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Candlestick Analysis

Last Two Hours Of London Session StrategyThis is how to go about trading this last two hours of London session strategy: Works on all Gbp and Eur pairs (and all Major pairs with USD). This is either a scalp or day trading that will reverse mostly direction of current trade (sometimes continue) daily trend for 20 to 40 pips, during last two hours of London session. 1) First look at 4 hour time frame charts ( for trend, momentum and if pair is on support or resistance, etc..) 2) Then enter and exit of either the 5 minute time frame for best entries or 15 minute time frame. 3) I use 10 to 12.5 pip stop loss with targets 20 to 40 pips away depending on ADR (average daily range) of pair and where price is currently at in master Forex cycle of day or week. 4) With right stop, entry and targets this will give you a high winning rate (mostly reversal of daily trend) quick or around two hour profitable strategy, with right risk management. Please back-test. The example chart is on a 15 minute chart related to Trading view not being able to post for public 5 minute charts, but mostly you want to enter and exit all trades via 5 minute frame for this two hour before London close strategy. Would have been a 1:3 risk reward and or 10 pip stop vs 30 pip target- that is great within two hours. On the current example GBPCAD chart.
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by Anbat
Shooting Star (How To Trade)Bearish Shooting Star When it occurs, it will be at the height of a current uptrend — typically an extended trend. It’s a lot like a shooting star falling from the heights of the heavens. At the end of that trend, the stock experiences one last effort to push higher, only to reverse on itself. Hence the name, shooting star. It goes up, only to fall back. Entry Where would you enter? More aggressive traders may anticipate the reversal as the candle is forming. Otherwise, you can wait until the close of the shooting star, enter, and set your stop at the high of the shooting star candle.
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Trend lines (How To Use Them) Trend lines General way of describing the behavior of price over time is the “trend.” A trend is simply the primary direction of price movement in the pertinent window of time. A number of “legs,” smaller-scale price trends that necessarily alternate between uptrend and downtrends – bullish and bearish legs, respectively. When price remains closely within a diagonal range bounded by two parallel lines, this small price range is often delimited with “trend channels,” indicating the upper and lower boundaries of the trend. When price moves within a horizontal range without moving in a clear directional trend, the price’s action is said to be in the “trading range.” There are a few basic rules to bear in mind when drawing trend lines: 1. Tentative trend line - A diagonal line the market bounces off of twice. This trend line is indicative of a potential trend, but is not confirmed and actionable just yet. Two points touching the line, suggests the possibility of a trend in the making, though conventional analysis will not regarding the trend as established until there are three points on the line. 2. Confirmed trend line - The market has bounced off this trend line three times. Conventional analysis regards this as a sign that the trend line is real, and that the market will react around it. It is easiest to trade from a trend when its highs or lows hew closely to a recognizable diagonal line, since this line may be used to predict future highs or lows. Opinions vary on whether trend lines should be drawn from the highs and lows of candles or from the body of the candle, the open and close prices; successful traders can be found employing either approach.
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Dow Theory, AppliedDow Theory is a foundational set of principles that underlies modern technical analysis. One of the main tenants of the theory involves trend confirmation by comparing similarities between equity indices' price behavior. Originally, the Dow Transportation Index was used to confirm trend direction in the Dow Industrial Index. Now things are a bit more complicated, with multiple indices covering a wide array of sectors and ever-evolving niche technologies. To get a confluence of direction across the four major American indices (DJI, SPX, IXIC, RUT) to close the week has not been a simple task. I believe this is one of the reasons why a systemic selloff has been delayed in spite of the increasingly opaque economic picture. There are just too many cross-correlates that offset each other on the basis of what each sector "should" do in such-and-such situation. For example, the notion of fleeing to technology as a safety measure may have manifested as a "real" reaction in the middle of 2020, but it was the media's promulgation of such an idea that popularized it into today's common market wisdom. In any case, I would argue that fleeing into tech will work until it doesn't - and that day is looking closer by the hour. Literally. Just take a look at the four charts displayed above - each of the four indices mentioned sports a bearish hourly candle to close the week. While this is subtle information, I was able to see the price action from a tape reader's point of view, and I will tell you that the price movement during this last hour was categorically different than any I have seen in months. This was real selling; institutional selling en masse. Each of the four underlying ETFs were seemingly stuck in quicksand for an hour and in order to confirm this back=end observation, I turned to the charts after the close. The results depicted above depict consistent heavy selling across all four indices, in the form of nasty looking candles to close the session. Charles Dow and his then-clever, and now-accepted theory, would point to this as a prime example, were he still trying to convince the world of its validity. While nothing is certain in markets, this is some pretty compelling data suggesting that, at the very least, there will be some serious volatility for the first time in a long time. I'm short, but it's not so simple with the other side being a hysterical bubble and all. My suggestion is to get creative and take advantage of the four-way confirm. -ConfirmPig TVC:IXIC CURRENCYCOM:US100 TVC:SPX CURRENCYCOM:US500 TVC:DJI CURRENCYCOM:US30 AMEX:IWM TVC:RUT
TVC:DJIEducation
by UnknownUnicorn5511258
4
3 Bar Reversal Pattern strategy 3 Bar Reversal Pattern strategy Great to trade the M.A.T. strategy or three bar reversal pattern. Measure-Apex-Trigger (three bars) Find an establish trend either bearish or bullish. This reverses trend into a new trend into other direction Rules: 1st candle: Measure Bar- last trending candle before low of trend (apex candle) 2nd candle: Apex Bar (lowest bar in downtrend or highest bar in upper trend)- used to enter new trend going opposite direction 3rd candle: Trigger Bar- makes a new high into bullish trade or new low into bearish trade. Use Apex bar (lowest candle) open for reversal trades going against established trend into new direction Chart example is 1 hr on EurAud would have give you a 1:2 setup of risk/reward using right risk management during this bullish trade today.
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Order Types (How To Set Up)Order Types: Market Order- Placed at market price Limit Order- Entry or exit order placed above or below market Stop Order- Entry or exit order placed above or below market. Rules for Placing Forward Orders: above current price: BAS: Buy Above is a Stop Order SAL: Sell Above is a Limit Order below current price: BBL: Buy Below is a Limit Order SBS: Sell Below is a Stop Order *YOU need to know this prior to trading Forex- always use a entry, stop and target order when entering any new trades. Risk management.
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Top 10 Patterns (Engulfing) #10 BestBullish Engulfing and Bearish Engulfing Candlestick Patterns: Chart example is a bearish one hour that happened on GbpChf. Engulfing Patterns are the strongest and most effective candlestick patterns. The reason is that when they are strong enough, the market usually follows them strongly. They can be the beginning of the strong trends and reversals. There are two kinds of Engulfing Patterns: 1. Bullish Engulfing Pattern- A Bullish Engulfing Pattern forms when a strong bullish candlestick opens below the close price of the previous candlestick. Previous candlestick has to be a bearish candlestick. Then the bullish candlestick goes up and covers the whole body of the bearish candlestick. Finally, it closes above the open price of the bearish candlestick. This pattern which forms on a downtrend, is a reversal pattern and causes the downtrend to reverse and goes up. The formation of this pattern means that bulls have taken the control. It means they have been able to take the price up and close it above the open price of the previous bearish candlestick. The more the bullish candlestick engulfs the previous bearish candlestick, the stronger the reversal signal is: 2. Bearish Engulfing Pattern- Bearish Engulfing Pattern forms by a bearish candlestick that engulfs the previous bullish candlestick.This patterns forms at the end of an uptrend or a bull market:the bearish candlestick has a very strong body that has engulfed the body of two previous candlesticks: That was just the general information about the Bullish Engulfing and Bearish Engulfing candlestick patterns. Indeed, you can locate many of these patterns on all charts and time frames.However, it doesn't mean that each of them can be known as strong reversal patterns that you can take and enter the market. Therefore, you should know how to evaluate and gauge these patterns and choose the strongest ones to enter.
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Top 10 Patterns (Harami) #9Harami and Harami Cross Candlestick Patterns. This reversal pattern is on my top 3 best, on 1 hour or higher time frames. Harami in Japanese language means pregnant. This pattern forms by two candlesticks, the first one is bigger and the other one is smaller. The smaller candlestick is completely engulfed by the body of the first candlestick. It looks like a pregnant woman looking from the side: There are two kinds of Harami. The one that forms at the bottom of a bearish market is a Bullish Harami. And the pattern that forms at the top of an uptrend is a Bearish Harami. Harami is a reversal pattern. Although Harami is known as a reversal pattern, you have to be careful not to take any positions as soon as you see a Harami pattern forms on the chart, because this pattern is not that strong. Only on the longer time frames like weekly and monthly it can be considered as a reliable reversal pattern. I do not trust it on the smaller time frames at all. Even if you trade this pattern on the longer time frame, having a reasonable stop loss is a must. Only under one condition the Harami Pattern can be known as a strong reversal pattern. It is when it crosses Bollinger Upper or Lower Band. Some traders know this pattern as Inside Day Candlestick while its combination with Bollinger Bands makes it a profitable and strong reversal candlestick pattern. Chart example is a Bearish Harami on a one hour chart that broke the upper band of the Bollinger band- that is why you could take the trade with confidence.
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Top 10 Patterns (Pin Bar) #8Pin Bar patterns are in the top three patterns to know: Example is bearish pin bar with nose which happens at a high liquidity time and volume too. Three types of pin bars are: Standard pin bar, Pin bar with nose and Pin bar with no real body. In general, Pin Bars are two types. The bullish pin bar, and the Bearish Pin bar. Bullish Pin Bar signals Long or Buy trade entry, and a Bearish Pin Bar signals the Short or Sell trade entry. Use 1 hour, 4 hour or daily pin bars at major support or resistance for better results. Fib Ret tool helps & pullbacks work. Every pin bar consists of a real body or a head. And a tail or long shadow.The real body is the difference between the opening price and closing price of a candle. So, if the closing price is higher than the opening price of a pin bar, then this types of pin bars are called the bullish pin bar. And if the closing price is lesser than the opening price, then this types of pin bars are called the bearish pin bar. A bullish pin bar is the sign of buyer’s strength and a bearish pin bar signals the strong selling pressure of a certain security. Based on the formation of pin bar, you will find 3 types of valid pin bars in a price action chart. 1- Standard Pin Bar: The first type of pin bar is the standard pin bar, this types of pin bars contains a real body and a long tail. They are the strongest than other two pin bars. You will see no extra shadow or wicks attached to the real body of this types of pin bars. 2- Pin Bar with extra shadow: The second types of the pin bar, is the pin bar with a nose or extra wick attached to the real body. These pin bars are also called as the hanging man. This types of pin bars shows less strong market momentum than the standard pin bars. The nose above or below the real body indicates the opposite directional force and hence shows weakness of the pin bar. 3- Pin Bar with no real body: This type has no real body but a tail. That means the opening price and closing price of the pin bar is same. The signal strength of this types of pin bar is very week. If you can find a strong bullish or bearish candle after these types of pin bars, then this patterns gives a very strong trading signal.
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Top 10 Patterns (Wolfe Wave) #7Wolfe Waves:Example of a bullish Wolfe wave on 15 mn GbpChf chart. Can be both bearish or bullish and on any time frames. The key to recognizing the setup is symmetry. Ideally, waves 1-3-5 are established with very regular timing intervals between moves. The other key ingredient is that the wave 4 should revisit the price range established by waves 1-2 for the best results. Another way to describe the pattern is that it comes as a rising wedge / channel in an uptrend, or falling wedge / channel in a downtrend. Wave 5 is often a false breakout move beyond the bounds of the pattern. Unlike either bull or bear flags, the movement is in the same direction as the overall trend, with the overlapping waves giving signals that an impending reversal is taking shape. This pattern has different names, depending on the source - Larry Pesavento describes the pattern as "3 pushes to a top/bottom" and uses Fibonacci relationships to confirm the setup (waves 3 and 5 are 127% or 162% extensions of the previous pullback.) Jeff Cooper uses "Cooper 1-2-3 swing" nomenclature, and Linda Raschke likes to call this setup "3 indians". The unique quality about Wolfe waves, however, is the objective target projection from waves 1 -> 4. Despite the great explanation and examples provided on Bill Wolfe's site, I continue to get questions about how much I trust this setup. Very much so.
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by Anbat
Top 10 Patterns (Triangles) #6Triangles: Example of bearish triangle on daily AudJpy chart Triangles are also continuation signals like rectangle patterns and flags. Triangle patterns are three types: ascending, descending, and the symmetrical triangle, which is the most common of the three. Ascending and descending patterns are similar to each other. The only difference is that the ascending triangle has a flat upper trend line. In contrast, the descending triangle has a flat lower trend line. The symmetrical triangle has the unique ability to form during both up trends and downtrends of the market, and it appears with converging trend lines. Confirming a continuation is also very simple with the symmetrical triangle as breakout points of the lower trend line during a downward trend is enough indication for the continuation of that downward trend. Similarly, a breakout of the upper trend line during an upward trend is enough indication for the continuation of that upward trend.
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by Anbat
Top 10 Patterns (Flags) #5Example of a bullish flag on 1 hour GbpAud chart: Any time frame and can be bearish too. These are almost similar to wedges in characteristics. The only significant difference between the two of them is the trend line. Trend lines in flags are said to be parallel and not converging like the wedges. Flags can be both bullish or bearish, depending on the circumstances. Bullish flags can be found during an upward market trend with the trend lines running paralleled above and below the price action. To get the confirmation for the continuation of the trend, look for a breakout just above the flag. Similarly, you look for bearish flags during downtrends. They will be easy to spot since they form an upward slope.
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Top 10 Patterns (Ranges or Rectangle) #4On 1 hour GbpChf example- sideways, rectangle, box or ranging price action- do not trade this. This is where a lot of money is lost by retail traders. Now the rectangle is not a reversal pattern like the previous entries on this list. Instead, it is a continuation pattern, which means that it is generally used by traders to confirm whether or not a particular trend should go on. You can either find a bullish rectangle or a bearish rectangle depending on the circumstances that create them. For example, you will find a bullish rectangle during an upward trend and a bearish rectangle during a downward trend. It essentially depicts a trading area where the bulls and the bears compete with each other where they bulls push the price up when the price nears support. The bears move the price down when the price approaches resistance. Look to trade either: Breakouts or Breakouts and then pullbacks to enter any new trades. Chart example showed a 1:2 or 1:3 risk reward setup. Be picky and be patience in the FX trading world.
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Top 10 Patterns ( Wedge Patterns ) #3Example on daily Aud/Jpy pair of a Wedge Pattern ( can be falling wedges and on any time frames): Wedge patterns are of two types, falling wedge as well as the rising wedge. While the falling wedge is associated with bullish reversals, the rising wedge is seen as a bearish reversal indicator. The wedge pattern has over three properties that a trader needs to look for if hunting for it on their charts. Converging trend lines. Decline in volume while the price is progressing through the pattern. A breakout from any of the trend lines. You can spot the rising wedge, usually when a currency's price has been climbing over a reasonable period. However, they have been known to form during a currency price's downward trend as well. As for the falling wedge, it has been observed to form correctly when a currency's price has been on a decline for a while. The pattern's hot spot is just when the market trend is in its final plunge. Of the two, the falling wedge has been noted to be more reliable than the rising wedge in terms of predicting the market's price trend.
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by Anbat
How to be careful from misleading Indicators | XRPUSD reversalAny feedback and suggestions would help in further improving the analysis! If you find the analysis useful, please like and share our ideas with the community. Keep supporting :) Quick glance: In our previous analysis on XRPUSD , we discussed about Ripple losing a massive market cap. Right now, XRPUSD had a massive reversal. It has taken support from the lower Bollinger bands. Market in the last 24hrs The last 24 hours were quite a roller coaster. All major cryptos witnessed a huge selloff including ETH, BTC, DOT and others. Trading volumes also spiked up tremendously. Today’s Trend analysis XRPUSD seems to be having a massive reversal. At the end of the downtrend on the 4H chart, there appeared to be a 'Hammer' formation. However, the patter could not be confirmed as the 2 following candles were red, thereby negating the reversal after the 'Hammer'. Stop losses would have been triggered for traders taking long positions after the hammer. Therefore, it is always crucial to wait for the confirmation candle, even if it eats into some of the potential gains. It hedges against fake-outs! The reversal happened after XRP took support from the lower band of the Bollinger Bands. The volume profile shows the demand zone at $0.8688, which is 40% higher than current levels. Price volatility remained extremely high at approximately 24.53%, with the day's range between $0.5231 — $.6514. Price at the time of publishing: $0.6315 XRP's market cap: $29.04 Billion Out of 11 Oscillator indicators, 9 are neutral,1 is bearish, and 1 is bullish. Out of 15 Moving average indicators, 11 are bearish , 3 are bullish and 1 is neutral . Indicator summary is bearish for XRPUSD in the shorter timeframe. Volumes have spiked up tremendously in the past 24 hours. ---------------------------------------------------------------------------------------- The analysis is based on signals from 26 technical indicators, out of which 15 are moving averages and the remaining 11 are oscillators. These indicator values are calculated using 4Hr candles. Note: Above analysis would hold true if we do not encounter a sudden jump in trade volume . ---------------------------------------------------------------------------------------- Any feedback and suggestions would help in further improving the analysis! If you find the analysis useful, please like and share our ideas with the community. Keep supporting :)
BITSTAMP:XRPUSDEducation
by Mudrex
2
Tweezer Tops and why they're reversal indicatorsHey there. Highlighting one of my favorite candlestick patters, Tweezers. Identifying: Green bar. Red bar. Approximately same size bodies. Wicks are the same height. Ezpz. The story: During an uptrend, everyone is confident prices will continue to rise, so they continue paying more. "Bulls are in control" but really, it's just the average sentiment; prices are going up so everyone wants a piece before it stops. At some point, early entrants take their profits, prices stop rising, and drop a little bit. Some people get nervous and overall confidence drops a little. It retests the price level again, but more people sell so it fails again, and this repeat price-level failure lowers confidence even more. If the price falls back to where this whole thing started, "bears are now in control" but really people have just lost their confidence that price will rise; everyone thinks that the double-tested price level is the max, whereas before they though it would go to the moon. Positive momentum has shifted to negative momentum. Different time frames The fun thing is that this story is the same as that of a double-top reversal pattern, because that's what tweezers are: zoomed-out double tops. Depending on the first bar's open and the second bar's close, it could also be an ascending triangle. So, you don't know if it's going up or down, but you know buyers are more nervous than before the pattern started. If you were to zoom out from the double top, and then zoom out again from the tweezer top, the whole thing would look like a gravestone doji. It would have the same open and close with a long upper wick (not the best example picture since this also has a long bottom tail, but hopefully you get the idea). But not every gravestone doji is a double tests, so tweezers tell the story of the markets a little bit better. At the end of the day though, they all say that prices ran up hard, got rejected, and fell back down hard. Not enough for a buy or sell signal, but if you identify a tweezer top, you now know important price levels and can make slightly better decisions about what will happen in the future if it rises above or falls under them. Good luck!
NYSE:DQEducation
by OverexposedPhotoOfADress
2
📚SPOT A MARKET REVERSAL WITH CANDLESTICK PATTERNS📚 Candlestick patterns are frequently applied for the identification of early trend reversal signs . Here are the three most common reversal formations that you may encounter trading different markets: 1️⃣ - Equal inside bar formation Once the price reaches some important pivot point quite often it tends to form a weak candle with a long rejection wick (long in comparison to the buddy of the candle). In case if the consequent candle's body has the same range, we call that the equal inside bar . It can be treated as the reversal formation ONLY with additional confirmation. Without an additional trigger, chances will be high that the market will start a sideways movement instead . 2️⃣ - Engulfing candle Once the price reaches some important pivot point quite often it tends to form a weak candle with a long rejection wick (long in comparison to the buddy of the candle). In case if the consequent candle's body engulfs (has a bigger range) the previous candle, we call that the engulfing candle . By itself, it is a quite strong reversal signal and can be applied as a trigger for opening a trading position. 3️⃣ - Engulfing candle (2X) Sometimes, the engulfing candle engulfs not only the previous candle but also one more preceding one . We also can call such a candle a high momentum candle . It is considered to be the strongest reversal formation (among these 3) and can be applied as a signal for a trade entry. ❗️ Remember that candlestick patterns work only on strong pivots/structure levels. Being formed on random levels, the performance of these formations is relatively low. ❤️Please, support this idea with a like and comment!❤️
FOREXCOM:XAUUSDEducation
by VasilyTrader
18
📚SPOT A MARKET REVERSAL WITH CANDLESTICK PATTERNS📚 Candlestick patterns are frequently applied for the identification of early trend reversal signs . Here are the three most common reversal formations that you may encounter trading different markets: 1️⃣ - Equal inside bar formation Once the price reaches some important pivot point quite often it tends to form a weak candle with a long rejection wick (long in comparison to the buddy of the candle). In case if the consequent candle's body has the same range, we call that the equal inside bar . It can be treated as the reversal formation ONLY with additional confirmation. Without an additional trigger, chances will be high that the market will start a sideways movement instead . 2️⃣ - Engulfing candle Once the price reaches some important pivot point quite often it tends to form a weak candle with a long rejection wick (long in comparison to the buddy of the candle). In case if the consequent candle's body engulfs (has a bigger range) the previous candle, we call that the engulfing candle . By itself, it is a quite strong reversal signal and can be applied as a trigger for opening a trading position. 3️⃣ - Engulfing candle (2X) Sometimes, the engulfing candle engulfs not only the previous candle but also one more preceding one . We also can call such a candle a high momentum candle . It is considered to be the strongest reversal formation (among these 3) and can be applied as a signal for a trade entry. ❗️ Remember that candlestick patterns work only on strong pivots/structure levels. Being formed on random levels, the performance of these formations is relatively low. ❤️Please, support this idea with a like and comment!❤️
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FOREXCOM:XAUUSDEducation
by VasilyTrader
27
Why? Candlestick AnalysisCandlestick Analysis is the trading language used to understand trading Forex: Cutting Through The Candlestick Hype- The use of indicators will not increase the reliability of candles. There are no advanced candlestick patterns, but there is a deeper understanding of price movements. Why Use Candlesticks? Provides a visual picture of what is occurring. Gives visual insights into others’thoughts and expectations. Gives visual confirmation signals of support and resistance. Can visually align your thoughts with the market. Can visually point to potential reversal points. Candle Language Produces Thoughts- Proper trading is said to be proper thinking, but how do we know what to think? Pattern recognition is a recurring arrangement of price bars that suggests the future movement of prices, which guides our thoughts. These patterns communicate how traders have acted and what their beliefs (expectations) are in that time frame, at the moment. Candles provide a picture of those expectations on an ongoing basis. Those pictures speak to us in “Candle Language”and are the basis for our continuous thoughts and trading decisions. Miscellaneous Thoughts on Candlesticks: Attempting to define accuracy of candle names or patterns without considering the trend, support and resistance is useless.There are a least 50 different candle patterns, bullish and bearish. Some memorize them, but you will see this is completely unnecessary. While candles are very good at visually showing reversal signals, the signals that do Not work are often the most powerful! All that is needed is a chart of price bars --all else is secondary. While other analysis tools may add additional information, they can only follow existing price action.
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by Anbat