4h
KNOW WHAT TO LOOK FOR IN A RANGE PATTERNThe market is working a range pattern the majority
of the time which is good news if you know what to look for.
Range patterns are full of information that will help you anticipate what comes next, so you can trade. Here are 3 examples that will make you chart smarter!
The first chart is my personal favorite range pattern. When you see a well established range, watch for price to "overshoot" your expected high or low. When that happens, get ready! As soon as it goes past the expected high or low, place pending orders to sell from the top or buy from the bottom. If price comes back to the range, it will come back fast!
The 2nd chart is an example of past performance predicting future price movement. During a range pattern, look back 15 bars from the middle of the range, and anticipate the market moving that far in the opposite direction. In this example, the solid arrow is predictive of the dashed arrow.
The last chart is an example of how the typical slow or no momentum you would expect is happening in the middle third, shaded in orange. To and from the outer edges of the range, momentum shows up.
4H Ichimoku 4H Kijun (updated crypto settings) is as reliable a dynamic S/R system as any, in my experience. Not magic, just maths.
USDCAD 4h Educational PostObserve the chart for a moment, and you will see the support trendline.
Now, price on the 4h candles has broken below this support trendline, but has never closed below it.
After the first three points on the trendline, illustrated by the first 3 circles, the trendline was established as valid.
(It generally is considered that 3 points are necessary for a level to be valid)
After the 3 points, the trendline was established, and even though there were 2 more circles after that, where candles went below the trendline, the 4h candles still closed above. The wicks in the last 2 points indicate that bulls reversed price in time for the 4h candle to close.
This trading week closed pretty nice for this pair, the third to last candle's lower shadow is as long as the body, and the following candle is very strongly bullish.
Therefore, I will be looking at a long position next week.
A lesson one could take away from this is that you should never take a trade that uses an unclosed candle, because it still has time to form completely differently, and it is a mistake that is very easy to avoid.
- For example, look at the two candles in the fourth circle: sure price went 30 pips below the trendline, but it did not close there. I can already tell you that there were traders that took this short position without waiting for that candle to close. Patience is key.
Another lesson is that higher time frames take precedence over shorter ones. One should not trade a 5 minute double top formation on a 1h or 4h,200 pip uptrend.
