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Candlestick Analysis

Trading Candle - Part 24Today I have removed all past comment balloons as well as the higher resistance line and lower support line so I could highlight the tighter trading range. TUTORIAL Monday's candle formed a Bearish Engulfing pattern. Engulfing candles are reversal candles so today's engulfing candle is indicating a reversal in trend from up to down. This candle is also a very bearish candle. Very bearish candles are formed with the OPEN at or very close to its HIGH and the CLOSE at or very close to its LOW. In addition, a very bearish candle body is TALL with respect to other nearby candles. As a result of this reversal candle, price should now move down to test support. TRADING With this tight trading range, I would not try to place any trades until price action moves outside this range.
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by ForexFloorTrader
2
Trading Candles - Part 23TUTORIAL Looking at the Monthly Candles. Price action in February and April formed a Hammer candle pattern. A Hammer is a reversal pattern. While these two candles are considered reversal candle patterns they are not strong reversal candle patterns as they did not Close above their Open. A Strong Hammer pattern would have closed above the Opening price level indicating the market was moving into new higher territory for the month. TRADING There is one problem we need to be careful about when it comes to Hammers that are not strong Hammers and that is their Low price is often retested. For this reason, it is advisable to wait for a confirming candle before making any trade decisions. NOTE These tutorials are not meant to be market analysis so they do not go into that detail. These tutorials are meant to simply teach what each candle is saying as they are formed each day during the market environment.
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by ForexFloorTrader
Trading Candles - Part 22TUTORIAL Today's candle formed a Neutral candle. Looking at the anatomy of today's candle the High and Low made a higher high and a higher low indicating the trend remains upward. However, the Close of today's session closed midway between the high and the low showing a balance of trading strength from both the buyers and the sellers indicating a neutral trading session. Further, the size of the Real Body is quite small compared to the size of the real bodies of the candles just before it. This indicates a low momentum trading session. With today's session being a Friday it is no surprise the session would be a low momentum session and a neutral session as these characteristics are common on a Friday. TRADING A trader holding a Long position should continue to hold its position. A trader who is not holding a Long position should not take a Long position. Taking a Long position now is high risk and is considered chasing the market. There should be no traders holding Short positions at this point in the upward trend.
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by ForexFloorTrader
Trading Candles - Part 21TUTORIAL Today's candle was a very bullish candle. Looking at the anatomy of today's candle notice Close is above its Open indicating a bullish candle. The long lower Shadow of the Candle indicates a rejection of lower prices as buyers overcome the sellers. The candle also has a short upper shadow indicating little rejection of higher prices. Lastly, the candle Closed near its High indicating the buyers were firmly in control of the market by the end of the session. All these characteristics of the anatomy of the candle indicate today's session as very bullish. TRADING A trader holding a Long position should continue to hold its position. A trader who is not holding a Long position should not take a Long position. Taking a Long position now is high risk and is considered chasing the market. Traders who are in Short positions should get out of those trades now.
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by ForexFloorTrader
Trading Candles - Part 20TUTORIAL Today's candle was a very bullish candle. The candle was bullish because it Opened at the Low of the session and Closed near the High. The lack of a lower Shadow indicates there were no sellers trying to push the market lower. The lack of a tall upper Shadow indicates the market was not rejecting higher prices. TRADING Today's candle broke out and closed above the High of the Doji that formed two sessions ago and is an indication this market ready to move higher. Recall a Doji pattern indicates market indecision. A Close above the High of the Doji indicates a decision to move higher and a Close below the Low of the Doji is a decision the market is ready to move lower. A Close above the High of a Doji is a trade setup to go "Long". However, we only want to go Long at Support. However, a Close above the High of a Doji that forms in between support and resistance is not a trade setup to go Long put rather indicates upward price continuation. SUMMARY No sellers, no higher price rejection, and a Close above the High of the Doji all points towards a powerful Long trade setup.
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by ForexFloorTrader
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SELLING OFF -_- Welcome : Today I will talk about one of the very important Japanese candles, which is (selling off) one of the most important candles that a trader should know and be careful : This candle comes at the end of the bearish trend to indicate its reversal (this candle indicates that the sellers are about to end and the price may rise). This candle is different, of course, from the other candles which are passive and large shade, its upper tail is short and its lower tail is long. In this example, the triangle was breached with a candle (selling off), and as you can see the price is reversed towards the upside ............. I hope I have benefited you follow and like (-; /
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by DRCPAP_FX
HOW TO recognize TRADING RANGE - TREND is your FRIEND!Hi traders, I didn´t open a trade yesterday, so I decided to record an educational video for you. My favorite topic (and very hard to implant for many traders) is TRADING RANGE. The most most most crucial ability is to recognize if you are in a Trading Range or in a Trend. Every stage of the Market requires a different approach! You can find a lot of complicated tools on the web that describes Ranges... Why make things complicated? My tool is simple - Swing Highs and Lows. They tell us everything about the market. I focus on the theory followed by examples on the SPY ( AMEX:SPY ) chart. Happy trading! Jakub FINEIGHT
AMEX:SPYEducation
by Fineight
2
Trading Candles - Part 19TUTORIAL Today's candle might be called a Gravestone Doji but it is not a Shooting Star. You might call it a Gravestone Doji but the real body is technically too tall. Today's candle is not a Shooting Star as Shooting Star's only occurs after an upward trend but this market is trading sideways in a trading range. If today's candle is not technically a Gravestone Doji then what do we call it? I call it simply as a weak bearish candle and here's why: The upper shadow is a long upper shadow indicating price is rejecting higher prices. If today's candle was a bullish candle I would not expect it to reject higher prices I would expect it to embrace higher prices. The candle closed below its "open". One identifier of a bearish candle is that its "Close" is below its "Open" therefore today's candle is a bearish candle. The real body of today's candle is short or small meaning that its "Open" and "Close" are close together. Small real candle bodies are an indication of a lack of momentum indicating weakness, therefore today's candle indicates weakness. Putting all this evidence together defines today's candle as a "Weak Bearish Candle". TRADING How do we trade today's candle? We don't! Notice the real body of today's candle is contained between the High and the Low of yesterday's Doji. A Long trade setup occurs when a candle closes above the High of yesterday's Doji and a Short trade setup occurs when a candle closes below the Low of yesterday's Doji. Since neither occurred today we take no action.
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by ForexFloorTrader
A CANDLESTICK TUTORIALTHE ANATOMY OF THE CANDLESTICK The CandleStick is composed of three main parts, the Real Body, the Upper Wick, and the Lower Wick. The Real Body is defined as the area between the Open and the Close of the CandleStick. The length of the Real Body represents the momentum of trading during the formation of the candlestick. A "Long Body" also called a "Tall Body" represents a lot of trading momentum during the session. A "Small Body" represents little momentum during the session. The "Upper Shadow" also called an "Upper Wick" represents the area of price rejection. The "High" of the upper shadow represents the maximum extent of higher price rejection during the trading session. The "Low" of the lower shadow then represents the maximum extent of lower price rejection. A candlestick with little to no shadow indicates there was little to no rejection of price at the price extremes during the session and a candlestick with long or tall shadows means the price was rejected. I will go more into price rejection in a later tutorial. SUMMARY 1. The Real Body of the Candlestick represents price momentum during the trading session. 2. The candlestick "Wicks" represents the area of price rejection during the trading session.
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by ForexFloorTrader
1
Trading Candles - Part 17TUTORIAL The latest candle (Friday 4/24/2020) formed a "Bullish" candle. A bullish candle is formed when its real body is approximately the same size as the previous candles, it "Closes" near or at its "High" and has a lower "Shadow" less than 2 times the length of its real body. It looks like a "Hammer" candle pattern but is not a hammer as its lower shadow is not greater than twice the length of its real body. During the formation of the bullish candle it "Opens" at the "Close" of the previous candle, moves lower and then the bulls (buyers) overpower the sellers and push the market upward and "Closes" at or very close to its high. Since the bulls (buyers) were able to overpower the sellers and push the market upward and "Close" at or near its "High" is what makes this a "Bullish" candle pattern. TRADING Although this candle was a "Bullish" candle it still formed a lower high and a lower low indicating the trend is still downward. I would not consider entering a "Short" trade because this candle was a bullish candle. I would want to see a "Bearish" candle to confirm the trend is still downward. Further, I would not want to enter a "Long" trade as the trend is still downward. I would want to see a "Bullish" candle pattern that makes as "Higher Low" and a "Higher High" to confirm the trend is reversing upward before considering a "Long" trade.
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by ForexFloorTrader
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by DerbyT
Trading Candles - Part 16TUTORIAL Today's candle broke out below support and closed the session below support; this is called a "Momentum Breakout". The breakout below support indicates price is ready to continue the downward trend. The "Momentum" part of the breakout means price typically starts to accelerate or increase range, with each day following the breakout. TRADING A breakout and close above a resistance line is a setup to enter the market "long" on the open of the next candle. A Stop Loss is then set below the support level. A Profit Level is then set at the next higher resistance level. A breakdown and close below a support line is a setup to enter the market "short" on the open of the next candle. A Stop Loss is then set above the resistance level. A Profit Level is then set at the next lower support level. In the case of the current market, the next support level is at 1.06547. The reward to risk ratio if I were to take the Short trade would be close to 1:1, a poor ratio. Smart traders do not take trades that are less than 2:1 as it can lead to portfolio disaster. Note: Moving down to a lower time frame may provide a better reward to risk ratio but keep in mind that the lower you go in time frame the higher becomes the overall risk of the trade.
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by ForexFloorTrader
2
Trading Candles - Part 15TUTORIAL Today's candle formed a Spinning Top. A Spinning Top is formed by a small real body with supper and lower shadows less than the length of the real body. By itself, a Spinning Top indicates a drifting market. Notice the Spinning Top's real body remains between Support and Resistance. REFRESHER The green Spinning Top that formed three days ago indicated the market a drifting. Based upon a drifting market I placed a Support line off the low of the Spinning Top and a Resistance line off the high. A breakout above the resistance line would then indicate the market is reversing upward and a breakdown below the support line would indicate the continuation of the downward trend. TRADING A breakout above Resistance would setup a Long Trade. A breakdown below Support would setup a Short Trade.
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by ForexFloorTrader
EURJPYprices likes to repeats time and time again as you can see both trades are the same but the right being the bigger version look at how price moved up with some strong bullish momentum but as seen with price action this played a roll in catching other out buying when they see candles like that, then what happened next we moved up into a correction followed by a double top or the cup and handle as people say for a sell this is why i love looking at price and this gives us better direction but not all the time i would say an edge within the markets but seeing this helps of course,
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by LucasMatthew
Trading Candles - Part 14TUTORIAL Tuesday's candle formed a Doji. A Doji is a candle pattern where the Open and Close are very close together and the candle has both upper and lower shadows. A Doji is a neutral candle and is neither bullish or bearish. The high of a Doji indicates resistance and the low support. As such I draw a horizontal support and resistance line. Notice the Spinning Top and two Doji remains between support and resistance. A breakout above resistance would indicate price is ready to move higher and a breakdown below support would indicate price is ready to move lower. TRADING A close above the resistance line would indicate a Long Trade setup and a close below the support lin would indicate a Short Trade setup.
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by ForexFloorTrader
Trading Candles - Part 13TUTORIAL Monday's candle formed a Doji. A Doji is a candle pattern where the Open and Close are very close together and the candle has both upper and lower shadows. A Doji is a neutral candle and is neither bullish or bearish. TRADING When a Doji is in between Support and Resistance I do not make any trade decisions as a Doji is just an indication the market is taking a break before continuing its trend. However, when price is near a support or resistance level the Doji informs me that a reversal is near. When the Doji is near or at resistance I look for the following candle to close below the low of the Doji; this then forms a Short trade setup. When the Doji is near or at support I look for the following candle to close above the high of the Doji; this then forms a Long trade setup.
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by ForexFloorTrader
Trading Candles - Part 12TUTORIAL Friday's candle formed a Spinning Top. A Spinning Top is formed by a small real body with supper and lower shadows less than the length of the real body. By itself, a Spinning Top indicates a drifting market. However, this spinning top's lower shadow's low price was equal to the low price of the previous candle forming a Bullish Tweezer. A Bullish Tweezer is a trend reversal indicator. TRADING Trading this market "Long" based upon the Bullish Tweezer candle pattern would indicate a counter-trend trade since the major trend is downward.
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by ForexFloorTrader