅ Stop: Beyond engulfing wick
✅ Target: Recent swing high/low

Success Rate: ~70% when at key levels!

6. Tweezer Top / Bottom ⭐⭐⭐

Tweezer Bottom:
- Two candles with equal lows
- After downtrend
- Signal: Bullish reversal

Tweezer Top:
- Two candles with equal highs
- After uptrend
- Signal: Bearish reversal

✅ Entry: After confirmation candle

7. Piercing Line / Dark Cloud Cover ⭐⭐⭐

Piercing Line (Bullish):
1. First candle: Bearish (red)
2. Second candle: Opens below, closes above 50% of first
3. Signal: Bullish reversal

Dark Cloud Cover (Bearish):
1. First candle: Bullish (green)
2. Second candle: Opens above, closes below 50% of first
3. Signal: Bearish reversal

✅ Stronger when closes beyond 50% mark

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🎯 Three-Candle Patterns

8. Morning Star / Evening Star ⭐⭐⭐⭐⭐

Morning Star (Bullish Reversal):
1. First candle: Large bearish (red)
2. Second candle: Small body (any color), gaps down
3. Third candle: Large bullish (green), closes above midpoint of first

Evening Star (Bearish Reversal):
1. First candle: Large bullish (green)
2. Second candle: Small body (any color), gaps up
3. Third candle: Large bearish (red), closes below midpoint of first

✅ Entry: After third candle closes
✅ Stop: Beyond pattern high/low
✅ One of the most powerful reversal patterns!

9. Three White Soldiers / Three Black Crows ⭐⭐⭐⭐

Three White Soldiers:
- Three consecutive bullish candles
- Each opens within previous body
- Each closes near high
- Signal: Strong bullish continuation

Three Black Crows:
- Three consecutive bearish candles
- Each opens within previous body
- Each closes near low
- Signal: Strong bearish continuation

✅ Very reliable for trend continuation

10. Inside Bar / Outside Bar ⭐⭐⭐⭐

Inside Bar:
- Current bar completely inside previous bar
- Shows consolidation/indecision
- Potential breakout setup

Entry:
✅ Buy: Break above inside bar high
❌ Sell: Break below inside bar low

Outside Bar (Engulfing):
- Current bar completely engulfs previous bar
- Shows strong momentum
- Immediate entry signal

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3. Chart Patterns Library {#chart-patterns}

🎯 Reversal Patterns

11. Head & Shoulders ⭐⭐⭐⭐⭐

Structure:
      Head
      /  \
   Left   Right
   Shoulder Shoulder
   ────Neckline────

Formation:
1. Left Shoulder: Rally + pullback
2. Head: Higher rally + pullback
3. Right Shoulder: Lower rally (fails to break head high)
4. Neckline Break: Confirmation

Bearish H&S (Top):
- Appears after uptrend
- Target: Head to neckline distance projected down

Inverse H&S (Bottom):
- Appears after downtrend
- Target: Head to neckline distance projected up

✅ Entry: Neckline break + retest
✅ Stop: Beyond right shoulder
✅ Extremely reliable pattern (~80% success)

12. Double Top / Double Bottom ⭐⭐⭐⭐

Double Top (Bearish Reversal):
       M
      / \
     /   \
────────────
  Neckline

1. First peak
2. Pullback to support (neckline)
3. Second peak (equal height to first)
4. Break below neckline = Confirmation

Double Bottom (Bullish Reversal):
────────────
  Neckline
     \   /
      \ /
       W

Measurement: Peak to neckline = Target projection

✅ Entry: Neckline break + retest
✅ Volume should decrease on second peak

13. Triple Top / Triple Bottom ⭐⭐⭐

Similar to double top/bottom but 3 touches
- Stronger resistance/support (more tests)
- Higher probability of reversal
- Longer formation time

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🎯 Continuation Patterns

14. Ascending/Descending Triangle ⭐⭐⭐⭐

Ascending Triangle (Bullish):
  Resistance ─────────
    /  /  /
   /  /  /
  /  /  / Higher Lows

Descending Triangle (Bearish):
  \  \  \ Lower Highs
   \  \  \
    \  \  \
  Support ─────────

✅ Entry: Breakout + retest
✅ Target: Base height projected from breakout
✅ Volume should increase on breakout

15. Symmetrical Triangle ⭐⭐⭐

     /\
    /  \
   /    \
  /      \

- Converging trendlines
- Lower highs + higher lows
- Breakout direction = continuation (usually)
- Measure: Widest part = target projection

16. Flag & Pennant ⭐⭐⭐⭐

Bull Flag:
    |  ╱
    | ╱  (Flag slopes down)
    |╱
────┘

Bear Flag:
    ┌────
    |\
    | \  (Flag slopes up)
    |  \

Pennant:
    |  /\
    | /  \  (Small triangle)
    |/    \

Formation:
1. Strong move (flagpole)
2. Consolidation (flag/pennant)
3. Breakout continuation

✅ Entry: Breakout of flag/pennant
✅ Target: Flagpole length from breakout
✅ Quick pattern (1-3 weeks max)

17. Rectangle (Range) ⭐⭐⭐

────────── Resistance
|        |
|  Range |
|        |
────────── Support

- Horizontal consolidation
- Multiple tests of S/R
- Breakout = trend continuation
- Common in all markets

✅ Trade inside: Buy support, sell resistance
✅ Breakout trade: Break + retest

18. Wedges (Rising/Falling) ⭐⭐⭐

Rising Wedge (Bearish):
     /
    / (Both lines rise, converge)
   /

Falling Wedge (Bullish):
   \
    \ (Both lines fall, converge)
     \

⚠️ Counter-intuitive:
- Rising wedge = bearish
- Falling wedge = bullish

✅ Entry: Break opposite to wedge direction

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4. Support & Resistance {#support-resistance}

🎯 Types of S/R

19. Horizontal S/R ⭐⭐⭐⭐⭐

Identification:
1. Price bounces multiple times
2. Round numbers (100.00, 1.2000)
3. Previous swing highs/lows
4. ATH/ATL (All-Time High/Low)

Strength Factors:
✅ More touches = stronger
✅ Longer timeframe = stronger
✅ Round numbers = stronger
✅ Recent tests = more relevant

20. Dynamic S/R (Moving Averages) ⭐⭐⭐

Key MAs:
- 20 EMA: Short-term trend
- 50 EMA: Medium-term trend
- 200 EMA: Long-term trend (most important!)

Price above 200 EMA = Bull market
Price below 200 EMA = Bear market

✅ Use as dynamic support in uptrend
❌ Use as dynamic resistance in downtrend

21. Fibonacci Retracements ⭐⭐⭐⭐

Key Levels:
- 23.6%: Minor retracement
- 38.2%: Shallow retracement ⭐
- 50.0%: Psychological level ⭐⭐
- 61.8%: Golden ratio ⭐⭐⭐ (MOST IMPORTANT!)
- 78.6%: Deep retracement

How to Use:
1. Identify swing high + swing low
2. Draw Fib from low to high (uptrend)
3. Watch for bounces at levels
4. 61.8% = best risk/reward

✅ Combine with S/R for confluence

22. Supply & Demand Zones ⭐⭐⭐⭐⭐

Supply Zone (Resistance):
- Area where price fell sharply (sellers entered)
- Look for: Long bearish candles from zone
- Price returns → likely to fall again

Demand Zone (Support):
- Area where price rose sharply (buyers entered)
- Look for: Long bullish candles from zone
- Price returns → likely to rise again

✅ Entry: Touch zone + confirmation
✅ Stop: Beyond zone
✅ Fresh zones (untested) = stronger

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5. Trendlines & Channels {#trendlines}

🎯 Trendline Rules

23. Drawing Trendlines ⭐⭐⭐⭐⭐

Uptrend Line:
- Connect 2+ swing lows
- Price bounces off line (support)

Downtrend Line:
- Connect 2+ swing highs
- Price bounces off line (resistance)

✅ Validation: Needs 3+ touches
✅ Steeper line = weaker (unsustainable)
✅ Break = potential reversal

Trading:
1. Buy bounces in uptrend
2. Sell bounces in downtrend
3. Trade breakouts (reversal)

24. Channels ⭐⭐⭐⭐

Parallel Channel:
Upper ────/─────/─────
       /     /
Lower ─/─────/─────

Construction:
1. Draw trendline
2. Draw parallel line through opposite extremes

Trading:
✅ Buy: Lower channel bounce
✅ Sell: Upper channel touch
✅ Breakout: Trend acceleration/reversal

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6. Market Structure {#market-structure}

🎯 Structure Basics

25. Higher Highs / Higher Lows (Uptrend) ⭐⭐⭐⭐⭐

     HH
    /  \     HH
   /    \   /
  HL     HL

Uptrend = Series of HH + HL

Confirmation:
✅ Each high > previous high
✅ Each low > previous low
✅ Broken trendline = reversal

Trading:
- Enter: Pullback to HL
- Stop: Below recent HL
- Target: Next HH extension

26. Lower Highs / Lower Lows (Downtrend) ⭐⭐⭐⭐⭐

  \     LH
   \   /  \
    \ /    \
    LH     LL

Downtrend = Series of LH + LL

Trading:
- Enter: Bounce to LH
- Stop: Above recent LH
- Target: Next LL extension

27. Break of Structure (BOS) ⭐⭐⭐⭐⭐

Break of Structure = Trend change signal

Bullish BOS:
- Price breaks above previous HH
- Confirms uptrend continuation

Bearish BOS:
- Price breaks below previous LL
- Confirms downtrend continuation

Change of Character (CHoCH):
- Price breaks opposite structure
- Example: Uptrend breaks below HL
- Signals potential reversal

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7. Order Flow & Supply/Demand {#order-flow}

🎯 Smart Money Concepts

28. Liquidity Pools ⭐⭐⭐⭐⭐

Where liquidity sits:
1. Above swing highs (stop losses)
2. Below swing lows (stop losses)
3. Round numbers (pending orders)
4. Equal highs/lows (clusters)

Smart Money Strategy:
1. Hunt liquidity (trigger stops)
2. Fill orders at best price
3. Reverse direction (actual trade)

Retail: Buy breakout
Smart Money: Sell into breakout (liquidity grab)

✅ Watch for: False breakouts
✅ Entry: Reversal after liquidity grab

29. Order Blocks ⭐⭐⭐⭐⭐

Order Block = Last candle before strong move

Bullish Order Block:
- Last bearish candle before strong rally
- Institutions bought here
- Price returns → support

Bearish Order Block:
- Last bullish candle before strong drop
- Institutions sold here
- Price returns → resistance

✅ Entry: Touch order block + confirmation
✅ Stop: Beyond order block
✅ High win rate (70-80%)

30. Fair Value Gaps (FVG) ⭐⭐⭐⭐

FVG = Imbalance in price

Identification:
1. Three candles
2. Gap between candle 1 high and candle 3 low (bullish)
3. Gap between candle 1 low and candle 3 high (bearish)

Meaning: Price moved too fast, left inefficiency

Trading:
✅ Price returns to fill gap (50-75% retracement)
✅ Entry: Gap fill + confirmation

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8. Multi-Timeframe Analysis {#multi-timeframe}

🎯 Top-Down Approach

31. Three-Timeframe System ⭐⭐⭐⭐⭐

Example (Day Trading):
1. Daily (D1): Trend direction
2. 4-Hour (H4): Entry zones
3. 15-Min (M15): Entry trigger

Process:
Step 1 (D1): Identify trend
- Uptrend: Buy only
- Downtrend: Sell only
- Range: Both directions

Step 2 (H4): Find entry zones
- S/R levels
- Demand/supply zones
- Fibonacci levels

Step 3 (M15): Wait for trigger
- Candlestick pattern
- Break of structure
- Order block test

✅ All timeframes aligned = highest probability
❌ Against higher TF = lower probability

32. Timeframe Ratios ⭐⭐⭐

Rule: Use 1:4 or 1:6 ratio

Examples:
- Swing Trading: Monthly → Weekly → Daily
- Day Trading: Daily → H4 → H1/M15
- Scalping: H4 → M15 → M5/M1

✅ Maintain ratio for consistency

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9. Entry & Exit Strategies {#entry-exit}

🎯 Entry Types

33. Break & Retest ⭐⭐⭐⭐⭐

Process:
1. Price breaks S/R level
2. Price pulls back to test (retest)
3. Price bounces away
4. Enter on bounce

Why It Works:
- S/R flip: Support becomes resistance (vice versa)
- Stop hunters cleared
- Better entry price
- Lower risk

✅ Entry: Confirmation candle after retest
✅ Stop: Beyond retest zone
✅ Win rate: 70-80%

34. Pullback Entry ⭐⭐⭐⭐

In Uptrend:
1. Wait for pullback to support (MA, trendline, Fib)
2. Look for bullish reversal pattern
3. Enter on confirmation

In Downtrend:
1. Wait for bounce to resistance
2. Look for bearish reversal pattern
3. Enter on confirmation

✅ Never chase breakouts
✅ Wait for value zone

35. Breakout Entry ⭐⭐⭐

High Probability Breakouts:
1. Multiple tests of level (3+)
2. Volume increase on breakout
3. Strong momentum candle
4. Timeframe confluence

Entry:
✅ Conservative: Wait for retest
✅ Aggressive: Enter on breakout candle close

⚠️ False Breakout Risk:
- Use wider stop
- Reduce position size
- Confirm with volume

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🎯 Stop Loss Placement

36. Stop Loss Strategies ⭐⭐⭐⭐⭐

1. ATR-Based Stop:
   SL = Entry ± (2 × ATR)
   ✅ Adapts to volatility

2. Structure-Based Stop:
   SL = Beyond swing high/low
   ✅ Respects market structure

3. Percentage Stop:
   SL = Entry ± X%
   ❌ Arbitrary, not recommended

4. Time-Based Stop:
   Close if no movement after X bars
   ✅ Good for ranging markets

Best Practice: Combine structure + ATR
SL = Beyond structure + buffer (0.5 ATR)

37. Take Profit Strategies ⭐⭐⭐⭐⭐

1. Fixed Risk/Reward:
   TP = Entry + (SL distance × R)
   Example: 2R = 2× stop distance

2. Key Level:
   TP = Next S/R level
   ✅ Natural exit point

3. Trailing Stop:
   Move SL as price advances
   ✅ Captures trends
   ❌ May exit early

4. Partial Exits:
   - 50% at 2R
   - 50% trailing to 5R+
   ✅ Balance profit taking + runners

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10. Price Action Trading Plans {#trading-plans}

🎯 Complete Trading Plan Example

Strategy: Demand Zone Reversal (Bullish)

1. SETUP IDENTIFICATION (Daily)
   ✅ Downtrend broken (CHoCH)
   ✅ Demand zone identified (previous strong rally)
   ✅ Price approaching demand zone

2. ENTRY RULES (H4)
   ✅ Price touches demand zone
   ✅ Bullish engulfing OR hammer
   ✅ Confirmation candle (close above pattern)

3. RISK MANAGEMENT
   Entry: Confirmation candle close
   Stop Loss: 10 pips below demand zone low
   Take Profit 1: Previous swing high (2R min)
   Take Profit 2: Trailing stop (structure-based)
   Position Size: 2% risk

4. TRADE MANAGEMENT
   - Exit 50% at TP1
   - Move SL to breakeven after 1R
   - Trail remaining 50% using HL structure

5. AVOID ENTRY IF:
   ❌ High-impact news in next 2 hours
   ❌ Multiple rejections of demand zone (weakened)
   ❌ Against higher timeframe trend
   ❌ Risk/reward < 2:1

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📊 Pattern Success Rates (Study Data)

⭐⭐⭐⭐⭐ (80%+):
- Engulfing at key levels
- Head & Shoulders
- Order Blocks
- Break of Structure
- Morning/Evening Star

⭐⭐⭐⭐ (70-80%):
- Double Top/Bottom
- Ascending/Descending Triangle
- Flag/Pennant
- Break & Retest

⭐⭐⭐ (60-70%):
- Doji at S/R
- Inside Bar breakout
- Rectangle breakout
- Trendline bounces

⚠️ Context Matters:
- Same pattern at S/R = Higher success
- Same pattern mid-trend = Lower success
- Volume confirmation = +10-15% success
- Multiple timeframe alignment = +15-20% success

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🎯 Price Action Trading Checklist

Before Every Trade:

✅ Identified trend (HTF)?
✅ Near key S/R level?
✅ Valid chart pattern?
✅ Confirmation candle?
✅ Risk/reward ≥ 2:1?
✅ Stop loss beyond structure?
✅ Position size = 1-2% risk?
✅ No high-impact news?
✅ Timeframes aligned?
✅ Clear entry/exit plan?

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🎓 Learning Path

Level 1 - Beginner (Month 1-3):

1. Learn basic candlestick patterns (10 key patterns)
2. Identify S/R on daily charts
3. Draw trendlines correctly
4. Understand HH/HL, LH/LL
5. Practice on demo: 100 trades minimum

Level 2 - Intermediate (Month 4-6):

1. Master chart patterns (10 patterns)
2. Multi-timeframe analysis
3. Supply/demand zones
4. Break & retest strategy
5. Live small account: 50 trades

Level 3 - Advanced (Month 7-12):

1. Order flow concepts
2. Liquidity hunting
3. Smart money concepts
4. Pattern combinations
5. Consistent profitability

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⚠️ Common Mistakes

❌ DON'T:

• Trade every pattern you see
• Ignore higher timeframe context
• Use arbitrary stop losses
• Chase breakouts
• Trade against trend
• Use too many confirmations (paralysis)
• Forget to check news calendar

✅ DO:

• Wait for high-probability setups
• Respect market structure
• Use proper risk management
• Be patient for retests
• Trade with trend
• Keep it simple (3-5 key patterns)
• Have a trade journal

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🎯 Key Principles to Remember

1. "Trade what you see, not what you think"
2. "Price respects levels until it doesn't" (manage risk)
3. "The best trades feel wrong" (everyone's on wrong side)
4. "More screen time = better pattern recognition"
5. "Patience > Action" (wait for A+ setups)
6. "Risk management > Win rate"
7. "Simplicity > Complexity"

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📚 Next Steps

After mastering price action:

• Combine with volume analysis
• Add 1-2 simple indicators (confirmation)
• Develop personal strategy
• Backtest thoroughly
• Paper trade 3+ months
• Start live with small size
• Scale up gradually

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Master price action and you can trade any market, any timeframe, anywhere in the world! 🚀

"The chart tells you everything you need to know - learn to listen."