Price Action Trading Course

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PRICE ACTION TRADING COURSE
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Contents
Price action trading Course CHAPTER 1: INTRODUCTION TO PRICE ACTION

Price action trading Course CHAPTER 2: WHAT IS PRICE ACTION TRADING?
Price action trading Course CHAPTER 3: UNDERSTANDING MASS PSYCHOLOGY IN TRADING
Price action trading Course CHAPTER 4: PRICE AND CHARTS
Price action trading Course CHAPTER 5: TRENDS
Price action trading Course CHAPTER 6: REVERSALS & CONTINUATIONS
Price action trading Course CHAPTER 7: UNDERSTANDING MARKET SWINGS
Price action trading Course CHAPTER 8: HOW TO TRADE SUPPORT AND RESISTANCE LEVELS
Price action trading Course CHAPTER 9: HOW TO TRADE PRICE CHANNELS
Price action trading Course CHAPTER 10: NINE PROFITABLE CHART PATTERNS
Price action trading Course CHAPTER 11: TEN PROFITABLE CANDLESTICK PATTERNS
Price action trading Course CHAPTER 12: HOW TO TRADE TRENDLINES WITH PRICE ACTION
Price action trading Course CHAPTER 13: HOW TO USE MULTI-TIMEFRAME ANALYSIS AND TRADING Price
action trading Course CHAPTER 14: TRADE THE OBVIOUS
Price action trading Course CHAPTER 15: CLOSING REMARKS
Price action trading Course CHAPTER 1: INTRODUCTION TO PRICE

ACTION
To really understand price action you need to study what happened in the past. To observe what is happening
in the present and then predict where the market will go next.
Think of a weather man, they know where the wind is blowing from, sees the high and low pressure systems
forming over the land, knows the temperature variation, cold front, hot front... you know what I mean, right?
Then what do they do? Say something like “tomorrow, the weather in Geneva will be mostly cloudy, slight
chance of rain and possibly sunny in the afternoon.”
But how do they know this?
By studying the past data of course, as well as seeing the current situation. Don’t get me wrong there are
indicators for them to assist with their predictions eg: advanced computer models; or satellites in spaces.
Traders are similar like that if we get the direction right, we make money, get it wrong we lose money. Really is
that simple. Learning price action is about trying to understand enough of the data to get the direction right
before placing a trade.
Before we dive straight in there are a few terms you will need to know: Long = Buy
Short = Sell
Bulls = Buyers
Bears = Sellers
Bullish = if the market is up, it is called a bullish market (uptrend)
Bearish = if the market is down, it is called a bearish market (downtrend) Bullish Candlestick = a candlestick
that has opened lower and closed higher. Bearish candlestick = a candlestick that has opened higher and
closed lower.
Risk : Reward ratio = if you risk $50 in a trade to make $150 then your risk : reward is 1:3. Which simply means
you made 3 times more than you risked.
CHAPTER 2: WHAT IS PRICE ACTION TRADING?
Price action trading is defined simply as when traders make trading decisions based on repeated price patterns
that have formed, this indicates to the trader in which direction the market is most likely to move.
Price action trading uses tools like chart patterns, candlestick patterns, trendlines, price bands, market swing
structure like upswings and downswings, support and resistance levels, consolidations and Fibonacci
retracement levels and pivots etc.
Overall, price action traders (PAT) tend to ignore the fundamental analysis. Why? because they believe
everything has already been factored into the market price.
Even then there are things to watch out for: any major economic news announcements like Interest rate
decisions, Non-Farm Payroll, FOMC.
3 very important reasons why you should trade price action
1. Price action represents collective human behaviour. Human behaviour in the market creates some
specific patterns on the charts. Price action is about understanding the psychology of the market
using those patterns. For example, when price hits a support level and shoots up or when it hits a
resistance level and drops down. Why?? Because of collective human reaction.
2. Price action gives structure to the market. You can’t predict with 100% certainty where the market
will go next. However, with price action you can, to a degree, predict the most likely direction the
market will go. This is because understanding the structure of what is unfolding you can prepare for
what comes next.
3. Price action helps to reduce market “noise” and false signals. If you are trading with stochastic or CCI
indicators they tend to give too many false signals. As is the case with many other indicators. Price
action helps to reduce these false signals, although not impervious to false signals, price action is a
better option than indicators simply as the indicators themselves are derived from the price action
anyways. As for noise, that is simply when there is too much price data distorting the picture of the
underlying trend, normally as a result of price corrections and volatility as well.
Price Action Trading is about trading with an edge. Simply put that means trading when the odds are in your
favour. This means:
• Trading with the trend

• Trading with Price action using reliable chart patterns and candlestick patterns
• Trading using support and resistance levels
• Making your winning trades larger than your losing trades
• Trading only in larger timeframes

• Waiting patiently for the right setups and not chasing trades
Don’t get me wrong these are not the most exciting things, you’ve probably heard all of them before
but these simple rules of thumb separate the winners from the losers.
These are not the most exciting pieces of information (not the sexiest advice), you’ve probably heard all this
before, but these simple rules are what separate the winners from the losers.
WHAT PRICE ACTION TRADING IS NOT
• Price action trading will not make you rich...It will however make you a profitable trader if you
combine it with proper risk management.
• Price action trading is not the magic cure / holy grail. Granted it does beat using indicators as they are
slower (lagging) than the raw price data.
• Price action trading will not make you an overnight success. There will be a lot of hard work on your
part to implement the learnings from this course. Once you have the confidence however to observe
how price reacts, see the repetitive pattern and trade them, you will be rewarded.
CHAPTER 3: UNDERSTANDING MASS PSYCHOLOGY IN TRADING
All human beings have evolved to respond to certain situations in certain ways. You can see the same happen
in the trading world as well:
For example, if you see a major resistance level, price hits the level and forms a `shooting star ́ a bearish
reversal candlestick pattern. You can then say with a greater degree of confidence that price is going to head
down.
Why?
Because the way traders think and react forms patterns. When this setup happens there are many traders
watching that resistance level and they all know that price has been rejected from this level on a previous one
or two occasions and that tells them that it is a resistance level. Furthermore, they too can see the bearish
candlestick formation...guess what they are now waiting to do?
1. They will be waiting with their sell orders...not just one sell order but thousands of them of varying
sizes.
2. On the other hand, though there is the traders who bought at a low price and now that the price is
heading up to the resistance levels, that’s where most of their take profit levels are. So now they’ve
taken their profits around that resistance level. That means there are now less buyers than sellers.
The balance tips in the direction of the sellers and that’s how the price is pushed back down away
from resistance levels.
3. On the other hand, there are traders who bought at a low price and set take-profits near the
resistance level. When the take-profits are collected the Buyer/Seller balance will shift, there will be
less buyers than sellers, and the price will be pushed back down and away from the resistance level.
Since price action trading is a representation of mass psychology, the markets being moved by the activities of
traders. Trading price action therefore is about understanding the psychology of the market using those
patterns and making a profit as a result.
There are two types of price action trading:
• Pure Price Action Trading (nothing but you and your chart, no indicators)
• Not-so-Pure Price Action Trading this is when you mix pure price action with the use of indicators.
That could be trend indicators like moving averages or oscillators like the stochastic indicator.
CHAPTER 4: PRICE AND CHARTS
Price What is price?
is the value given to a particular instrument usually in monetary terms and its value is dependent on supply
and demand.
• If the demand is more, price increases as more traders start buying and driving price up.
• Demand zones on your price chart are around support levels, that’s where buyers come and start
buying
• and driving prices up.
• If there is over supply, price falls as there are more sellers and less buyers.
• Supply zones on your charts are on and around resistance levels where sellers come in and drive
prices down due to the fact there are very few buyers.
Every time you open your charts you are seeing the forces of supply and demand at work. If the market is
going up, it means there is a lot of demand for that instrument. Likewise, if the market is going down, it means
there is less demand and lots of supply.
However, there is another important thing about price.... It has a time component.
The price of something today will not be the same tomorrow, next week or in a month. Supply and demand
drive price up and down over time. To represent the value of price over time you need price charts: price bars,
candlestick and line charts. These are graphical and visual representation of price over time. Thus telling you a
story about supply and demand forces over a certain time period which can be 1 minute up to one month or
sometimes a year depending on platform.
3 MAIN TYPES OF PRICE CHARTS
1. Bar charts
2. Candlestick charts
3. Line charts
What is a Bar Chart?
The chart you see above is a bar chart. The red and green things are called bars. The green bars are bullish and
the red bearish. The bar chart simply looks like a `stick’ or a bar with two short knobs on both sides. The knob
on the left is the opening price and the knob on the right the closing price.
Then there’s the wick on the upper end and the lower end. The highest point or level of the wick on the upper
end is the highest price that was reached during that timeframe or period and the lowest point of the lower
wick is the lowest price that was reached during that same period, or timeframe.
What is a candlestick chart?
The chart above is an example of a candlestick chart. The candlestick chart shows the same information as the
above bar chart, with one notable difference: the candlestick chart has a body while the bar chart does not.
A candlestick chart in other words is like putting a body over the skeleton of a bar chart. In the above
representation of bar chart vs candlestick. Note how they convey the same information.
The red colour is most often used to indicate a bearish candlestick which means price opened high and closed
lower. A green candlestick representing a bullish candlestick and is the exact opposite.
What is a line chart?
The line chart while showing the same price information over time as the bar and candlestick charts it does not
reveal everything.
It is one of the least favourited by traders for trading. As the line chart is simply drawn by connecting either
the closing, high or low price and that’s how you get the line on a chart. Line charts however can be useful for
looking at the bigger picture and finding long term trends, but they simply cannot offer up the kind of
information contained in candlestick charts.
Out of the three, the candlestick chart is the most popular followed by the bar chart. So, from here on we will
focus on the candlestick chart only.
The Candlestick
• The candlestick had its origins in Japan and can also be referred to as the Japanese candlestick chart.
• The colour of the candlestick tells you if price was up or down in a particular timeframe which means
that the candlesticks are either bullish or bearish.
Most traders prefer to set green as bullish and red as bearish. Some platforms have options where you can
change the colours of the candlesticks to any colour you want.
This candlestick shown below is an example of a bullish candlestick.
A bullish candlestick simply means that price opened lower and closed higher after a certain time period.
(Depending on preferences set)
The candle body represents the distance price moved from the opening price to the closing. The longer the
body, the more price has moved after opening. The shorter the candle body means the exact opposite.
The highest price that was reached during that time period is known as the High.
The lowest price reached during the time period is known as the Low.
Now the candlestick shown below is an example of a bearish candlestick.
A bearish candlestick simply means that the candlestick opened at a high price and closed lower after a certain
time period.
Understanding Buying and Selling Pressure on Candlesticks
There are both bullish candlesticks that are considered bearish and bearish candlesticks that are considered
bullish?
Every candlestick that is formed tells you a story about the battle between the bulls and the bears – who
dominated the battle, who won at the end, who is weakening etc. It’s the length of the body as well as the
shadow (wick) that tells you a story about buying/selling pressure.
The first green candlestick on the left picture, it’s a bullish candlestick, right? Yes. However, you can see that it
has a very short body and a very long wick.
It tells you that the sellers (bears) were dominant. If this candlestick was to form after hitting a resistance
level, it would be considered a bearish signal even though it’s a bullish candlestick.
This is the same for all the candlesticks that you see, if you apply the same logic you can understand the story
that is being told:
• If the upper wick is very long, there’s a lot of selling pressure. It means price opened and got pushed
higher by the buyers but then at the highest price, sellers got in and drove it back down.
• If the lower wick is long, there is a lot of buying pressure. Sellers drove the price down, but buyers got
in and drove the price back up.
• If the lower wick is short, it tells you there is very minimal buying pressure.
• If the upper wick is short, it tells you there is very minimal selling pressure.
What about the length of the body though?
• The longer the body of the candle, indicates very strong buying or selling pressure.
• A short body of a candlestick indicates little price movement and therefore less buying or selling
pressure.
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• Sometimes the candles will have no upper or lower shadows but with very long bodies. These are
interpreted the same way as standard candlesticks but are an even stronger indication of bullish or
negative market sentiment.
• In the case of a bullish candle, prices never decline below the open. In the case of a bearish candle,
price never traded above the open.
So far, we have looked at individual candlesticks, but what happens if you combine more than one
candlestick? One important thing a group of candlesticks can show you is how strong or weak a bullish or
bearish move is.
It can tell you if the bearish or bullish move is weakening, this is referred to as momentum.
The diagram above shows 3 bearish candlesticks in a downtrend, each with decreasing length and body
lengths. In a downtrend situation it is a signal that the downtrend is weakening.
If this happens around support levels, you should take notice and also watch for a bullish reversal candlestick
pattern, which will give you the confidence to buy. Or Vice versa in the diagram below.
Candlestick Wicks why are they important
The wicks of candlesticks along with the body tell a story. A wick which can be called a shadow or tail of a
candlestick is a line situated above and below the body of a candlestick. We have already looked at how they
are formed. However, a long wick or tail indicates a significant change in market sentiment.
Candlesticks with long upper wicks commonly occur when an uptrend is losing strength. Long lower wicks
occur when the downtrend is losing its strength.
CHAPTER 5: TRENDS
When you have price moving across time, due to supply and demand, then this creates trends. It is important
to know the various types of trends that exist, how they form and what kind of structure they have. Knowing
this you won’t have to rely on an indicator to tell you if the trend is up or down.
There are three types of trends:
UPTREND – when price is moving up
DOWNTREND – when price is moving down
SIDEWAYS (CHANNEL/RANGING) – When price is moving sideways
Each of these three trend types have their own price structure that gives indication as to whether price is in an
uptrend, downtrend or sideways trending market.
All of these are derived from the DOW theory. Made famous by Charles Dow
The DOW Theory of Trends (Summarised)
The theory in simple terms says that:
1. For an uptrend, price will make continuously higher high and higher lows until a higher low gets
intercepted, then that signals the end of the up trend and the beginning of a downtrend.
2. In a downtrend, price will make continuously lower highs and lower lows until this is intercepted and
that signals an end of the downtrend and a beginning of an uptrend.
Structure of An Uptrend (BULL) Market
With an uptrend market, prices will be making Higher Highs (HH) and Higher Lows (HL), see diagram below for
clarity:
Structure of A Downtrend (BEAR) Market
With a downtrend, prices will be making Lower Highs (LH) and Lower Lows (LL). The diagram below shows in
more clarity.
Structure of a Sideways/Ranging market
For a ranging market, in an ideal scenario, price will move within a range between support and resistance
levels, changing direction as it reaches these levels. However, it is not ideal and looks like the chart above.
CHAPTER 6: REVERSALS & CONTINUATIONS
A reversal is a term used to describe when a trend reverses direction. For example, the market has been in a
downtrend and when price hits a major support level, it reversed and formed an uptrend.
Reversals are most common in the following areas:
• Support levels
• Resistance levels
• Fibonacci levels
Continuation, in short means there is a main trend, for example a downtrend as price slows down and
consolidates for a little while (might even reverse a little, sometimes known as a minor uptrend in a major
downtrend often called an upswing in a major downtrend). When this phase of consolidation ends and price
resumes in the original direction, this is called a continuation.
When a phase of consolidation ends, and price resumes in the original direction, it is called a continuation.
Continuation in short means there’s a main trend, for example a downtrend, and as the price slows down and
consolidates for a short period of time a reversal may be seen
In short, continuation means there’s a main trend, for example a downtrend, and as the price slows down and
consolidates for a small period of time
3 Reasons to study reversal levels / points as well as understanding trend continuity patterns and signals
1. You don’t want to be selling at, or near, a support level (which is a reversal point)
2. You don’t want to be buying at, or near, a resistance level (which is a reversal point)
3. You don’t want to be buying in a downtrend or selling in an uptrend.
Learning continuation candlestick patterns and chart time help to increase the likelihood of spotting these
trends, allowing you to trade with the trend them. There are times however when trading against the main
trend is the thing to do, like when trading in channels, which we will cover later.
CHAPTER 7: UNDERSTANDING MARKET SWINGS
Price moves in swings. A swing is when the market moves like waves do.
3 Reasons to understand Market price swings
If you want to be a price action trader, you must understand this concept. Even more so if your style of trading
is trend trading or swing trading.
If you do not understand how price moves in swings, you are more likely to:
1. Execute trades at the wrong spot! For example, in an uptrend, you buy as the market begins a
downswing.
2. Get stopped out or you need to put a very large stop loss. Large stop losses don’t necessarily mean
large risk, if you do position sizing based on the stop loss distance. If not, then that’s a large risk you
are taking.
3. Being forced to wait a while before the market retraces to start seeing profits on your trade.
In an uptrend, you should be looking to buy on the downswing. In a downtrend, you should be looking to sell on
an upswing.
CHAPTER 8: HOW TO TRADE SUPPORT AND RESISTANCE LEVELS
Nothing is more noticeable than support and resistance levels, these levels stand out making it easy for
everyone to see. In fact, support and resistance trading is the core of price action trading.
The key to successful price action trading lies in finding effective support and resistance levels on your charts.
Horizontal Support and Resistance
These are quite easy to spot on your charts. They look like peaks and troughs.
How to find horizontal support and resistance levels on your chart
• Price has been going up, hits a price level or zone where it cannot continue upward any further and
then reverses, that’s a resistance level.
• Price has been going down, hits a price level or zone where it cannot continue and bounces up from
there, that’s a support level.
As price approaches an established support or resistance level you should expect that it will get rejected from
that level again. The use of reversal candlestick patterns on support and resistance levels becomes necessary
in these cases.
Significant Support and Resistance Levels
Not all support and resistance levels are created equal. Those levels that are formed in the large timeframes
like the monthly, weekly and daily charts, tend to move price for a very long time, once price touches them.
Support turned Resistance Level and Resistance turned Support Level
In a downtrend, when a support level has been broken to the downside, it often acts as a resistance level. The
chart above shows an example for clarity.
When you see this happening, you should be looking for bearish reversal patterns to use as a signal to enter a
short trade.
Likewise, in an uptrend you will also see similar things happen when resistance levels are broken and price
retraces to retest it, they act as support levels.
In those situations, look for a bullish reversal candlestick pattern to use as a signal to enter a long trade.
CHAPTER 9: HOW TO TRADE PRICE CHANNELS
The path price follows and the area within this range is called the price channel. The fundamentals behind this
is based on support and resistance.
There are 3 major types of channels:
1. The uptrend channel.

2. The downtrend channel.
3. The sideways/horizontal channel.
Uptrend channel
Downtrend channel
Horizontal Channel
Horizontal channels are little bit different from uptrend and downtrend channels because with uptrend and
downtrend channels, you would require 2 points to draw trendlines and wait for price to touch them later on
before you take a trade because the trendlines are at an angle.
With horizontal channels you can start trading the setup at point 2 which can be both a resistance or support
level based on the fact that a prior resistance or support level is already visible. You should expect price to
bounce from those levels. Look for reversal candlestick patterns when you see such setups happening.
GENERAL RULES FOR TRADING CHANNELS
1. If you buy or sell at one side of the channel, you wait for price to reach the other end of the channel
to take profit or exit the trade.
2. Place your stop loss on the outside of the channel or just above the high of the candlestick (for a sell
order) or just below the low of the candlestick (for a buy order) that touched the channel and shows
signs of rejection.
CHAPTER 10: NINE PROFITABLE CHART PATTERNS
There is a difference between chart patterns and candlestick patterns. Chart patterns are not candlestick
patterns and candlestick patterns are not chart patterns:
• Chart patterns are geometric shapes found in the price data that can help a trader understand the
price action, as well make predictions about where the price is likely to go.
• Candlestick patterns on the other hand can involve only one single candlestick or a group of
candlestick which have formed one after the other in regards to how they form in relation to each
other; body length, opening and closing prices, wicks (or shadows) etc.
Triangles
There are 3 types of triangle chart patterns and the chart below shows the differences between each
very clearly:
1. Symmetrical Triangle
The symmetrical triangle is a continuation pattern therefore it can appear in both an uptrend and downtrend.
It is both a bearish and a bullish pattern.
How To Draw A Symmetrical Triangle
• You will see price moving up and down as normal but this up and down movement is converging to a
single point.
• You need minimum of 2 peaks and troughs to draw the two trendlines on both sides
Two Simple ways to trade Triangles
#1: Trade the initial Breakout

#2: Trade the retest of the trendline that is broken
2. Ascending Triangle
The ascending triangle is a bullish continuation pattern in an existing uptrend. When it is seen forming in an
uptrend, expect a breakout to the upside. However, it is also a strong signal for a reversal (bullish) when you
see it form in a downtrend.
3. Descending Triangle
The descending triangle is characterised by a descending resistance level and a horizontal support level
converging to a point until a breakout happens to the downside.
While being a bearish chart pattern that forms in a downtrend as a continuation pattern. It is also a strong
reversal signal (bearish) when formed at the end of an uptrend. So no matter where you see this prepare for a
bearish breakout.
4. Head & Shoulders
Is a bearish reversal pattern, when found in an uptrend it signals the end of the uptrend.
How to trade the Head & Shoulders Chart Pattern
5. Inverse Head & Shoulders
A similar pattern though not as common, is the inverse head and shoulders pattern. It is a bullish reversal
pattern, working the exact opposite of the Head and Shoulders pattern above.
How to trade the Inverse Head & Shoulders Chart Pattern
#1 Buy the initial breakout from the neckline

#2 Wait for the retest, using bullish reversal candlesticks for trade entry confirmation.
6. Double Bottom
Is a bullish reversal chart pattern when it forms in an existing downtrend, it signals a possible upward trend.
How to trade Double Bottoms
#1 Trade the breakout of the neckline
#2 Wait to enter on the retest of broken neckline
#3 Buy on bottom
7. Double Top
Is a bearish reversal chart pattern, when found in an uptrend the broken neckline confirms a downtrend.
How to trade Double Tops
#2 Wait to enter on the retest of broken neckline
#3 Sell on Peak 2
8. Triple Bottom
Triple bottoms don’t form as often, however we should still know what they look like.
These bullish reversal chart patterns, are found in a downtrends. The break and retest of the neckline is
confirmation of the change in trend.
How to trade Triple Bottoms
#2 Wait to enter on the retest of broken neckline, placing a buy order once they see a bullish reversal
candlestick
#3 Buy on bottom 3
9. Triple Top
Is the exact opposite of a triple bottom and are bearish chart patterns. Just as rare as triple bottoms. When
found in an uptrend, it signals the end of an uptrend when the neckline is broken and prices heads down.
How to trade Triple Tops

#2 Wait to enter on the retest of broken neckline, placing a sell order once they see a bearish reversal
candlestick #3 Sell on peak 3
Price action trading Course CHAPTER 11: TEN PROFITABLE

CANDLESTICK PATTERNS
There are lots of candlesticks but out of all of them only 9 are need to know. These are the most common and
are also very powerful when these form at support and resistance levels or Fibonacci Levels, they make great
entry signals.
#1 The Doji Candlestick Pattern
The doji candlesticks are single (individual) candlestick patterns. There are 4 types of doji candlesticks as
shown below:
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a) The doji cross can be both considered a bullish and bearish signal depending on where is forms.
b) The gravestone doji is considered a bearish reversal candlestick when formed in an uptrend or in a
resistance level.
c) The dragonfly doji is considered a bullish candlestick pattern when formed in a downtrend or in a support
level.
d) The long legged doji shows a period of indecision by bulls and bears and depending on where it forms
(uptrend / resistance level = bearish signal, downtrend /support level = bullish signal)
#2 The Engulfing Candlestick Pattern
The engulfing patterns are two candlestick patterns. For a bullish engulfing pattern, you will see that the first
candle is bearish followed by the second candle which is very bullish and this second candle completely engulfs
the first.
a) Bullish Engulfing – when formed in a support level or in a downtrend, this can signal that the downtrend is
potentially ending.
b) Bearish Engulfing – when formed in an uptrend or in a resistance level, this is a signal that the uptrend may
be ending.
#3 Harami Candlestick Pattern
The harami is a 2 candlestick pattern which can be bullish or bearish.
a) Bullish harami – the first candlestick is a strong bearish candlestick followed by a bullish candle, which is
quite short and is completely covered by the shadow of the first candle. When you see this in a downtrend or
in an area of support, this will be your buy signal.
b) Bearish harmai – the exact opposite of the bullish harami. When you see this pattern for ina resistance level
or in an uptrend, this is a bearish reversal signal and may indicate that the uptrend is ending and you should go
short.
#4 Dark Cloud Cover Candlestick Pattern
The dark cloud is another bearish reversal candlestick pattern formation consisting of 2 candlesticks. The first
one is a bullish candlestick showing a strong upward momentum but when the second candle forms, it shows a
completely different story... its bearish and it closes at about the midway point or below of the first
candlestick.
When you see the dark cloud cover candlestick pattern in an uptrend or on a resistance level, it’s a bearish
reversal signal and you should prepare to short.
#5 Piercing Line Candlestick Pattern
The Piercing Line is the opposite of Dark Cloud Cover. You may see this in a downtrend or forming at a support
level. The first candle is extremely bearish, with the second candle telling the opposite story, its bullish. The
second candlestick should close at least mid-point of previous candle or above.
When you see the piercing line formation at support levels or in a s downtrend market, this is a potential
bullish reversal signal so you should be preparing to enter a long trade.
#6 Shooting Star Candlestick Pattern
This is one of the most reliable candlesticks and obviously one of the most popular since they are so easy to
spot on any chart. The shooting star is a single candlestick pattern and when it forms in an uptrend or on a
resistance level. It is considered a bearish reversal pattern and should let you know to prepare for a short
entry.
NB. The shooting star can also be referred to as the bearish hammer, inverse hammer, inverted hammer or
bearish pin bar. They all mean the same thing, referring to the shooting star candlestick pattern.
#7 Hammer Candlestick Pattern
The hammer is a single candlestick pattern and it is considered a bullish reversal candlestick pattern and it is
the antithesis of the shooting star candlestick pattern. With a long tail (shadow) and a short upper wick or
none at all.
When it forms in a downtrend or on a support level, take note...this is high probability bullish reversal
candlestick pattern.
#8 Hanging Man Candlestick Pattern
While the hanging man and the hammer look similar, the hanging man is not a bullish signal. It forms in an
uptrend. When it forms in an uptrend or on resistance levels, it tells you the uptrend may be coming to an end,
look for a signal to enter a short position.
See chart below for example in action.
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#9 Railway Track Candlestick Pattern
The railway track pattern is a 2-candlestick pattern and there’s a bearish and a bullish railway track candlestick
pattern. Like most railways, they should look like each other, same length and body, almost identical images of
each other.
a) Bearish Railway track, the first candle is bullish followed by almost exactly the same length and body of the
second candlestick which is bullish. When you see a bearish railway track form in an uptrend, or in an area of
resistance, this is a signal to look for a short entry.
b) Similarly but opposite is the bullish railway tracks, when you see them form in a downtrend or in a an area
of support. Look for a signal to buy.
#10 Spinning Top Candlestick Pattern
Spinning Tops can be continuation candlestick patterns or a reversal pattern. Usually comprised of small
bodies and with both upper and lower shadows which are longer than the length of the body. Spinning tops
show indecision, which means they can be both bearish and bullish.
If you see a spinning top in a support area or in a downtrend, this can be considered a bullish reversal signal
when the high of the bearish spinning top is broken to the upside.
Likewise, if you see a bullish spinning top in a resistance area or in an uptrend. It can be considered a bearish
reversal signal as soon as the low is broken to the downside.
See example below for clarity.
Blending Candlesticks – A Concept You Need to Know
Most platforms allow you to alter the timeframe in which you are viewing, as mentioned before this could be
as small as 1 minute and as large as a Month or year depending on your platform.
You may see a hammer in the 1hr timeframe but remember each 1hr timeframe consists of two 30minute
candles to make 1hr. To give you a bullish hammer in the 1hr time, or a bearish shooting star for instance, you
would need bullish and a bearish engulfing patterns.
See below for clarity.
This concept is important, as in some platforms they do not have the partner timeframe eg. There’s no
2minute for your 1min timeframe, or 10 min for your 5min, or 2hr for your 4hr or even 8hr or 16hr. This is
important as let’s assume you’re a trader who only trades hammers and shooting stars and you’re waiting to
buy at a major support line in the 1hr.
You’ve been waiting patiently for a bullish hammer to form to give you your signal to buy. Unfortunately no
hammer forms in the 1hr timeframe and even though you saw a bullish engulfing pattern formed, you did not
enter a buy trade.
Now, you have just watched price shoot up and wishing you entered at the bullish engulfing signal that was
given. Had there been a 2hr time frame, you could have switched to it and seen a very bullish hammer and you
would have taken the trade.
Further examples below.
Notice that a piercing line when blended forms a hammer, likewise dark cloud cover when blended is a
shooting star.
CHAPTER 12: HOW TO TRADE TRENDLINES WITH PRICE ACTION
When the market is heading down, it forms down swings and upswings as it continually moves lower. Similarly,
when the market is in an uptrend, it will form upswings and downswings as it continues to move up.
The peaks that are formed by the up swings and the troughs that are formed by the downswings can be used
to draw trendlines.
• You need a minimum of 2 peaks to draw a downward trendline for a market in a downtrend
• You need a minimum of 2 troughs to draw an upward trendline for a market in an uptrend
How To Draw Downward Trendlines
Now for a market in a downtrend, you can connect the peaks with a line and that forms your downward
trendline.
What you are waiting for is for price to come back up and touch that trendline and when it does, this could
mean that a down swing will start and it may be the best time to enter a short trade.
The use of bearish reversal candlesticks as trade confirmation is highly recommended with this trading method.
How To Draw Upward Trendlines
Now for a market in an uptrend, you can connect the peaks with a line and that forms your upward trendline.
What you are waiting for is for price to come back down and touch that trendline and when it does, this could
mean that an up swing will start and it may be the best time to enter a long trade.
The use of bullish reversal candlesticks as trade confirmation is highly recommended with this trading method.
What Happens If The Trendline Gets Intersected?
There are a couple of things to be aware of when a trendline gets intersected:
1. 1) The trend has potentially now changed

2. 2) Potentially a false breakout and price will soon head back in the original direction
If one trendline gets broken, you need to see if you can draw another trendline above (or below) the one that
has been broken. There can be 2 or more downward trendlines or 2 or more upward trendlines at any one
time on any chart in any timeframe.
So even if price breaks the first trendline, it still has yet to head to the 2nd and 3rd etc.
If you take a trade on the first trendline, but price intersects it and you are stopped out with a loss and now
price is heading to the 2nd trendline above, you should wait for a bearish reversal signal.
CHAPTER 13: HOW TO TRADE CONFLUENCE WITH PRICE ACTION
A confluence is point/ level in the market where two or more level intersect each other (or come together) and
they form a flash point or hot point or confluence point.
Example:
While watching the market, you see price is heading to a resistance level, you check your Fibonacci retracement
tool, price is reaching the 61.8 fib level, even more...the overall trend is also down.
Before entering a trade you already have 3 things lining up for you:
1. Overall downtrend
2. Resistance level approaching
3. Resistance level price is approaching is corresponding with fib level 61.8
The beauty of trading with confluence:
• - Trades taken are really low risk – high reward entry trades
• - Trades taken have higher probability of being profitable.
The more confluence you can have to support your decision the better chance you have of a
successful trade.
CHAPTER 14: HOW TO USE MULTI- TIMEFRAME ANALYSIS AND

TRADING
Multi timeframe analysis / trading, is more than just blending candles, you can use it to get better entries for
each trade, or to reduce the stop loss distance. Meaning better risk reward ratios, smaller stop loss sizes also
mean the potential to increase the lot size. This has a knock on effect on the profit made if your trade direction
is correct.
If you are trading strictly with large timeframes like the daily chart, your stop loss distance will be huge and the
issue with that is your risk:reward ration can be reduced as a result (not necessarily all the time).
To minimise your stop loss, even if you are trading with a setup in the daily chart, for your trade entry, you are
actually switching to the smaller timeframes and watching for a sell signal in the 1hr.
Example:
This chart below is a daily chart, showing a triple top pattern in a solid resistance level. Price has been pushed
down twice from this level and when the third time it reaches this level it was pushed down again.
Now you can see the bearish harami reversal candlestick pattern and you could have used this as your sell
signal by placing a pending sell stop order just a few pips under the low. And placed a stop loss outside of the
resistance line as shown on the chart above.
However, if you switched to the 1hr chart to wait for the trade entry, your stop loss distances would be very
small in comparison to the daily timeframe.
Lets see them side by side on the daily chart and compare.
Notice for the 1hr trade entry, it was done almost at the very top and the stop loss distance was very small in
comparison to the trade taken in the daily timeframe. Which means that the risk:reward of the 1hr timeframe
trade is a lot better than you would get in the daily.
This can be done with the daily timeframes, 4hrs or all the way down to the 30min and 15 minute time frames.
For even more precision, you can watch setups in the 4hr and switch down, 1hr , 30mins, or lower for the entry.
Course CHAPTER 14: TRADE THE OBVIOUS
As powerful as price action trading can be, not all trading setups will become winners. However, as long as
your losses are small and your profits large, you will always be out in fron. That is why proper risk
management is important. When you are watching the chart for trading setups, you need to see and trade the
obvious.
If there is an obvious pattern on the chart and you can see it clearly, then you should know that there are
thousands of traders out there watching the exact same thing...because its so obvious.
Things like:
• Trendlines or channels or bullish pin bars forming on major support levels, if you can see that, there
are many other seeing the same thing.
• All these traders will be waiting to see what happens at these levels and say if a bullish hammer forms
on a major support level. The most likely outcome of that is that as soon as the high of the hammer
candlestick is broken, price will shoot up.
When you trade the obvious you trade with what everybody else is seeing, essentially you are riding the
market move created by all the orders putting the odds in your favour.
CHAPTER 15: CLOSING REMARKS
Things to be wary of:
- Levels are not lines drawn in concrete; they get broken. The more a level is tested, sooner or
later it will get broken. On average expect 2/3 time to be tested after that expect a breakout.
- Do not listen to analysts. They mess with your decision making process and cloud your
judgement.
- Find your best time to trade. Your personality, your work situation etc may dictate what
timeframe you can use.
- If the bus leaves you, don’t chase the bus. If you missed your optimal entry point, sit back
and wait. There will ALWAYS be another opportunity, wait for a retrace/retest/ pullback etc
and then enter.
- Be patient for the right trading setups to form. Depending on your timeframe this could
take a while. Sit and wait.
- If you are suffering from losing streaks, take a break. Take a week off from trading to clear
your mind then come back with a clear mind to trade.
- If you have winning streaks, do not get overconfident and risk more. Your streaks of losses
may be just around the corner.

Price Action Trading Course

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Price Action Trading Course

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PRICE ACTION TRADING COURSE

Price action trading Course CHAPTER 1: INTRODUCTION TO PRICE ACTION

Price action trading Course CHAPTER 1: INTRODUCTION TO PRICE

But how do they know this?

CHAPTER 2: WHAT IS PRICE ACTION TRADING?

3 very important reasons why you should trade price action

• Trading with the trend

• Trading only in larger timeframes

WHAT PRICE ACTION TRADING IS NOT

CHAPTER 3: UNDERSTANDING MASS PSYCHOLOGY IN TRADING

There are two types of price action trading:

CHAPTER 4: PRICE AND CHARTS

Price What is price?

3 MAIN TYPES OF PRICE CHARTS

What is a Bar Chart?

What is a candlestick chart?

What is a line chart?

This candlestick shown below is an example of a bullish candlestick.

Now the candlestick shown below is an example of a bearish candlestick.

Understanding Buying and Selling Pressure on Candlesticks

What about the length of the body though?

Candlestick Wicks why are they important

There are three types of trends:

UPTREND – when price is moving up

DOWNTREND – when price is moving down

SIDEWAYS (CHANNEL/RANGING) – When price is moving sideways

The DOW Theory of Trends (Summarised)

The theory in simple terms says that:

Structure of An Uptrend (BULL) Market

Structure of A Downtrend (BEAR) Market

Structure of a Sideways/Ranging market

CHAPTER 6: REVERSALS & CONTINUATIONS

Reversals are most common in the following areas:

CHAPTER 7: UNDERSTANDING MARKET SWINGS

3 Reasons to understand Market price swings

CHAPTER 8: HOW TO TRADE SUPPORT AND RESISTANCE LEVELS

Horizontal Support and Resistance

How to find horizontal support and resistance levels on your chart

Significant Support and Resistance Levels

Support turned Resistance Level and Resistance turned Support Level

CHAPTER 9: HOW TO TRADE PRICE CHANNELS

There are 3 major types of channels:

1. The uptrend channel.

GENERAL RULES FOR TRADING CHANNELS

CHAPTER 10: NINE PROFITABLE CHART PATTERNS

How To Draw A Symmetrical Triangle

Two Simple ways to trade Triangles

#1: Trade the initial Breakout

4. Head & Shoulders

How to trade the Head & Shoulders Chart Pattern

5. Inverse Head & Shoulders

How to trade the Inverse Head & Shoulders Chart Pattern

#1 Buy the initial breakout from the neckline

How to trade Double Bottoms

#1 Trade the breakout of the neckline

#2 Wait to enter on the retest of broken neckline

How to trade Double Tops

#1 Trade the breakout of the neckline

#2 Wait to enter on the retest of broken neckline

How to trade Triple Bottoms

#1 Trade the breakout of the neckline

How to trade Triple Tops

#1 Trade the breakout of the neckline

Price action trading Course CHAPTER 11: TEN PROFITABLE

#1 The Doji Candlestick Pattern

#2 The Engulfing Candlestick Pattern

#3 Harami Candlestick Pattern

The harami is a 2 candlestick pattern which can be bullish or bearish.

#4 Dark Cloud Cover Candlestick Pattern

#5 Piercing Line Candlestick Pattern

#6 Shooting Star Candlestick Pattern

#7 Hammer Candlestick Pattern

#8 Hanging Man Candlestick Pattern

See chart below for example in action.

#9 Railway Track Candlestick Pattern