Trading price action: My strategy and setup

Trading price action is one of the simplest yet most powerful ways to read the market, but is it really the key to consistent trading success? In this article, trading expert Haikel Ali reveals his personal price action trading strategies, candlestick patterns he trusts, and how he blends them with indicators for sharper trading decisions.

Trading price action has completely changed the way I look at the markets. When I first started, I cluttered my charts with every technical analysis indicator I could find, only to end up confused and second-guessing myself. Over time, I discovered that focusing on candlestick patterns, support and resistance levels, and Simple Moving Averages (SMA) gave me sharper signals and more consistent results. In this article, I’ll share the price action trading strategies I trust most, from spotting momentum shifts to using confluence for stronger setups, along with the lessons I’ve learned from mistakes that many traders make. If you want a clean, practical approach to reading price movements and making confident trading decisions, this guide is for you.

What is price action trading?

Price action simply means analyzing price movement on a chart without relying heavily on external indicators. Since each candlestick's pattern/formation represents how the price moved during a specific time period (open, high, low, close), the formations (like ring-high and ring-low, pin bars, engulfing candles, etc) reflect the psychology of buyers and sellers in real time.

For me, this approach has been both empowering and practical. It provides flexibility, keeps my charts clean, and allows me to respond directly to market behavior, especially during high volatility periods. Importantly, it doesn’t mean I reject indicators totally—far from it. I’ve simply found that when I first anchor my view on price, and then bring in selective tools like exponential moving averages combined with candlestick patterns, my trading becomes sharper and more consistent.

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What are candlestick patterns?

Candlestick patterns are visual formations on price charts that represent the battle between buyers and sellers over a given time period. Each candlestick shows four key pieces of information: the opening price, closing price, highest price, and lowest price, allowing traders to interpret market sentiment quickly. When grouped into patterns, these candlesticks reveal potential continuations or reversals in price trends. 

For example, candle formations like ring-low and high, pin bars, engulfing, etc., can signal rejection, strength, or indecision in the market. 

Since we are first going to speak about ring-low and ring-high candle formations, I have included the image below to show you what these patterns look like:

The core idea behind trading price action

The foundation of price action trading lies in one idea: price reflects everything. Every news or data release, such as Nonfarm Payrolls (NFP), central bank decision, or market shock, eventually shows up in the candles. By observing how price reacts around levels and in patterns, I can read the psychology of market participants.

The chart shows EURUSD price action during the release of Nonfarm Payroll data on 1 August 2025.

For example, a sudden surge in long wicks near resistance shows hesitation or fading buying power. These insights come straight from the market’s heartbeat—the price itself (see the next chart image as an example).

This chart shows the EURUSD price action five hours after the Nonfarm Payroll data release on 1 August 2025.

Smart use of indicators 

I used to load my charts with many technical analysis indicators—RSI, MACD, Bollinger Bands, Stochastics, you name it—hoping they’d give me an edge. The reality? It created more confusion than clarity. Because each indicator had its own mathematical interpretation, and often they contradict one another.

These days, I prefer to start with relatively “naked” charts—just price structure and maybe support/resistance zones. But that doesn’t mean I trade without indicators altogether. Instead, I use them selectively and in conjunction with price action. 

For example, the application of the 8- and 20-period Exponential Moving Averages indicator helps me filter trend direction. When the 8-period EMA line is above the 20-period EMA, it signals an uptrend market. When the 8-period EMA line is below the 20-period EMA, it signals a downtrend market.  

If a  candle formation shows the price rejection in line with the moving averages trend conclusion, it strengthens my conviction (see the next chart image for example).

This chart shows the EURUSD price on 19 August 2025 at 08.00 UTC  where a potential ring-high candle formation/pattern was spotted. The chart also shows the application of 8-period (red) and 20-period (blue) of Exponential Moving Averages indicators that indicate a potential bearish trend, where the 8- (red) was below the 20-period (blue).

This chart shows the EURUSD price on 20 August 2025 at 04.00 UTC, 20 hours after the potential ring-high candle formation/pattern was spotted in the previous image, and the price was experiencing a downtrend. 

So, it’s not about indicators versus price action. It’s about knowing when to let price action lead and when to let indicators confirm.

Blending price action with indicators for more precision

This is where my trading really matured. Instead of seeing technical analysis indicators as “enemies” of trading price action, I began treating them as tools that complement it. Price Action + Moving Averages.

Moving averages act like a “dynamic trend filter.” For example:

• In an uptrend, I look for retracements when the 8-period EMA is above the 20-period EMA. If the price bounces with a ring-low pattern (even potential), I see it as a green light to enter a long position.
• In a downtrend, a ring-high forms when the 8-period EMA is below the 20-period EMA, giving me confidence to short the market.

Understanding price action signals from experience

How I spot momentum shifts

Momentum shifts are the market whispering change before the big move. I look for things like:

• A series of strong candles losing steam, replaced by smaller indecisive ones.
• Failure to break a prior high or low.
• Long wicks show rejection of higher or lower prices.
• Increasing overlap in candles—often a sign of shift in balance.

These signals help me sense when trends may stall, reverse, or accelerate.

Common mistakes traders make when interpreting signals

When I started, I often misread the signs:

• Trading one candlestick in isolation without considering the bigger context.
• Forgetting that higher time frames outweigh lower ones.
• Treating signals as guarantees instead of probabilities.

My favorite price action trading strategies (Refined over the years)

Trend following with retracement entries

Identify the trend, wait for the price to retrace to a level, look for confirmation, then enter in the direction of the trend. It’s simple, powerful, and aligns me with momentum. It’s one of my go-to price action trading strategies because it keeps me aligned with momentum. Look at the image below, for example:

This chart shows the GBPUSD price on 21 August 2025 at 09.00 UTC, where a potential ring-high was spotted along with the moving average at the 8-period mark (Red) below the 20-period mark (Blue), signaling a downtrend continuation for price action trading. 

This chart shows the GBPUSD price on 21 August 2025 at 14.00 UTC. The GBPUSD price decreased five hours after the potential ring-high was spotted in the previous image.

Pin bars with indicator confirmation

Pin bars are powerful rejection signals. The image below is an example of what a pin bar looks like:

I like to combine a pin bar with indicator confirmation—such as forming at the 8-period and 20-period EMA above one another. 

For example, a bullish pin bar bouncing off when the 8-period EMA is above the 20-period EMA during an uptrend tells me buyers are still firmly in control. See image below for example:

This chart shows the bitcoin price on 13 August 2025 at 04.00 UTC, where a bullish pin bar was spotted and the moving average 8-period mark (Red) is still above the 20-period mark (Blue), signaling an uptrend continuation. 

This chart shows the bitcoin price on 14 August, 2025 at 00.00 UTC , where the BTC price was still experiencing  an uptrend 20 hours after the bullish pin bar was spotted along with the moving average at the 8-period mark (Red) and still above 20-period (Blue) mark, signaling an uptrend continuation from the previous image.

The power of confluence in my trading

Confluence means stacking evidence: support and resistance levels+candlestick patterns+moving averages. The more clues align, the stronger the setup. When trading price action, this layered approach increases confidence because price action reflects the psychology of market participants across different timeframes.

Some benefits of using confluence in price action trading strategies:

• Aligns signals from candlestick charts, moving averages, and resistance lines.
• Filters out noise from lagging indicators.
• Supports more profitable trading by confirming the prevailing trend.
• Reduces false reversal signals in trending markets and trading ranges.

Confluence turns a simple, stripped-down approach into a powerful trading technique that helps improve decision-making and trading psychology.

Things that complement price action trading

Price action trading is often viewed as naked trading—focusing on raw price movements without unnecessary clutter. Still, certain elements can enhance a trader’s charts without diluting the sole focus on price.

Examples that complement price action analysis:

• Fundamental factors: Economic data releases, news events, and central bank decisions that drive price moves.
• Technical indicators: moving averages as a trend filter, showing when price moves in the same direction or an opposite direction.
• Support and resistance levels: Confirming price action signals and helping set a realistic profit target.

These tools don’t replace price action trading but refine entries, exits, and risk tolerance for retail traders.

Multi-timeframe analysis

I always check:

• Weekly/Daily charts → provide the broader context and prevailing trend.
• 4H/1H charts → for setups, spotting candlestick patterns, and applying moving averages.

Why multi-timeframe analysis helps price action traders:

• Aligns short-term trading strategies with the larger financial market trend.
• Clarifies whether a candlestick pattern at a swing low or resistance level is valid or just noise.
• Improves timing for day trading and swing setups by recognizing when the trend resumes.

This top-down approach keeps me consistent and helps me avoid trading against the broader direction of price movements.

Candlestick patterns I trust most

The candlestick patterns I rely on most in my price action strategy are:

• Ring-high and ring-low → Reveal reversal signals near resistance lines or swing lows.
• Pin Bars (pin bar pattern) → Long upper wick or lower wick shows strong rejection and selling/buying pressure.
• Engulfing candles → Powerful continuation or reversal signals depending on context.

Why these candlestick patterns matter in price action trading strategies:

• Represent the real-time battle between buyers and sellers on the market’s price chart.
• Give insight into market sentiment and trading psychology.
• Provide cleaner trading signals than most traders get from technical indicators.
• Help retail traders make trading decisions without overly relying on lagging indicators.

While price action trading ignores many variables and doesn’t guarantee future results, combining these candlestick patterns with support and resistance levels and moving averages helps many traders achieve more consistent, profitable trading outcomes.

Developing my own price action playbook

• Journaling: I log trades with screenshots, reasons, and outcomes.
• Backtesting: Historical testing builds trust in my setups. See my article on backtesting to learn the basic understanding of backtesting.
• Confidence without clutter: The fewer unnecessary signals, the more I trust my edge.

Common pitfalls and how I avoid them

• Overtrading candlestick patterns: Not every candlestick formation is valid. Look at the market context and the indicator trying to inform you, don’t ignore it.
• Ignoring context: A bullish pin bar in a downtrend market is weaker; it's better to avoid.

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Frequently asked questions about trading price action

Final thoughts: Why trading price action continues to deliver for me

Price action is not about rejecting technical analysis indicators—it’s about making price the foundation of trading decisions. Indicators like moving averages don’t replace it, but they do enhance its precision when used smartly.

For me, price action continues to work because it’s adaptable, clear, and rooted in how markets truly behave. With the right mix of simplicity, confluence, and discipline, it’s an approach that will always have value—no matter how markets evolve.

Ready to put these price action trading strategies into practice? The best way to build confidence is through testing. Start with an Exness Demo Account where you can practice trading price action patterns, refine your entries and exits, and develop your own trading technique without risking real funds.