Reading Price Charts for Forex Trading: A Deep Dive into Price Action

Most professional traders agree that the true language of the market is the actual price movement on the chart, not mathematical formulas or auxiliary tools. Today, we will explore why Price Action has become a fundamental basis of trading and how to use it effectively to generate profits.

The Language of the Market: What is Price Action?

Price Action literally translates to “price behavior,” but its deeper meaning encompasses the art and science of decoding price movements to forecast future trends.

The core principle is based on behavioral economics: “Price reflects everything” (Price Discounts Everything) Economic factors, news, monetary policies, fears, and greed of the masses are all reflected in the current price at any given time.

Therefore, analyzing price directly is equivalent to observing the final outcome of all variables in the market.

Why is Price Action better than Indicators?

The main problem with indicators (Indicators) such as RSI, MACD, or Stochastic is lag (Lag). They are built from formulas that calculate based on past prices. For example, a 50-day Moving Average uses data from the past 50 days, meaning what you see is “the past,” not what is happening now.

In rapidly changing markets, waiting for moving average cross signals can cause you to buy just before a breakout or sell just as the trend begins.

Price Action, on the other hand—allows you to read what the market is telling us right now (Real-time). If a candlestick shows a strong rejection signal, a Price Action Trader will recognize it immediately.

Candlesticks and the stories they tell

Candlestick Charts are the best tools for analyzing Price Action because each candlestick narrates the struggle within that timeframe.

• Open Price (Open): The starting point of the battle
• High Price (High): The peak where buyers pushed up
• Low Price (Low): The lowest point where sellers pushed down
• Close Price (Close): The outcome of the battle—who wins
• Body: The actual fight—green means buyers win, red means sellers win
• Wicks: Traces of intense struggle—long wicks indicate price rejection

The pillars of Price Action

###Trend(

“Trend is your friend” is a correct principle. Price Action helps clearly identify trends.

• Uptrend: Higher highs )HH( and higher lows )HL(
• Downtrend: Lower highs )LH( and lower lows )LL(
• Sideways: Price moves within support and resistance zones, market is consolidating or waiting for news

)Support & Resistance###

Price Action does not see these as single lines but as zones of significance.

• Support: Price zone that was “cheap” in the past, often attracting buying
• Resistance: Price zone that was “expensive” in the past, often attracting selling
• Key point: When resistance is broken successfully, it becomes the new support immediately

(Candlestick Patterns)

These are the “words” the market uses to communicate with us:

• Pin Bar: A candlestick with a very long wick and small body, a sign of price rejection
• Bullish Engulfing: A large green candle “engulfs” the previous red candle
• Bearish Engulfing: A large red candle “engulfs” the previous green candle
• Inside Bar: A small candle contained within the previous candle, signaling accumulation before a breakout

Three Price Action Strategies

1. Breakout Trading Strategy(

Wait for the price to break important support or resistance zones, then follow the trend.

Steps: Identify clear support-resistance zones → Wait for the price to “close” outside the range → Enter order in the direction of the breakout

Caution: False Breakouts )เบรกหลอก###—the price breaks but then pulls back. Safer approach is to wait for a retest and a Price Action signal.

( 2. Trend-Following Strategy)

“Buy the Dip” in an uptrend and “Sell the Rally” in a downtrend.

Steps: Confirm the main trend → Find support in an uptrend → Wait for a pullback → Look for reversal signals via Price Action → Enter buy

Advantages: Better entry cost and clear Stop Loss points

( 3. Reversal Strategy)

Identify the highs or lows of a trend ###difficult but highly rewarding(.

Steps: Find a long-term trend → Look for signs of momentum loss → Protect against false signals → Enter when structure )HH, HL### is broken

Getting started with Price Action trading

( Step 1: Read a blank chart

Turn off all indicators. Choose one asset )such as EUR/USD(. Start with the Daily chart:

• Draw support-resistance zones )zones(
• Identify the trend
• Look for key Price Action candlestick patterns
• Observe what happens next

Repeat until you see a pattern

) Step 2: Create a trading plan

The plan must be clear and include:

• Entry conditions: Buy when you see a Bullish Pin Bar at the Daily support in an uptrend
• Stop Loss: Place below the Pin Bar wick or support zone
• Take Profit: At the next resistance or when Risk:Reward reaches 1:2

Step 3: Practice before real trading

Use a demo account with a platform that has tools for 3-6 months. Practice until you can follow the plan consistently.

( Step 4: Trade with small real money )size(

Start with the smallest lot size you can risk comfortably. The goal is not to make huge profits but to follow the plan and manage emotions.

5 Tips for professional Price Action trading

) 1. Larger timeframes matter more

Signals on 1-minute charts may be noise, but the same signals on Daily or Weekly charts are highly significant. Start from larger charts ###Week/Day### and zoom in ###H4/H1(.

) 2. Context is more important than pattern

Pin Bar does not always mean “sell.” A Pin Bar in the middle of a strong trend may mean nothing. But a Bearish Pin Bar at a major weekly resistance after a long rally? That’s a significant sell signal.

3. “Less is more”

• Use blank, higher timeframe charts
• Trade only 3-4 times per month
• Wait for A+ setups where everything aligns (big picture, position, signals)

( 4. Record your trades

Take screenshots before and after trading. Write down reasons and review weekly. This is the fastest way to learn.

) 5. Price Action is a risk management tool, not a magic wand

No strategy is 100% accurate, but indicators clearly show stop-loss points. Successful traders win only 50% of the time but make twice the amount when they win ###Risk:Reward 1:2(, resulting in long-term profitability.

The conclusion

Price Action is not about making noise but about listening. The Thai-language pdf on Price Action that is widely discussed remains a guide traders use for study. The advantage of this method is that it is never slow like indicators, applicable to all assets and timeframes, and makes trading simpler yet sharper.

The key secret is patience: practice reading blank charts, manage risk strictly, and record lessons from every trade. Ready? Start your journey with Price Action today.