Best price action trading patterns

There are several price action trading patterns that traders commonly use to identify potential trading opportunities. Here are some of the best-known price action patterns:

1. Pin Bar: The pin bar, or pinocchio bar, is a single candlestick pattern that has a long wick or shadow and a small body. It indicates a rejection of a certain price level and can suggest a potential reversal. A bullish pin bar has a long lower wick and a small upper body, while a bearish pin bar has a long upper wick and a small lower body.

2. Engulfing Pattern: An engulfing pattern occurs when a candlestick completely engulfs the previous candlestick, indicating a shift in market sentiment. A bullish engulfing pattern forms when a bullish candlestick completely engulfs the previous bearish candlestick, suggesting a potential reversal to the upside. Conversely, a bearish engulfing pattern forms when a bearish candlestick engulfs the previous bullish candlestick, indicating a potential reversal to the downside.

3. Inside Bar: An inside bar pattern forms when the range of a candlestick is completely contained within the range of the previous candlestick. It indicates a period of consolidation or indecision in the market. Traders often look for a breakout of the inside bar range as a potential trading signal.

4. Double Top and Double Bottom: These patterns occur when the price reaches a certain level, reverses, and then tests that level again. A double-top pattern forms when the price makes two consecutive peaks at a similar level, indicating a potential reversal to the downside. Conversely, a double bottom pattern forms when the price makes two consecutive troughs at a similar level, suggesting a potential reversal to the upside.

5. Head and Shoulders: The head and shoulders pattern is a trend reversal pattern that consists of three peaks. The central peak is higher, forming the head, while the two outer peaks are lower, forming the shoulders. A neckline is drawn connecting the troughs between the peaks. A break of the neckline can indicate a potential reversal in the direction of the trend.

6. Triangles: Triangles are consolidation patterns that occur when the price forms higher lows and lower highs, creating a contracting range. There are three main types of triangles: ascending triangle, descending triangle, and symmetrical triangle. Traders often look for a breakout of the triangle pattern to enter trades in the direction of the breakout.