WEEKLY TRADE REVIEW OF ANALYTIC SUNDAY EP2This video contains before and after, of my analysis ffor the week and reasons why i got in when i did.
every step is well explained and detailed
Candlestick Analysis
What Is Imbalance Of Price Action Orders?What Is an Imbalance of Orders?
An forex imbalance of orders exists when there are too many (either buy or sell) orders of a listed pair that cannot be fully matched by the opposite order on an exchange. This applies to either buy, sell, or limit orders. An imbalance of orders is also referred to as an "order imbalance."
Good news would increase the demand (buy orders) for a certain pair and would also make it attractive to hold onto. Likewise, unexpected negative news can bring a large sell-off (sell orders) and little demand for a pair that does not look promising. HIGH impact news can leave imbalances on charts- especially on 1hr or 4hr charts during a trading session. These are in my top five easy scalps or day trading trades to do during my trading. << Should be yours too!!!
Things to be aware of with Forex imbalances area:
1) Order imbalances exist when there is an excess of buy or sell orders for a specific Forex pair.
2) Most order imbalances are short-lived but can exist for hours and even the entire day.
3) Using limit orders rather than market orders can help mitigate some of the problems with buying or selling during order imbalances.
Some traders trade before or during high impact news hits certain pairs- SMART play is to wait for that one hour candle to close- and IF you see an either buy or sell imbalance in 1 hour candlestick (no price action either right or left of that candlestick and zero WICKS either)- wait for price action to reverse current trend to negate the imbalance (either buy or sell)- the opposite way. Those are easy trades- but always use risk management on all trades you do.
High impact news can leave these areas of imbalance on any timeframes (yes, gaps in price actions are considered imbalances in price too). Look for big huge candlesticks or gaps left on charts (big banks are buying or selling). A reversal point happens when filling of big orders changes the price behavior. I look and trade these price reversals when price action closely consulates around major quarter point levels ).000 or .500 levels. Then shows me one of the three following candlestick set ups (only ones I trade and need in trading): Harami (2 candles), Engulfing (2 candles) and/or Pinbar (3 candle) setups.
Look for: Large candlesticks, with no candlesticks left or right on candlestick and have zero WICKS/SHADOWS in that area either. (this is a clue/hint). RSI line (purple) when up thru BASE line (yellow) and above 50 on RSI- so only trade noted had liquidity, momentum & volume to rock price action up or visa versa.
USD/CHF How To Trade Accumulating Pair With Spinning TopsThis Is An Educational + Analytic Content That Will Teach Why And How To Enter A Trade
Make Sure You Watch The Price Action Closely In Each Analysis As This Is A Very Important Part Of Our Method
Disclaimer : This Analysis Can Change At Anytime Without Notice And It Is Only For The Purpose Of Assisting Traders To Make Independent Investments Decisions.
Learn How to Trade Wedge Patter | Full Strategy Explained 📚
Hey traders,
In this video, you will learn how to trade wedge pattern.
We will discuss the theoretical basics of this pattern.
Then, on a real market example, I will show you how to spot and trade it.
❤️Please, support this video with like and comment!❤️
Strong Trading Strategy, Do not trust all the pin barsThe pin bar pattern is one of the best signals on any market for predicting the next move. But should you trust all pin bars? In my humble opinion, NO, and I’m explaining this idea below and the approach I take to distinguish valid pin bars from invalid ones.
I suppose you already know what is a pin bar, so I’ll not explain its basic details here. If you don’t know please, do a search and read its basics first.
I have 3 filters for my pin bars. Find them below and boost the idea if you liked it :)
1- What should it look like?
In my opinion, having a candle with a shadow (wick) longer than the other and a small body is not the only factor to call it a pin bar. I filter pin bars by expecting some pre-defined proportions and ratios between body size and shadow lengths. Here are my rules:
The body must be at least 2% of the candle height.
The long shadow must be at least 4 times bigger than the body.
The long shadow must be at least 2 times bigger than the short shadow.
I know you are rightly thinking about how to calculate them, but do not! There is a simple indicator that does this calculation and highlights the pin bars for you, the Abnormal Pin Bar indicator . You just need to set it up with your values. You can even set up an alert to let you know when a pin bar is shaped.
These are my rules and values that fit my strategy, you can use them. Also you can do your own tests to find the values that fit your psychology and your strategy. You can say you prefer a pin bar that has a bigger body than yours! it’s okay, just do your own tests to make sure it works for you.
2- What is behind that?
Always inspect the smaller timeframe to check if the sub-candles that shaped the pin bar confirm its bearishness or bullishness. Yes, you should always see the big picture but remember, all the moves start from smaller timeframes. You shouldn't expect too much from a movement with bad groundwork.
For a bullish pin bar, its bullish sub-candles must overcome the price action and volumes of its bearish ones, and on the other hand, for a bearish pin bar, its bearish sub-candles must surpass the price action and volumes of its bullish sub-candles.
It would be nice to write a long and detailed article about bearish and bullish sub-candles competition and when they overcome each other. It's not something you decide just by comparing the number of bullish and bearish sub-candles! Long story short, it’s all Price Action and Volume Analysis. and my favorite one is when the volume of sub-candles in one direction surpasses the volume of the candles in the opposite direction. Or you can look for volume and price anomalies.
What is the volume and price anomaly?
The volume and price anomaly is a simple pattern that occurs in two consecutive candles. Assuming two descending candles or two ascending candles in a row, if the body of one candle is bigger than the other one, we expect its volume to be larger, or if the body of one of them is smaller, we expect its volume to be small. Now, if this pattern is not observed for two consecutive candles, we call it a volume and price anomaly.
For example, a candle has a larger body than the previous candle, but its volume is smaller than the previous candle. Or a candle that has a smaller body than the previous candle, but its volume is greater than the volume of the previous candle!
Anomaly Confirmation Candle:
In most cases, after the volume anomaly, I wait for a confirmation candle. This candle will be a bearish candle for a bullish anomaly and will be a bullish candle for a bearish anomaly. The volume of the confirmation candle is very important in anomaly, and in addition to its shape and size, you should also pay attention to its volume.
I just explained the anomaly here to give you a point of view and perspective. I don't want to make this idea overlong so I do not go into more details. Maybe it would be a subject for another idea ;)
In which timeframe should the inspection be done?
You will understand which timeframe you should choose to inspect a pin bar sub-candles by experiencing it over time, but I personally consider two things:
1- The timeframe must be well-known and be used by not only me but also by most traders.
2- It must contain at least 4 sub-candles. e.g. for a daily pin bar, 12h reveals only 2 sub-candles while 4h reveals 6.
For example, for a closed daily pin bar, it would be a good check to inspect candles for the 4h timeframe. or after a weekly pin bar close, you can check the candles of the last 7 days.
Consider this instruction and practice on the chart to see the result.
If one of the pin bars in sub-candles is also a pin bar, do the same inspection for it.
3- On there any key level around?
A pin bar is an important pattern but one that touches a trend line or any important level is leading! The combination of a key level and a valid pin bar is something very valuable and instructive. It's definitely not to be missed, provided you do your own analyses.
Prioritising trend lines and important levels always makes my decision easier when a pin bar spawns near to more than one significant level.
Check twice if you face a pin bar in peaks, troughs, resistance or support areas, supply and demand zones, or as a rejection from a trend line.
You can use the Trend Key Point indicator to highlight important levels. Additionally, there is a guide about its usage .
Bonus Tips:
Pin bars on bigger timeframes are more reliable.
If there are lots of pin bars shaped on a chart, think twice, select a bigger timeframe, or do not use this strategy on that specific asset.
For two valid pin bars in a row, the one with a bigger volume is more important to me.
Check twice if the volume of a pin bar is bigger than the volume average.
Check twice if the volume of a pin bar is bigger than the volume of its previous candle.
Do you have any questions? ask in the comments.
Do not hesitate to write your opinion about this idea.
I'd appreciate if you share this idea with your network.
The Inside Bar ConceptThe Inside Bar is a lovely pattern that shows consolidation in a valuable way. As you can see the candle parent candle creates the high and low that will low key to know the consolidation is over. Price staying inside this area tells you so many things !
1. The Market volume is low in terms of trades being executed on the instrument.
2. Where price is at fair value
3. When price action is ready to leave fair value.
Take a look at your chart and back test this. You will be amazed !
How To Profit With Trades in DrawdownHey Trading Friends. Did you know you can still make money with trades being in drawdown. In this video, I show you through 4 trades I myself have taken.
If you have questions about drawdown I'd love to chat with you. You can reach me in the comment section.
[Candlestick Patterns] Just need to know these three!#Candlestick #CandlePattern #Tocademy #Tutorial
Hello traders from all over the world, this is HAMZA_ZDH=)
I was unexpectedly surprised by many of you who liked and supported my last post about the basic concept of TA( Technical Analysis ). Today I prepared a brief lecture about the Candlestick Pattern, one of the most fundamental phenomenon and behaviors that traders must be well-informed. In fact, we should be very familiar with these textbook contents and interpret it in a glimpse on the technical chart unconsciously. Just like we don't pay direct attention about each breathes when breathing, like we don't care each and all of the alphabets when we speak, or like we don’t perceive location of each keyboards every moment as we type, this very technique should be performed automatically and quickly by observing dominant formations of candlestick bars.
As a matter of fact, comprehending market trends and price actions only by referring to the candlesticks is yet too spurious. It should be used in such a way to weight on certain scenarios in a macroscopic view, rather than deriving precise and specific PRZ(Potential Reversal Zone)s and distinguish the accurate market trend. It’s never like ‘The price must go up because this pattern just appeared’. Furthermore, I strongly believe that the reliability of the candlestick pattern strategy is declining especially in recent financial market, where we encounter countless non-traditional and abnormal situations that were not very common in the past. Hence among the existing ‘Textbook’ candlestick pattern strategies that can easily be found on Google , there are particular patterns that are still very reliable on current market and there are ones that are not as reliable as it used to be. So here, I will organize everything very clearly for you guys.
Shooting Star Candlestick
What is the Shooting Star Pattern?
1. A shooting star is a type of candlestick pattern which forms when the price of the security opens, rises significantly, but then closes near the open price.
2. The distance between the highest price of the day and the opening price should be more than twice as large as the shooting star’s body.
What does Shooting Star tells you?
1. Shooting stars signals a potential downside reversal and is most effective when it forms after 2-3 consecutive rising candles having higher highs.
2. A shooting star opens and rises strongly during the trading session, showing the same buying pressure that is seen over the last trading sessions.
3. At the end of the trading session, the sellers push the price down near the open.
4. This shows that the buyers have lost control by the end of the day, and the sellers have taken over.
5. The long upper shadow indicates that the buyers are losing position as the price drops back to the open.
6. The candle after the shooting star gaps down and then moves lower on heavy volume.
7. This candle helps in confirming the price reversal and indicates that the price will continue to fall.
Trading Scenario
1. Trade Entry: Before you enter a shooting star trade, you should confirm that the prior trend is an active bullish trend.
2. Stop Loss: You should always try to use a stop-loss order when trading the shooting star candle pattern.
3. Taking Profits: The price target for this trade should be equal to the size of the shooting star pattern.
Limitations of Shooting Star
1. One should not only rely on a candle pattern like in a shooting star for making trading decisions.
2. This is why confirmation is required, one can confirm by the next candle or other technical analysis indicators.
3. One should also use stop losses when using candlesticks to control the losses.
4. A candlestick pattern is more significant when it occurs near an important level signaled by other forms of technical analysis.
OXY, A TRUE example of FALSE break out !Regardless of what legendary investors (Like Warren Buffett ) or famous traders do, we always should trade our own strategy.
OXY was fighting with a strong static resistance and finally lost the battle. We have 9 hits to this static line which shows how powerful it is.
False break outs are among the most common traps in trading . Although the concept is very simple , many traders fall simply into the trap just because of lack of patience or weak risk management strategy.
Please keep this words in mind and I promise you will be the winner in long term : " Be sure about a break out before jumping into a trade " .
True break outs have three conditions:
1. Break out should be done by a strong high volume bullish candle and at least 50 % of body of such candle should be placed above the valid resistance.
2. A pull back to broken resistance and rotation is necessary to be sure about true break out. Please note sometime we may not see a complete pull back ( if there is a support before broken resistance) but who can accept the risk of false break out?
3. Continuation of movement in direction of break out.
Occidental Petroleum fulfilled first condition in it's last attempt ( if we close our eyes to volume) with a gap up bullish candle above the resistance. It made also a pull back but no rotation and continuation of the upside movement came after that. It means we had a false break out.
I investigated false break outs of a dynamic resistance in my previous publication on BTC and here I showed an example of false break out of static resistance. Regardless of type of resistance (dynamic or static) , concept is the same.
True break out setup has been shown on the chart. As you see the concept is very simple. Please keep this concept in mind and believe me you won't regret.
Wish you huge profits and good luck.
Pro Traders Take Profits on EarningsWhat happened today on the earnings announcement by PEP? Pro traders took profits against the retail crowd's buying on the news headlines that suggested an earnings "beat" for Q2. The retail buying causes the gap up at open, which is a prime cue to take profits on swing trades.
This was what we call a pre-earnings run. The earnings results don't matter as much as the technical setup a few weeks ahead of the earnings release. Swing trades were initiated at the reversal from the support at 155, confirmed by price and volume patterns at that time.
Now, with resistance overhead, where the initial target for this earnings play was, and the retail crowd causing a gap up at open on the earnings announcement, this is where professional short-term traders close long positions. This should not be construed as a good opportunity to short swing-style, however. It is an example of the execution of a long swing-style earnings strategy.
This is an example of TechniTrader's Relational Technical Analysis techniques for planning better trades.
Candles continued.So here I am following on from the previous post, we have moved to the 4H chart, and I have taken a deeper delve into how to filter the candles out to find optimal ones, and look here, all the Bullish engulfing under the moving average... very poor performance, but the Bearish engulfing that is rejecting the moving average, remember previous post we talked about what price is attempting on pullbacks to the moving average? also has an orderblock rejecting as the moving average is down, remember what that tells us?? I will post the links to them under this post so you can go back over it. The Bollinger band squeezed just before aswell before the expansion. What to take away... Patience and optimisation! make the rules to your system click! do not react to every candle, find where price has action!
3 Types of Charts You Must Know 📈
Hey traders,
In this post, we will discuss 3 most popular types of charts.
We will discuss the advantages and disadvantages of each one, and you will decide what type is the most appropriate for you.
📈Line Chart.
Line chart is the most common chart applied by analysts. Reading financial articles in different news outlets, I noticed that most of the time the authors apply line chart for the data representation.
On a price chart, the only parameter that the one can set is a time period.
Time period will define a time of a security closing price. The security closing prices overtime will serve as data points.
These points will be connected with a continuous line.
Line charts are applied for displaying an asset's price history, reducing the noise from less volatile times.
Being simplistic, they can provide a general picture and market sentiment. However, they are considered to be insufficient for pattern recognition and in depth analysis.
📏Range Bar Chart.
In contrast to a line chart, a range bar chart does not consider time horizon. The only parameter that the one can set is a price range.
By the range, I mean a price interval where the price moves. A new bar will be formed only once the prices passes the desired range.
Such a chart allows to completely ignore time variable focusing only on price movement and hence reducing the market noise.
The chart will plot new bars only when the market is volatile, and it will stagnate while the market is weak and consolidating.
Accurately setting a desired price range, one can get multiple insights analyzing a range bar chart.
🕯Candlestick Chart.
The most popular chart among technicians and my personal favorite.
With just one single parameter - time period, the chart plots candlesticks.
Each candlestick is formed as a desired time period passes.
It contains an information about the opening price level, closing price, high and low of a selected time period.
Candlestick chart is applied for pattern recognition and in-depth analysis. Its study unveils the behavior of the market participants and their actions at a desired time period.
Of course, each chart has its own pluses and minuses. Choosing its type, you should know exactly what information do you want to derive from the chart.
What chart type do you prefer?
❤️If you have any questions, please, ask me in the comment section.
Please, support my work with like, thank you!❤️
2 Steps in Drawing a Downtrend Channel A buying strategy in a downtrend.
How to identify buying opportunity in a downtrend?
Not my preference to buy in a downtrend, but that does not mean we should avoid it when buying opportunity arises.
Recognizing it is a downtrend, we keep our buy position short-term; as we are going against the trend.
Discussion: Rules in constructing a downtrend parallel trendline
Rule 1 – First the downtrend line
Rule 2 – Then, its parallel
Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
Bounce Risk for Selling ShortStocks that are falling rapidly often have the illusion that they will never stop falling. The panic that settles into the mindset of an investor who is watching his or her profits and capital erode overnight can overwhelm a stock’s price action. So for a brief time, the stock can behave outside of what the chart patterns would suggest was reasonable. But the higher risk is always the bounce.
Stocks can bounce without warning. Huge up days that form in a downtrend can cause significant losses for short sellers.
A stock bounces because it hits a price point where:
1. b uyers are waiting to go long
2. where large-lot short sellers are preparing to exit
Monthly and yearly highs are areas where there is risk for a bounce. These bounces are often caused by small-lot investors and traders perceiving this as a good place to buy a stock that has corrected. The old adage, “buy low and sell high,” prompts the uninformed to buy as a stock is running down without understanding the dynamics of a downtrend. So they buy at monthly and yearly highs when they are called out by the various news and trading chat forums: “XYZ has hit its 52-week price, this is a good time to buy XYZ.”
Another big bounce area is far more important: the monthly lows and yearly lows. This is the price range where the wiser bargain hunters and bottom fishers lurk around. They know that low area is solid support and that a downtrending correction isn’t going to last on a strong company. Therefore, lows pose even bigger risk of bounces that actually can reverse the downtrend, especially if the steep descent has been underway for some time.
A stock may nearly pierce through a sturdy support level, reach the yearly low and then suddenly make a V-shaped short-term bottom or shift sideways depending upon the strength of the stock and company. These sudden changes of trend catch many short traders unaware and create larger losses than monthly and yearly highs.
Sideways patterns also create sturdy support levels where large bounces can occur for the rapidly falling stock. Moving averages for long-term trendlines are another area of strong support where bounce risk is high.
How to avoid bounces for selling short:
Identify each area where a stock could bounce. This includes the highs and lows of sideways action from prior years. Identify long-term moving average support on weekly charts. Identify monthly and yearly the highs and lows.
After you have identified all support areas, determine if this support will be weak, moderate, or strong. Weak support will seldom cause problems for a falling stock and usually a resting day, at best, will form. Moderate support can cause a bounce that can take out tight stop losses and strong support can potentially wipe out a wider stop loss for a bigger loss.
It is important to calculate the point gain to the lean side when selling short because bounces can occur before the support is actually touched. And do not be fooled by the falling stock that runs just beyond the support level--often a small run beyond the lowest low is just a ‘gottcha’ sell short entry for bargain hunters. This is the area where you will find the larger reversal candle patterns.
Selling short is a faster-paced trading condition. It can be more lucrative with faster profits than the upside at times, but you must have plenty of experience to watch for high-risk areas in the downtrend and a strong mental attitude that allows you to cut losses quickly.
A simple strategy for low timeframesHello, good morning, I want to introduce a simple strategy to those who trade in low frame time.
For example, I'm on the Dow Jones chart for 5 minutes at a time frame
Take a closer look at this backtest
You must first find support and resistance levels
In the next neighbourhood, be patient until the price hits that level
Now wait for the first candle to form relatively independently of that surface
By independent candlestick, I mean to see a candlestick that starts to form without contact with the surface and closes in such a way that it does not come into contact with that surface again.
A candle that has no contact with the desired surface either at the beginning or at the endpoint.
We can now expect the price to move with the size of the independent candlestick length.
simply
To better understand, watch the image or ask a question after watching it.
I should mention that i always consider one unit of profit and one and a half units of loss
PRICE ACTION TRADING | THREE TYPES OF TRIANGLES YOU MUST KNOW 📐
Hey traders,
In this post, we will discuss 3 simple and profitable types of a triangle pattern.
1️⃣The first type of triangle is called a descending triangle.
It is a reversal price action pattern that quite accurately indicates the exhaustion of a bullish trend.
Setting a new higher high the market retraces and sets a higher low, then bulls start pushing again but are not able to retest a current high and instead the price sets a lower high and drops to the level of the last higher low setting an equal low.
The price keeps trading in such a manner setting lower highs and equal lows till the price sets a new lower low.
Most of the time it gives a very accurate signal of a coming bearish move.
Please, note that a triangle formation by itself does not give an accurate short signal. The trigger that you should wait for is a formation of a new lower low.
2️⃣The second type of triangle is called a symmetrical triangle.
It is a classic indecision pattern. It can be formed in a bullish, bearish trend, or sideways market.
The price action starts contracting within a narrowing range setting lower highs and higher lows.
Based on them, two trend lines can be drawn.
Breakout of one of the trend lines with a quite high probability indicates a future direction of the market.
3️⃣The third type of triangle is called an ascending triangle.
It is a reversal price action pattern that quite accurately indicates the exhaustion of a bearish trend.
Setting a new lower low the market retraces and sets a lower high, then bears start pushing again but are not able to retest a current low and instead the price sets a higher low and bounces to the level of the last lower high setting an equal high.
The price keeps trading in such a manner setting higher lows and equal highs till the price sets a new higher high.
Most of the time it gives a very accurate signal of a coming bullish move.
📍Please, note that a triangle formation by itself does not give an accurate long signal. The trigger that you should wait for is a formation of a new higher high.
Learn to recognize such triangles and you will see how accurate they are.
Let me know what pattern do you want to learn in the next post?
❤️If you have any questions, please, ask me in the comment section.
Please, support my work with like, thank you!❤️
day trading forex strategies price action for beginnersIn this video, you will see me analyse my forex watchlists to look for trading opportunities
day trading for forex beginners
day trading forex strategies
forex day trading strategies for beginners
day trading forex strategies price action for beginners
Trade Recap of a Trend Line Break + Retest StrategyI am recapping these previous trade set up. I hope my 600+ followers understand how I do my live market execution trade set ups. What I am looking for in a live trade set up is first wait for the break out. I am looking for a break out candle which closes above a trend line. Next, I am looking for a retest of the trend line.
In the examples below, retest number one is just a plain old retest and not a price action signal. I still like this retest since the candlestick wick touches the trend line and price closes above the trend line.
In retest number two, a price action signal occurs in the form of an engulfing candlestick. I like this set up better than the first one because of the price action signal.
So, my entries are when the candlestick wick touches the trend line. The best entries are when there is a price action signal where the wick touches the trend line or protrudes through the trend line. Note: Trend line has FOUR or MORE touches on the H1 Chart.
RETEST 1
RETEST 2
Candlestick Action | How Candles Are Formed🕯
❗️Japanese candlesticks as a technical analysis tool were invented earlier than others, but they were not widely used immediately. By the name, it is easy to guess that Japan became the "homeland": local rice traders used this method already in the 18th century. However, due to the geographical remoteness and closeness of the country from external "visitors", this type of chart gained popularity much later, when exchange life was already actively boiling in Europe and the USA.
✅What is hidden behind the candlestick chart?
🟢A candle is formed from 4 prices: opening, closing, high and low for a certain period of time. If we take a timeframe of a minute, then each candle will indicate the price movement within this minute, if an hour is inside an hour, if a day is inside a day. The distance between the opening and closing price is the "body" of the candle, and the tails show to what lows and highs the price reached. If the opening price was higher than the closing price, then the candle will be black; and vice versa: if the opening price is lower than the closing price, then the candle will be white. It turns out that candles are, in fact, the psychology of the market, they most accurately reflect the fears and hopes of its participants.
🟢The charts of Japanese candlesticks themselves are valuable for analysis: the resulting models are interpreted as models of reversal or continuation of the trend. It is also important to understand: each individual candle or a combination of candles is just a way of depicting the actions and moods of all bidders for the period we have chosen (day/week/ month, etc.). The fact is that human behavior is quite formulaic in the same situations, and that is why various methods of chart analysis are so popular with investors and traders.
🟢Looking at only one or several candlesticks, a "savvy" viewer can easily understand whether the market is set to rise or fall, change the current trend or its continuation, increase the momentum of movement or its attenuation.
⚠️It is important to understand that the behavior of individual bidders develops into a general market movement, which can be "read" using charts of Japanese candlesticks and their basic models. Therefore, your optimal investment decisions will be supported by the most effective moments of entry or exit from the position, which will significantly improve the financial result.
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DAY TRADING STRATEGY USING TOP DOWN ANALYSISIn this video i walk you through my day trading strategy from higher time frame to lower time frame.
In the video, you will discover;
How to day trade
How to analyze the market from a higher time frame to a lower time frame
How to pick the best trades that win.
How to mark your support and resistance.
How to follow the trend and many more.
What is a Gap in Trading? | Different Types of Gaps Explained 📚
Hey traders,
In this article, we will discuss a very common pattern that is called gap.
In technical analysis, the gap is the difference between the closing price of the previous candlestick and the opening price of the next candlestick.
📈Gap up represents a situation when the price bounces up sharply at the moment of a transition from one candlestick to another. The price gap that appears between them is called gap up.
📉Gap down represents a situation when the price drops sharply at the moment of a transition from one candlestick to another, the price gap between the closing price of the previous candle and the opening price of the next candle is called a gap down.
From my experience, I realized that with a high probability the gap tends to be filled. For that reason, once you see a gap, consider trading opportunities around that.
Depending on the market conditions where the gap appears, there are several types of a gap to know:
1️⃣Common gap appears in a weak, calm market. When the trading volumes are low and the market participants are waiting for some trigger, or the asset reached a fair value price.
2️⃣Breakaway gap appears in a situation when the price suddenly breaks a structure (support or resistance) in a form of a gap.
Such a gap usually confirms a structure breakout.
3️⃣Runaway gap usually appears when the market is growing or falling sharply. It signifies the dominance of buyers/sellers and highly probable continuation. Usually, such gaps are not filled.
4️⃣Exhaustion gap is, in contrast, appears around major key levels and signifies a highly probable reversal. The exhaustion gap is usually confirmed by a consequent strong opposite movement that fills the gap.
Learn to recognize gaps on a chart and learn to interpret them. It will increase the accuracy of your technical analysis.
❤️If you have any questions, please, ask me in the comment section.
Please, support my work with like, thank you!❤️
ERRORS ON PIN-BARSThere are a large number of technical analysis figures, there are many different patterns, but as you know, they do not work 100% of the time.
No matter what you trade, you should always pay attention to the market context and the pin bar is no exception.
Pin bar is a very profitable pattern, provided that you trade it correctly.
Beginners often make mistakes trying to trade every pin bar that is formed in the market.
Today we will try to analyze the most common mistakes of beginners when trading a pin bar.
1. Trading pin bars in trending markets
To begin with, every beginner should learn how to trade a pin bar in trending markets, because any pattern will work itself out if it trades in the direction of the trend.
The trend is still our friend and we should use its strength to open positions.
Look for an entry point on the pin bar in the direction of the trend and avoid losses.
2. Pin bar on daily charts
A trader should be able to trade a pin bar on daily charts, because a daily chart is the best chart for trading. This is a fact.
If you do not know how to trade a pattern on a daily chart, then you will not be able to trade it on smaller timeframes.
As you know, the market is full of trading noise on low timeframes. That is why patterns are most difficult to work out there.
In such noise, false signals appear that confuse beginners, but an experienced trader will be able to determine a really profitable entry point.
3. Market conditions
It is very important to understand where to expect the right pin bar, which will bring profit.
Pin bars can be found anywhere in the market, but this does not mean that each of them will bring you profit. No.
The strongest signals occur near strong levels, it is at such points that it is worth looking for an entrance.
4. Stop loss
Very often, traders trade a reversal pin bar, hoping to catch a trend change.
If you catch such a movement, you can earn a lot, but it's difficult to do it.
The price rarely immediately reverses after the pin bar, the market will fluctuate and if you put a stop loss too close to the position opening point, you may be knocked out.
It is most correct to put a stop loss where the closing of the position will be correct, perhaps a little further than the opening point.
No one wants to be knocked out of position ahead of time and watch the price go where we wanted, but without us.
Conclusion
The strongest signals simply cannot appear everywhere on the chart.
You need to be able to filter out the signals correctly and use the most profitable ones.
To do this, first study the theory, gain experience on older timeframes and only then practice more.
Take your time.
Good luck!
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩💻
