How To Catch And Trade Forex Reversals EasilyMarkets reverse because of changing economic sentiment.
That's the easy part. Managing your entries/exits is what needs overall care.
Get consistency with this approach.
Community ideas
Why the US dollar bear should tread with careThe USD saw a sharp reversal higher despite a 50bp cut, simply because the markets were positioned for a more dovish dot plot. I have argued in prior analysis the USD exposure is a bit stretched over the near-term, so perhaps shorting the USD is getting a bit stale. We also have several key markets at inflection points after a risk event. Matt Simpson takes a technical look.
Chart Patterns and Key Signals in Live TradingChart Patterns and Key Signals in Live Trading
Chart patterns are powerful tools used by traders to predict future price movements. These patterns emerge from the price action on a chart and provide visual signals that help traders make informed decisions. Understanding and recognizing these patterns in live trading can significantly improve your ability to forecast potential price trends and execute successful trades.
What are Chart Patterns?
Chart patterns form when price movements of a security, such as a stock or currency pair, follow a recognizable formation or trend on a price chart. These patterns represent the collective sentiment of buyers and sellers, indicating periods of consolidation, continuation, or reversal. Traders use these patterns to anticipate where prices may move next and to identify high-probability trading opportunities.
Key Types of Chart Patterns
Chart patterns can be categorized into two main types:
1. Reversal Patterns: These indicate that the current trend is likely to reverse.
2. Continuation Patterns: These suggest that the current trend will continue after a brief pause.
Common Reversal Patterns
Head and Shoulders
Description: The head and shoulders pattern signals a trend reversal. It has three peaks: a higher peak (the head) between two lower peaks (the shoulders). The neckline connects the lows between the two shoulders.
What to Look For:
Uptrend before formation: This pattern is more reliable if it follows a strong uptrend.
Break of the neckline: The trend reversal is confirmed when the price breaks below the neckline, indicating a bearish move.
Live Trading Tip: Wait for the price to break the neckline and retest it before entering a short position to reduce false signals.
Double Top:
Description: A bearish reversal pattern that forms after an uptrend, consisting of two peaks at roughly the same level.
What to Look For:
Resistance level: The two peaks touch a resistance level but fail to break through.
Neckline break: The trend reversal is confirmed when the price breaks below the support level (neckline) between the two peaks.
Live Trading Tip: Enter a short trade after the price breaks below the neckline and possibly retests the support as resistance.
Double Bottom:
Description: A bullish reversal pattern that forms after a downtrend, consisting of two troughs at roughly the same level.
What to Look For:
Support level: The two bottoms touch a support level but fail to break below.
Neckline break: The reversal is confirmed when the price breaks above the resistance level (neckline) between the two troughs.
Live Trading Tip: Enter a long trade after the price breaks above the neckline and retests it as support.
Common Continuation Patterns
Triangles
Symmetrical Triangle:
Description: A continuation pattern characterized by converging trendlines, where the highs and lows converge toward each other.
What to Look For:
Breakout: The pattern is confirmed when the price breaks out of the triangle, either upward or downward, signaling a continuation of the previous trend.
Live Trading Tip: Watch for increased volume during the breakout to confirm its validity. Enter the trade in the direction of the breakout.
Ascending Triangle:
Description: A bullish continuation pattern with a horizontal resistance line and an upward-sloping support line.
What to Look For:
Resistance breakout: The pattern is confirmed when the price breaks above the resistance level, signaling a continuation of the upward trend.
Live Trading Tip: Enter a long trade once the price breaks the resistance and volume spikes, indicating strong buying interest.
Flags and Pennants
Flag:
Description: A continuation pattern that looks like a small rectangular consolidation phase after a strong price movement.
What to Look For:
Strong trend: The flag forms after a sharp price move, followed by a consolidation phase.
Breakout: A breakout from the flag pattern confirms the continuation of the previous trend.
Live Trading Tip: Enter the trade in the direction of the breakout, especially if accompanied by an increase in volume.
Pennant:
Description: Similar to the flag, but the consolidation phase forms a small symmetrical triangle instead of a rectangle.
What to Look For:
Strong trend: A pennant forms after a sharp move, followed by price consolidation.
Breakout: The breakout signals a continuation of the previous trend.
Live Trading Tip: Trade in the direction of the breakout and ensure there’s an uptick in volume for confirmation.
Wedges
Rising Wedge:
Description: A bearish continuation or reversal pattern where the price forms higher highs and higher lows, but the slope of the highs is steeper than the slope of the lows.
What to Look For:
Trendlines converging: The wedge narrows as the highs and lows converge.
Breakdown: The pattern is confirmed when the price breaks below the lower trendline, signaling a bearish move.
Live Trading Tip: Short the trade once the price breaks below the wedge, especially if volume increases.
Key Signals to Look for in Live Trading
1. Volume Confirmation
Description: Volume plays a critical role in confirming the validity of chart patterns. A breakout or breakdown on low volume can be a false signal, whereas high volume supports the strength of the price movement.
What to Look For:
Volume Spike on Breakout: Look for a significant increase in volume during breakouts from chart patterns. This indicates that more traders are participating in the move and that it has momentum.
Divergence between Price and Volume: If price is moving in one direction but volume is decreasing, it may indicate a weakening trend.
2. False Breakouts
Description: A false breakout occurs when the price appears to break out of a pattern but quickly reverses, trapping traders who acted on the breakout.
What to Look For:
Lack of Follow-Through: After the breakout, if the price doesn’t continue in the breakout direction and instead reverses quickly, this could be a false breakout.
Live Trading Tip: To avoid false breakouts, wait for a retest of the breakout level or look for confirmation in volume before entering a trade.
3. Divergence with Indicators
Description: Divergence occurs when the price of an asset moves in one direction while an indicator (such as the RSI or MACD) moves in the opposite direction.
What to Look For:
Bullish Divergence: When price makes lower lows, but the indicator forms higher lows, signaling a potential reversal to the upside.
Bearish Divergence: When price makes higher highs, but the indicator forms lower highs, indicating a potential reversal to the downside.
Live Trading Tip: Use divergence as a signal to prepare for a trend reversal, especially when combined with chart patterns like double tops or bottoms.
Chart patterns are essential for predicting price movements, but they work best when combined with other tools like volume analysis and indicators. As you gain experience in live trading, you'll develop the ability to spot these patterns more easily and understand how to trade them effectively. Always remain patient and look for confirmation signals before entering trades based on chart patterns.
Market Analysis Techniques for TradersMarket Analysis Techniques for Traders
Navigating the financial markets demands a strong toolkit of analysis techniques. This comprehensive article introduces traders to key market analysis methods, ranging from fundamental and technical analysis to more specialised approaches like price action and quantitative methods.
You can pair your learning with FXOpen’s free TickTrader platform to gain the deepest understanding of these techniques. There, you will find the price charts, drawing tools, and indicators necessary for many of these market analysis methods.
Fundamental Analysis
Fundamental analysis involves the scrutiny of economic indicators, company financials, and geopolitical factors to assess an asset's intrinsic value.
Economic indicators like GDP, employment rates, and interest rates offer a macroeconomic view, while company financials such as earnings, debt ratios, and future projections are microeconomic factors. Fundamental analysts also pay close attention to geopolitical events, like elections or trade wars, which can shift market sentiment.
The strength of this approach lies in its thorough, long-term outlook, making it particularly useful for investors in equities and commodities. However, it is time-consuming and often requires a deep understanding of economic theory. For example, Warren Buffet's value-based approach leans heavily on fundamental analysis, emphasising the importance of understanding the intrinsic value of stocks.
Technical Analysis
Technical analysis diverges from the fundamental approach by focusing solely on past and current price movements and trading volumes. Traders employ various indicators, such as moving averages, Relative Strength Index (RSI), and Moving Average Convergence Divergence (MACD), to predict future price behaviour. Trend lines and support and resistance levels further supplement these indicators, offering visual aids for decision-making.
A famous case is Paul Tudor Jones, who successfully predicted the 1987 market crash using technical indicators. He compared the market’s top in 1987 with the previous peak of 1929 and found notable similarities, demonstrating the power of learning technical analysis.
The advantage of technical analysis in trading is its applicability across different time frames, from intraday to multi-year trends. However, it can sometimes give false signals, known as "whipsaws," leading to potential losses.
Price Action Analysis
Price action analysis, while related to technical analysis, is a more focused method that relies on the interpretation of raw price movements instead of using additional indicators. Traders primarily use chart patterns like head and shoulders, double tops and bottoms, and candlestick patterns such as bullish or bearish engulfing to make trading decisions. Like technical analysis, support and resistance levels are also crucial here.
One of the advantages of price action analysis is its simplicity: no need for dozens of indicators. On the flip side, it can be subjective and open to interpretation, making it less straightforward for some traders. Munehisa Homma, a 17th-century Japanese rice trader, is often cited as an early pioneer of price action analysis. Utilising candlestick charts, he achieved great success and laid the foundation for modern technical analysis.
Quantitative Methods
Quantitative analysis employs mathematical and statistical models to evaluate financial assets and markets. Algorithmic trading, a method that automatically executes trades based on pre-set criteria, is a prime example of the use of quantitative techniques. Traders also use backtesting to validate the effectiveness of a trading strategy by applying it to historical data.
The quantitative approach offers the benefit of speed and precision, but it also carries risks such as model overfitting, where a strategy works well on past data but fails in real-time trading. One notable firm that has achieved exceptional success through quantitative methods is Renaissance Technologies, a hedge fund that’s achieved annual returns of 30%+ through its sophisticated mathematical models.
Sentiment Analysis
Sentiment analysis focuses on gauging market psychology by monitoring news, social media, and sentiment indicators. It seeks to understand how collective emotions are driving market trends. Methods for sentiment analysis include text mining of news articles and tweets, as well as tracking investor sentiment indexes like the Fear & Greed Index.
While sentiment analysis offers a real-time pulse of market psychology, it is also prone to rapid changes, making it less reliable for long-term trading decisions. Notably, traders during the GameStop short squeeze phenomenon in early 2021 relied on sentiment analysis from online forums, turning what seemed like an undervalued stock into a trading frenzy.
Intermarket Analysis
Intermarket analysis extends the analytical lens to the relationships between different asset classes, such as equities, commodities, currencies, and bonds. By identifying these correlations, traders can gain insights into how a movement in one market could influence another.
The advantage of intermarket analysis is its holistic view of market dynamics, but it also requires a strong grasp of global economics. For instance, in the chart above, we can see the price of crude oil with the price of Exxon Mobil (XOM) and BP (BP) overlaid. There is a strong correlation between crude oil’s trend and the trend of these companies’ share prices. Traders could evaluate the bullishness or bearishness of crude oil to set a bias for XOM and BP’s future direction.
Seasonal Analysis
Seasonal analysis examines recurring patterns in markets, often influenced by factors like weather, holidays, and fiscal calendars. For example, retail stocks often rise before the holiday shopping season, and energy commodities can be influenced by demand for transport fuel in summer and heating fuel in winter. Tools like seasonal charts help traders identify these trends.
However, a major challenge lies in the changing dynamics of markets, which may render some seasonal patterns less reliable over time. Investors who had historically profited from buying stock in winter and selling in summer found this strategy less effective in recent years due to evolving market conditions.
The Bottom Line
In summary, a well-rounded understanding of diverse market analysis techniques is key to trading success. Whether focused on long-term investments or intraday trades, incorporating these methods can substantially enhance your trading strategy. For those ready to apply these insights in a live trading environment, opening an FXOpen account can serve as the next logical step in your trading journey.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
A New President's Potential Impact on Oil Prices1. Introduction
The U.S. presidential election in 2024 is set to bring new leadership, with a new president guaranteed to take office. As history has shown, political transitions often have a profound effect on financial markets, and crude oil is no exception. Traders, investors and hedgers are now asking the critical question: how will WTI Crude Oil futures react to this change in leadership?
While there is much speculation about how a Democrat versus a Republican might shape oil policy, data-driven insights provide a more concrete outlook. Using a machine learning model based on key U.S. economic indicators, we’ve identified potential movements in crude oil prices, spanning short, medium, and long-term timeframes.
2. Key Machine Learning Predictions for Crude Oil Prices
Short-Term (1 Week to 1 Month):
Based on the machine learning model, the immediate market reaction within the first week following the election is expected to be minimal, with predicted price changes below 2% for both a Republican and Democratic win. The one-month outlook also suggests additional opportunity.
Medium-Term (1 Quarter to 1 Year):
The model shows a significant divergence in crude oil prices over the medium term, with a potential sharp upward movement one year after the election. Regardless of which party claims the presidency, WTI crude oil prices could potentially rise by over 40%. This is in line with historical trends where significant price shifts occurred one year post-election, driven by economic recovery, fiscal policies, and broader market sentiment.
Long-Term (4 Years):
Over the course of the full four-year presidential term, the model predicts more moderate growth, averaging around 15%. The data suggests that, while short-term market movements may seem reactive, the long-term outlook is more balanced and less influenced by the winning party. Instead, economic conditions, such as interest rates and industrial activity, will have a more sustained impact on crude oil prices.
3. Feature Importance: The Drivers Behind Crude Oil Price Movements
The machine learning model's analysis highlights that crude oil price movements, especially one year after the election, are primarily driven by economic indicators, rather than the political party in power. Below are the top features influencing crude oil prices:
Top Economic Indicators Influencing Crude Oil:
Fed Funds Rate: The most significant driver of crude oil prices, as interest rate policies affect everything from borrowing costs to overall economic growth. Changes in the Fed Funds Rate can signal shifts in economic activity that directly impact oil demand apart from the US Dollar itself.
Labor Force Participation Rate: A critical indicator of economic health, a higher participation rate suggests a stronger labor market, which supports increased industrial activity and energy consumption, including crude oil.
Producer Price Index (PPI): The PPI reflects inflation at the producer level, impacting the cost of goods and services, including oil-related industries.
Consumer Sentiment Index: A measure of the general public's outlook on the economy, which indirectly influences energy demand as consumer confidence affects spending patterns.
Unit Labor Costs: An increase in labor costs can signal inflationary pressures, which could lead to changes in oil prices as businesses pass on higher costs to consumers.
This study exclusively uses U.S. economic data, excluding oil-related fundamentals such as OPEC+ supply and demand information, in order to focus on the election’s direct impact through domestic economic channels.
Minimal Influence of Political Party on Price Movements:
Interestingly, the machine learning model suggests that the political party of the newly elected president has a relatively low impact on crude oil prices. The performance of WTI crude oil appears to be more closely tied to macroeconomic factors, such as employment data and inflation, than the specific party in power.
These findings emphasize the importance of focusing on economic fundamentals when analyzing crude oil price movements for longer term exposures, rather than solely relying on political outcomes.
4. Historical Analysis of Crude Oil Price Reactions to U.S. Elections
Looking back over the last two decades, the performance of crude oil post-election has varied, depending on global conditions and the economic policies of the newly elected president.
Notable Historical Movements:
George W. Bush (Republican): In his 2000 election, crude oil dropped nearly 50% within a year, reflecting the broader economic fallout from the bursting of the dot-com bubble and the events of 9/11. In contrast, his 2004 re-election saw oil prices climb 21.5% within a year, driven by the Iraq War and increasing global demand for energy.
Barack Obama (Democratic): After his 2008 election, crude oil prices surged by 33.8% within one year, partly due to economic recovery efforts following the global financial crisis. His 2012 re-election saw more modest growth, with an 8.3% rise over the same period.
Donald Trump (Republican): His election in 2016 coincided with a moderate 23.8% increase in crude oil prices over one year, as the U.S. ramped up energy production through fracking, contributing to global supply increases.
Joe Biden (Democratic): Most recently, crude oil prices skyrocketed by over 100% in the year following Biden’s 2020 victory, driven by post-pandemic economic recovery and supply chain disruptions that affected global energy markets.
5. WTI Crude Oil Contracts: CL and MCL Explained
When trading crude oil futures, the two most popular contracts offered by the CME Group are WTI Crude Oil Futures (CL) and Micro WTI Crude Oil Futures (MCL). Both contracts offer traders a way to speculate or hedge on the price movements of crude oil, but they differ in size, margin requirements, and ideal use cases.
WTI Crude Oil Futures (CL):
Price Fluctuations: The contract moves in increments of $0.01 per barrel, meaning a $10 change for one contract.
Margin Requirements: As of recent estimates, the margin requirement for trading a CL contract is around $6,000, though this can fluctuate depending on market volatility.
Micro WTI Crude Oil Futures (MCL):
Price Fluctuations: 10 times less. The contract moves in increments of $0.01 per barrel, meaning a $1 change for one contract.
Margin Requirements: 10 times less, around $600 per contract.
Practical Application:
During periods of heightened market volatility—such as the lead-up to and aftermath of a U.S. presidential election—traders can use both CL and MCL contracts to navigate expected price fluctuations. Larger traders might use CL to hedge against or capitalize on significant price movements, while retail traders may prefer MCL for smaller, controlled exposure.
6. Conclusion
As the 2024 U.S. presidential election approaches, crude oil traders are watching closely for market signals. While political outcomes can cause short-term volatility, the machine learning model’s predictions emphasize that broader economic factors will drive crude oil prices more significantly over the medium and long term.
Whether a Democrat or Republican wins, crude oil prices are expected to see a potential increase, particularly one year after the election. This surge, driven by factors such as interest rates, labor market health, and inflation, suggests that traders should focus on these economic indicators rather than placing too much weight on which party claims the presidency.
7. Risk Management Reminder
Navigating market volatility, especially during a presidential election period, requires careful risk management. Crude oil traders, whether trading standard WTI Crude Oil futures (CL) or Micro WTI Crude Oil futures (MCL), should be mindful of the following strategies to mitigate potential risks:
Use of Stop-Loss Orders:
Setting predefined exit points, traders can avoid significant drawdowns if the market moves against their position.
Leverage and Margin Control:
Overexposure can lead to margin calls and forced liquidation of positions in volatile markets.
Position Sizing:
Adjusting position sizes according to risk tolerance is vital especially during uncertain periods like elections.
Hedging Strategies:
Traders might consider hedging their crude oil positions with other instruments, such as options or spreads, to protect against unexpected market moves.
Monitoring Economic Indicators:
Keeping a close watch on key U.S. economic data can provide valuable clues to future crude oil futures price movements.
By using these risk management tools effectively, traders can better navigate the expected volatility surrounding the 2024 U.S. election and protect themselves from significant market swings.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com - This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
A+ Trade Set ups All From Respecting Simple Levels! We identify high-quality trade opportunities by focusing on key support and resistance levels. By respecting these fundamental price points, traders can enhance their decision-making process. Support levels act as a floor where buying interest tends to emerge, while resistance levels serve as a ceiling where selling pressure usually mounts. Recognizing and adhering to these simple levels helps traders pinpoint entry and exit points more effectively, increasing the probability of successful trades and improving overall trading performance.
AMEX:SPY
AMP Futures - News FlowIn this idea we will demonstrate how to access the News Flow feature with Tradingview.
Gold Rush Sweeps Global Markets: What’s Behind the Record Run?The shiny stuff has outperformed stocks by a lot this year, sparking a debate over gold’s characteristics as an asset: is it just a pet rock that does nothing but sit idle, or is it the ultimate timeless store of value that trounces every competitor in times of uncertainty and gloomy outlook?
Gold XAU/USD is so back — the precious metal has outperformed nearly every other megacap asset, including the S&P 500 where 500 of America’s biggest and brightest companies generate returns for shareholders like a restless corporate machine.
Since the start of trading this year, gold is up a solid 25% to hit a record high of $2,590 earlier this week. In comparison, the broad-based Wall Street average, the S&P 500 SPX , is up 18% over the same time span.
Thank the impatient people who bet on prospects and can’t wait for the rumor to materialize. To a fairly big extent, the gains in gold are driven by the prospects of lower borrowing costs. Not the single cut to interest rates , which would be in the ballpark of 25 basis points to 50 basis points. That’s fairly fresh — way before that, early in 2024, investors were high on hopium that they’ll get as many as six slashes to interest rates.
Hopes Fade but Gains Stay
Gold didn’t show any signs of fatigue despite the Fed pushing against the consensus views. It plowed through mixed bags of macro reports showing that the US economy was zig-zagging between hot and cold.
Ultimately, gold won back its reputation as a preferred investment in times of shifting monetary policy landscapes, brewing geopolitical tensions , and overall uncertainty and gloomy outlook for global markets.
The fast-paced, hot-to-the-touch gold market today is in stark contrast to historical performance. During the time frame 2011 through 2018, gold was virtually muted and hugging the flatline with nothing exciting about it.
Right now, gold’s everywhere — from the retail trader’s portfolio to the central banks’ vaults. Global central banks, the money-printing machines with infinite reserves, stacked up the bullion to the tune of 483 tons in the first half of the year, says the World Gold Council. It’s a record since record-keeping began.
Good Guy Gold
But wait, that's not all — gold has buoyed some free riders. Gold-backed assets are partying hard, too. Gold mining companies are whizzing through, riding on massive year-to-date gains with the top performers up about 30%.
Exchange-traded funds with exposure to gold are flaunting big gains as well. These gold ETFs barely flash any red on the year with the top players flexing advances by as much as 50%.
The Great Portfolio Rotation or What’s Opportunity Cost?
By the looks of it, there’s this portfolio rotation into gold in the lead-up to the Federal Reserve’s upcoming interest rate cut. The US central bank is getting ready to knock down the cost of borrowing in an effort to alleviate some of the strain on the economy and lean against a possible recession.
What’s gold’s role in all that hubbub? Gold gets more attractive amid lower interest rates thanks to something called “opportunity cost.” In a nutshell, higher rates generally benefit fixed-income assets like bonds that get you guaranteed returns. And why jam your money into gold when you can ride out the high-rate wave and churn out 5% on the 10-year bond US10Y . That’s opportunity cost — missing out on fun, gains and dopamine while your hands are full with a non-yielding asset. What we’ve seen so far is a marked shift away from it.
Bond yields are falling in anticipation of the Fed’s rate cut, prompting investors to ramp up their long positions in the yellow bars, which are notorious for … well … yielding nothing. In other words, holding gold gets you no yield, interest, or dividend whatsoever, unlike bonds or the US dollar deposits where you can sit around and do nothing and still make money.
The prospects of downshifting interest rates have diminished the opportunity cost of non-yielding gold. Apparently, the shiny metal still has it — whenever the right conditions perk up, gold lives up to its standards of being a safe haven and a store of value.
What’s your take on gold? Do you have a long position in it or you’re a permabear who’s brave enough to short it at the top? Comment below!
USD/JPY may squeeze if Fed delivers dovish disappointmentUSD/JPY looms as a prime squeeze candidate should the Fed disappoint on extremely dovish market pricing, not only likely to benefit from the probable uplift in US bond yields but also recent shifts in market positioning.
USD/JPY staged a decent reversal on Monday after slicing through the Dec 28 low of 140.273, printing a hammer candle on the daily. With RSI (14) nearing oversold territory and breaking the downtrend it’s been in since the start of September, directional risks may be shifting.
I’m not rushing into a long trade just yet, but I am keen to see whether the price holds above 140.273 today. If it does, longs could be established with a stop around 139.60 for protection. Make sure you keep positioning front of mind given how volatile the pair has been recently.
143.63 looms as a suitable trade target with only minor resistance at 141.73 located in between.
Good luck!
DS
SPX 500 Unjustified Bearish moves up and exit strategy explainednot financal advice just seeing many similarities in current market structure that could warrant a 20% correction as we are going thru bearish moves up to the upside.
Looking for a potential breakout of all time highs on VISA!🔉Sound on!🔉
Thank you as always for watching my videos. I hope that you learned something very educational! Please feel free to like, share, and comment on this post. Remember only risk what you are willing to lose. Trading is very risky but it can change your life!
The key to starting a trade is support and resistance points
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As you study candles, you will learn about trend reversal sections.
Therefore, rather than learning the shapes or patterns of candles, when you study them, you will be able to see the support and resistance points and sections made up of the selling area and trend reversal sections in a big picture.
Therefore, rather than trying to memorize the shapes or arrangements of candles, it is important to see whether support and resistance points and sections are formed when such shapes, arrangements, and patterns appear.
The same goes for other studies related to charts.
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As you study candles, you will find that what you have studied appears in the sections where candles are gathered.
These areas are drawn as horizontal lines to indicate support and resistance points.
However, objective information is needed to conduct trading on the horizontal lines drawn like this.
Otherwise, even the support and resistance points you drew will likely become useless lines if you conduct barrack trading because you don't trust them.
Be careful because your psychological state will interfere with analyzing the chart.
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The easiest way to obtain this objective information is the Heikin Ashi chart and the Renko chart.
The Heikin Ashi chart and the Renko chart help you check the trend because they show fewer fakes and sweeps.
(Heikin Ashi chart)
(Renko chart)
Among these, you can immediately see that the Renko chart is a bit easier to find support and resistance points.
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You can think of the points near the end of the blocks on the Renko chart as having strong support and resistance points.
Therefore, among the horizontal lines drawn on the chart above, the 2800.0 and 4000.0 points are the end points of three blocks, so they can be seen as strong support and resistance points.
If you change the Renko chart to a regular candle chart, you can clearly see that it will form support and resistance points or sections.
However, since the Renko chart changes the price in blocks, it is difficult to trade at this point.
Therefore, the Heikin Ashi chart or Renko chart is good to use when analyzing the chart, but it is difficult to trade.
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To compensate for this, we created a horizontal line at the price position using indicators (StochRSI, OBV, CCI, RSI) that have been used for a long time.
The horizontal line connected to the current candle position plays the role of the current support and resistance point.
And, since the longer the horizontal line, the stronger the support and resistance role, you can see that it plays the role of support and resistance even if it is not connected to the current candle.
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The support and resistance points drawn on the Heikin Ashi chart or Renko chart are difficult to use for trading, but you can easily check the support and resistance section by looking at only the 1D chart.
However, in order to display support and resistance points with a general candle chart, support and resistance points must be displayed on the 1M, 1W, and 1D charts.
And, the order of charts with strong support and resistance is 1M > 1W > 1D charts.
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When you look at the 1M, 1W, and 1D charts using the HA-MS indicator, horizontal lines like the above are displayed.
You can display them by changing the line type or line thickness to make them easier to see and then proceed with trading.
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The above content corresponds to the method of finding support and resistance points included in general chart-related books.
Of course, it is different from the explanation in the chart-related book, but I explained how to use indicators to more clearly indicate support and resistance points.
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Even if you trade with the support and resistance points above, it will not work well when you actually trade.
This is because you are not familiar with the most important trading strategy in trading.
In conclusion, the most important thing is to create a trading strategy, rather than finding the support and resistance points explained above, looking at the trend line, or looking at indicators.
However, it is very difficult to create a trading strategy that fits your investment style from the beginning.
So, you should practice creating a trading strategy that suits you while trading based on the information of the objective chart.
In order to trade, you need to decide on the following three things:
1. Investment period
2. Investment size
3. Trading method and profit realization method
The above three things must be determined.
No. 1 and 2 are determined according to your investment style.
Therefore, it is recommended not to change No. 1 and 2 after you start trading.
3. Based on the information of the actual chart, the buy section, sell section, and stop loss point are determined.
In addition, the profit realization method can be determined according to the investment period.
The profit realization method is:
1. How to get cash profit
2. How to increase the coin (token) corresponding to the profit
There are methods 1 and 2 above.
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In order to create a trading strategy, it is important to display all the information you want on the chart before starting the transaction.
If you do not, and then display lines on the chart after starting the transaction, psychological factors will be added and displayed, so the possibility of not trusting the lines drawn after starting the transaction increases.
To prevent this, it does not matter if you use the indicator added to the HA-MS indicator.
The reason is because it is objective information.
You should increase profits or reduce losses by adjusting the investment ratio while conducting the transaction using this objective information.
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Have a good time.
Thank you.
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SILVER | THE BIGGEST CUP & HANDLE OF ALL TIME!Apple’s Cup and Handle pattern in the early 2000s is often cited as one of the most significant. After a prolonged downtrend, Apple formed a large cup with a handle from 2000 to 2005, which, after breaking out, has continued to appreciate to this very day. However, Apple's pattern is nothing compared to the current Cup & Handle pattern that exists in silver, whether in size or price.
I truly believe that silver is currently the most undervalued asset and will not only attain higher prices than most can imagine but will also rapidly begin to appreciate against gold, which currently has a ratio of 83.75 to 1. This ratio is irrational and unsustainable, as gold and silver are typically mined at a ratio of around 10 to 1. Even current U.S. Treasury Mint coins—Silver Eagles and Gold Eagles—have a current exchange rate of 50 to 1 at face value. Historically, under the gold standard and the Coinage Act of 1834, the ratio was set at 16 to 1.
Although this will not happen overnight and could take a decade or more to come to fruition, the unnatural and irrationally low price of silver is coming to an end. The overinflated gold-to-silver ratio will continue to fall as price manipulation ends and true price discovery begins.
You are not optimistic enough about #BTC!The US presidential elections, held every four years, are completely compatible with the CRYPTOCAP:BTC mega bull cycle!
After the presidential elections held in 2012\2016 and most recently in November 2020, #bitcoin transitioned to the mega bull process!
The issue of high interest rates on the Fed's side has now come to an end. With the easing of interest rates and the presidential election to be held in November, #Bitcoin will transition to the mega bull process!
What are you missing if you only measure time and price?In this video, I am explaing why besides the price and time we need to measure another factor on the chart which is called Sapce.
Please comment and let me know if you want to know more about it.
Is your ETH and SOL working for you !?The crypto market never sleeps which means leaving your holdings stagnant could mean missing out on significant opportunities.
So it’s time to ask yourself:
Are your assets maximizing their potential, or are they just gathering virtual dust?
You wouldn’t leave all your money in a low interest savings account, so why do it with your crypto?
The idea is to put your investments to work, so they keep earning returns without you lifting a finger. I’ll walk you through exactly how to read it and use it to your advantage.
But that’s just the beginning, we’ll also be covering:
-Yield strategies: A breakdown of the strategies we use to generate yield.
-Pros and cons: The advantages and drawbacks of each strategy.
Not sure what options are best for you?
Are you letting your capital sit idle?
Worried about security risks?
This analysis is about to change that .I’ll show you how to maximize your returns and crush those security fears, so you can confidently put your assets to work
Let's dive right in and kick things off with the ‘crowd favorite’ of yield strategies: staking
Staking is exclusive to Proof of Stake (PoS) blockchains and their associated tokens.
Meaning you cannot gain staking yield from Bitcoin, for example, because it is a Proof of Work (PoW) blockchain. by staking your tokens like CRYPTOCAP:ETH or CRYPTOCAP:SOL , you receive a portion of newly minted tokens, effectively earning yield while playing a vital role in securing the network.
If you’re not staking, you could be missing out on significant gains, with potential returns ranging from 3% to 18% APY. that’s why many investors choose to stake their assets rather than let them sit idle
Staking has become a widely adopted strategy, with staking ratios (amount staked vs. unstaked) sitting between 20% and 80% on most POS blockchains In fact, a staggering $520 billion is currently staked across the top PoS blockchains, underscoring its popularity as a method for generating additional income.
Assuming an average 5% reward rate, that equates to $25 billion in staking rewards. That’s massive.
Despite the appeal of earning extra income through staking, becoming a solo staker can be technically challenging which is why staking providers like Lido, Rocket Pool, and Jito have emerged.
They handle network validation for the rest of us, while maximizing our staking yield.
Let’s break down the pros and cons of using a staking provider:
Pros:
✅ Security and efficiency: Our tokens are put to work securely and efficiently, contributing to the network’s security without us having to manage it all ourselves.
✅ Maximized rewards: We earn the majority of staking rewards without needing to handle the technical complexities, making it a hassle-free way to generate income.
✅ Liquidity retention: We receive liquid tokens as proof of our staked assets, allowing us to stay flexible and use them in other DeFi opportunities.
Cons:
❌ Fees: These providers typically charge a fee ranging from 8% to 25% for their validation services, which can slightly reduce your overall yield.
❌ Smart contract risks: There are inherent risks associated with smart contracts, such as bugs and/or vulnerabilities, that could potentially impact your staked assets.
By weighing these pros and cons, you can decide whether outsourcing your staking through liquid staking providers is the right strategy for you.
Ok, so if that’s the case how do we go about choosing the right liquid staking provider?
Here are some key factors to consider when selecting a provider:
1/ Reputation and security
Track record: Look for providers with a solid track record and a strong reputation in the DeFi space.
Security measures: Ensure the provider employs robust security measures, such as smart contract audits.
2/ Total volume locked
TVL: Check how much liquidity your chosen provider has attracted.
TVL is a quick and effective measure of the broader market's trust in a provider, as it reflects the total amount of assets currently staked or locked in their protocol, valued in dollars.
Feel free to use DefiLlama, which ranks all liquid staking providers by TVL.
Simply select the blockchain you’re interested in, and you’ll see the top players in the space, giving you a clear view of where the most assets are being staked and which providers are leading the market.
3/ Yield rates
Competitive yields: Compare the staking yields offered by different providers. While higher yields are attractive, they should not come at the expense of security or reliability.
Fee structure: Be aware of the fee structure. Liquid staking providers typically charge a small fee for their services, which can impact your overall returns.
4/ Liquidity and flexibility
Liquid staking tokens (LSTs): Check if the liquid tokens issued by the provider are widely accepted across DeFi platforms and have enough liquidity. The more integration and liquidity these tokens have, the better.
Redemption options: Some providers offer instant or flexible redemption options for your staked tokens, which can be crucial if you need quick access to your assets.
5/ Decentralization and governance
Decentralization: Providers that are more decentralized tend to be more resilient to risks such as regulatory actions or central points of failure.
Governance participation: Some providers offer governance rights with their tokens, allowing you to have a say in the protocol’s future direction. This can be an added benefit for those interested in being more involved in the ecosystem.
6/ Community and support
Active Community: A strong, active community can be a good indicator of a provider’s health and future prospects. Engage with the community to gauge the level of transparency and support.
so while you trading and trying to maximize your gains Its good to stake some of your HODL bag as well
IS TESLA STOCK READY TO RALLY? (September 14, 2024)Some HTF views of tesla stock & data analysis to figure out if Tesla is about to go on this massive multi year rally
EdTech Unicorn Stride Surges: Strong Financials Fuel Rally!The EdTech revolution is progressing rapidly! As technology advances, internet access grows swiftly, and students seek innovative learning methods, the global EdTech market is flourishing.
North America currently holds a significant 37.3% share, but regions such as the Middle East and Africa, Europe, and Asia-Pacific are gaining ground, fueled by government support, digital literacy, and a burgeoning middle class. It's an exciting time for digital learning, and there's even more to look forward to!
◉ EdTech Market Growth Outlook
➖ Valuation projected to rise from $220.5 million in 2023 to $810.3 million by 2033.
➖ Compound Annual Growth Rate (CAGR) of 13.9%.
◉ Government Initiatives Supporting EdTech Sector
The US Department of Education has allocated $277 million in new grants through the Education Innovation and Research program to enhance educational equity and innovation, particularly in areas affected by the COVID-19 pandemic, specifically focusing on STEM education and rural regions.
Recognizing the enormous opportunity in EdTech, we're examining a stock that exhibits remarkable growth potential within the sector.
◉ Company Overview
Stride Inc. NYSE:LRN is a tech-driven education service provider offering proprietary and third-party online curricula, software, and services in the U.S. and globally. Their products support personalized learning for K-12 students through virtual and blended public schools, individual online courses, and supplemental materials in subjects like math, English, science, and history. Stride also emphasizes career learning in fields such as IT, healthcare, and business, and operates tuition-based private schools. Additionally, they provide post-secondary programs in software engineering and healthcare under brands like Galvanize and Tech Elevator, along with staffing services. Rebranded from K12 Inc. in December 2020, Stride has been incorporated since 1999 and is headquartered in Reston, Virginia.
Investent Advice by Naranj Capital
Buy Stride NYSE:LRN
● Buy Range- 77 - 80
● Target- 115 - 120
● Potential Return- 45% - 50%
● Invest Duration- 12-18 Months
◉ Market Capitalization - $3.31 B
◉ Peer Companies
➖ Graham Holdings NYSE:GHC - $3.23 B
➖ Adtalem Global Education NYSE:ATGE - $2.67 B
➖ Grand Canyon Education NASDAQ:LOPE - $4.04 B
➖ Laureate Education NASDAQ:LAUR - $2.25 B
◉ Technical Aspects
● Monthly
➖ The stock price initially faced resistance at $40 in 2011 but later found support at $17.
➖ Despite several attempts to break through resistance, the stock experienced significant declines.
➖ However, after a 12-year period, it finally broke out and rallied to a high of $84.
➖ Currently trading at $77.7, the stock is expected to continue rising in the near future
● Daily
➖ The daily chart indicates a clear uptrend in the price movement.
➖ An ascending triangle pattern has formed, and following the breakout, the price has retraced to the breakout level.
➖ At this moment, the price is attempting to find support at the 50 EMA.
➖ From a technical standpoint, the stock is resting at a support level, making it an attractive option for accumulation with a mid to long-term investment outlook.
◉ Relative Strength
➖ The chart clearly illustrates that Stride Inc. has greatly outperformed the US Smallcap 2000 index, achieving an impressive annual return of 82%, which is a notable achievement.
◉ Revenue & Profit Analysis
● Year-on-year
➖ In FY24, revenue surged by 11.3%, reaching $2,040 million, up from $1,837 million in FY23.
➖ EBITDA saw a substantial boost, climbing to $295.3 million in FY24 compared to $225.2 million the previous year.
➖ The EBITDA margin also experienced growth, rising to 14.47% from 12.26% in FY23.
➖ Additionally, diluted EPS witnessed an impressive increase of 57.91%, jumping to $4.69 in FY24 from $2.97 in FY23.
● Quarter-on-quarter
➖ In the latest June quarter, the company achieved a remarkable milestone with quarterly sales reaching an all-time high of $520.8 million. This marks a 3% increase from the $504.9 million recorded in the March quarter and a significant 10.75% rise compared to $470.3 million in the same quarter last year.
➖ EBITDA declined from $100.2 million to $82.3 million in the latest quarter, representing a 17.8% decrease.
◉ Valuation
◉ PE Ratio
● Current PE Ratio vs. Median PE Ratio
➖ The present price-to-earnings ratio for this stock is 16.2x, which is considerably below its four-year median price-to-earnings ratio of 18.9x times, indicating that the stock is currently undervalued.
● Current PE vs. Peer Average PE
➖ The stock presents a favorable valuation when considering its Price-To-Earnings Ratio of 16.2x, which is lower than the average of its peers at 18.3x.
● Current PE vs. Industry Average PE
➖ Stride appears to be offered at a more competitive price, featuring a Price-To-Earnings Ratio of 16.2x, which is significantly below the average of 19.2x for the US Consumer Services industry.
◉ PB Ratio
● Current PB vs. Peer Average PB
➖ The present PB ratio in relation to the average PB of peers indicates that the stock is somewhat higher, with a ratio of 2.8x in contrast to the peer average of 2.6x.
● Current PB vs. Industry Average PB
➖ When comparing the current PB ratio to the industry average, Stride appears to be considerably overvalued, exhibiting a PB ratio of 2.8x, while the industry average stands at 1.6x.
◉ Cash Flow Analysis
➖ The cash generated from operations has experienced substantial growth in fiscal year 2024, increasing to $278.8 million from $203.2 million in fiscal year 2023.
◉ Debt Analysis
➖ Stride has a total debt of $528.2 million, resulting in a debt-to-equity ratio of 0.44.
➖ The company generates sufficient interest income to exceed its interest expenses, indicating that interest payment coverage is not an issue.
◉ Top Shareholders
➖ BlackRock Inc. holds a significant ownership interest in this company, with a notable stake of 14.9%. This level of investment reflects BlackRock's confidence in the company's potential for growth and profitability.
➖ The Vanguard Group also maintains a considerable presence, owning 10.7% of the company's shares.
➖ Together, these two investment giants represent a substantial portion of the company's equity, indicating strong institutional support and interest in its future performance.
◉ Conclusion
Upon examining Stride Inc.'s financial performance, we focused on essential metrics such as revenue growth, profit margins, and the stability of cash flow. Additionally, we assessed the company's future growth potential by looking into industry trends and the competitive landscape.
As a result, we are confident that Stride Inc. is positioned to capitalize on new opportunities while effectively navigating challenges, making it an attractive option for both investors and stakeholders.
Fed’s Rate Decision to Set the Tone for Stocks, Gold and CryptoOfficials at the central bank are staying tight-lipped over the magnitude of the interest rate cut. What we know so far: there will be one. What we don’t know: is it going to be 25bps or 50bps?
Federal Reserve Chairman Jay Powell (or JPow if you’re a cool kid) is most likely having a hard time sleeping these days. Lurking in the near distance, September 18 to be precise, is a decision he should make that has the power to slosh trillions of dollars across global markets.
Stock valuations, crypto prices and the glow of gold all hinge on a single figure — the US interest rate ( USINTR ). Major central banks are on the move to unwind their restrictive monetary policies, especially when it comes to global interest rates . Investors have been trying to run ahead of the interest rate decision and position their portfolios to accommodate both a small casual trim to borrowing costs but also a bigger, juicier slash.
Clashing opinions over the size of the interest rate reduction have been swaying the financial markets in recent weeks. Fed officials haven’t sent out any comms regarding that question so markets do what they do best — speculate.
According to the FedWatch tool by CME Group, at the end of this week, investors were nearly even in their expectations for the upcoming interest rate cut with 55% calling for a 25bps (basis points) cut and 45% rooting for the fuller treatment of 50bps.
In any case, this would be the Federal Reserve’s first cut to borrowing costs in more than four years. The benchmark rate in the US is currently sitting at a 23-year high of 5.5% — a level that has stayed flat since July.
After a series of reports pointing to a wobbling economy — and on the back of mostly receding inflation — the central banking clique issued its uplifting guidance at their previous meeting, saying rates are about to go down when they meet again. But what they didn’t say — because they’re data dependent — is how much.
A 25bps cut to interest rates would most likely be already priced in across the spectrum. Stocks, the US dollar, gold and even cryptocurrency are now acting as if this level of rate cut is factored in. Moreover, some investors might even be disappointed to see a rate cut of that casual magnitude. Buy the rumor, sell the news, maybe?
A 50bps cut to interest rates could bring some needed fuel for the next leg up in stocks, gold and crypto. And, on the flip side, knock the dollar’s valuation.
Lower interest rates make money more affordable, enticing investors, businesses and consumers to get more cash out of the bank and spend more freely on big-ticket purchases. Obviously, investors shove the cash into various markets. Businesses expand operations and build new products. And consumers, well, they buy the new iPhone 16 and jam what's left in meme stocks ?
Perhaps even more importantly, lower interest rates help steer the economy, keeping it on an upward trajectory. Liquidity improves, because there’s more money flowing in the system, and valuations of public and private assets usually increase.
Take gold ( XAU/USD ), for example. Gold hit an all-time high Friday morning, pumping above $2,570 per ounce . Driving the gains was the relationship between gold and the prospects of lower rates, which make bullion more appealing because they reduce the opportunity cost of holding a non-yielding asset. At the same time, the US dollar loses some of its allure because the reduction in rates triggers a lower yield on dollar deposits.
Bitcoin ( BTC/USD ) is another interest -ing candidate to join the rate interplay. The OG token has been increasingly correlated to macroeconomic factors and the rate decision is already seen impacting its price in a positive way.
Stocks have been in choppy trading mode over the past couple of months largely due to the looming uncertainty about the looming rate-setting meeting.
So what do you think it’s going to be — 25bps or 50bps? And how would it affect financial markets? Shoot your thoughts below!
Gold Trading Strategy: A Professional Approach to XAUUSD 👀 👉 This comprehensive video presents a sophisticated trading plan for the XAUUSD (Gold/US Dollar) market, designed to maximize profitability through a structured approach. We delve into crucial aspects of technical analysis and leverage TradingView's advanced tools to gain a competitive edge in the markets.
Key topics covered include:
1. Trend identification and analysis
2. Entry and exit criteria
3. Market overextension assessment
4. Discount entry strategies aligned with institutional positioning
5. Higher timeframe trend analysis combined with 4-hour chart entry points
6. Price action and market structure interpretation
Our methodology emphasizes the importance of avoiding premium entries in bullish markets and instead focuses on identifying optimal discount entry opportunities. By aligning our strategy with institutional movements, we aim to enhance the probability of successful trades.
The video provides a detailed exploration of various technical analysis components, including:
- Trend analysis techniques
- Market structure interpretation
- Price action patterns
- Overextension indicators
- Traded Volume indicators
- Multi-timeframe analysis (higher timeframe trend combined with 4-hour chart entries)
This comprehensive approach to XAUUSD trading is designed to equip traders with the tools and knowledge necessary to navigate the gold market effectively and potentially increase their trading success.
Disclaimer: Trading in financial markets carries a high level of risk and may not be suitable for all investors. The information provided in this video is for educational purposes only and should not be construed as financial advice. Past performance is not indicative of future results. Always conduct your own research and consider your financial situation before making any investment decisions. Trade responsibly and use proper risk management techniques. 📉✅
Trading Near the Bells Part 1: The OpenWelcome to our 2-part series on how to trade the two most intense, liquid, and volatile periods of the trading day: the open and the close. These moments bookend the trading session and are critical for traders who thrive on fast-paced environments.
In Part 1, we’ll focus on the open—the first hour after the market bell rings. We will explore why this period offers unique trading opportunities, examine key price patterns, and discuss proven strategies for capturing profit while managing risk during this high-volatility window. From gap trading to opening range breakouts, understanding the open is essential for those looking to capitalise on the rush of liquidity and order flow at the start of each session.
The Significance of the Open
The open is often the most critical time of the trading day. It sets the tone for the session as market participants react to overnight developments, including earnings reports, geopolitical events, and economic data releases. The first hour of trading typically sees a surge in volume as traders place orders based on these new inputs, creating significant liquidity and volatility. This influx of activity can result in sharp price moves, offering traders the chance to capture quick profits.
Additionally, the open provides vital clues about market sentiment. The price action within the first 30-60 minutes can hint at whether the market will experience a trend day or a range-bound session. Understanding how to interpret and trade this period effectively can give traders a strategic edge, allowing them to capitalise on these early movements while managing risk appropriately.
Three Strategies for Trading the Open
1. Gap and Go
The "Gap and Go" strategy focuses on stocks or index’s that gap up or down significantly at the open and continue to move in the same direction. This strategy works best when the gap is backed by a fundamental catalyst, such as a strong earnings report, positive economic data, or a major news announcement. Gaps that are supported by solid news or events tend to continue in the same direction as they attract significant buying or selling pressure.
Additionally, this strategy is most effective when the price is breaking out of a period of compression or a key level of resistance. For instance, if a stock has been consolidating under a major resistance level and gaps up on strong earnings, it is likely to trigger further buying as traders who were waiting for the breakout jump into the trade.
• Key Setup: Look for gaps backed by a catalyst and breaking out of key technical levels.
• Entry: Enter in the direction of the gap if the price holds above or below the opening range.
• Stop-Loss: Set your stop near the gap level or below the opening range to protect against a quick reversal.
Example Gap and Go:
In this example, the S&P 500 gaps above both a descending trendline and a key resistance area at the open – backed by inflation data that had come in lower than expected. The gap holds within the first hour and continues to rise throughout the session, demonstrating how the early price action set the stage for the rest of the day.
S&P 500 5min Candle Chart
Past performance is not a reliable indicator of future results
2. Opening Range Breakout (ORB)
The Opening Range Breakout strategy involves identifying the high and low of the first 15-30 minutes of trading and looking for a breakout beyond this range. This strategy works best when the breakout aligns with the broader market trend. If the larger trend is bullish and the stock or currency pair breaks above its opening range, it indicates that the market is continuing in the direction of the prevailing trend, providing a higher probability trade.
• Key Setup: Works well when the breakout is in line with the bigger picture trend.
• Entry: Enter long if the price breaks above the opening range with strong volume, or enter short if it breaks below.
• Stop-Loss: Place stops just inside the opening range to protect against false breakouts.
Example ORB:
In this scenario, the S&P 500 establishes a clear range within the first hour. A decisive break below this range leads to a cascade of selling pressure, indicating how the breakout set the tone for the rest of the session.
S&P 500 5min Candle Chart
Past performance is not a reliable indicator of future results
3. Gap Fade
The Gap Fade strategy involves trading against the initial gap, assuming the move is overextended or lacks a fundamental catalyst. This strategy works particularly well when the gap occurs without significant news or events to justify the price movement. Traders using this approach bet that the market has overreacted to the gap and that the price will reverse and "fill" the gap by moving back toward the previous day's close.
Additionally, this strategy is effective when the gap coincides with a trend that has become extended on higher timeframes, suggesting that the market is due for a correction or reversal. For example, if a stock gaps up but has been in a prolonged uptrend and appears overbought on the daily chart, it may be primed for a pullback.
• Key Setup: Best used when there is no significant catalyst behind the gap and when the trend is extended.
• Entry: Short-sell if the gap appears overextended and lacks momentum, aiming to catch the reversal.
• Stop-Loss: Set your stop above the high of the opening range for shorts (or below the low for longs) to limit losses in case the move continues.
Example Gap Fade:
In this example, the S&P 500 gaps higher but stalls at a key resistance area. The market fails to continue higher during the first hour, leading to a break below resistance and a downtrend for the rest of the session.
S&P 500 5min Candle Chart
Past performance is not a reliable indicator of future results
Conclusion
The market open is a dynamic period full of opportunity for traders who are prepared to act quickly. Whether you prefer trading with the momentum of a Gap and Go, riding the trend with an Opening Range Breakout, or fading an overextended Gap, understanding the unique characteristics of the open is a crucial element of short-term trading. By using these strategies and adjusting them to the day's market conditions, you can navigate the volatility of the open with confidence and precision.
In Part 2 we’ll dive into trading the close—the other bookend of the trading day with its own set of challenges and opportunities.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83.51% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
How I Use Multi Timeframe Analysis to Capture LARGE Price SwingsDISCLAIMER: This is not trade advice. Trading involves real risk. Do your own due diligence.
TUTORIAL:
Today, I demonstrate the thought process and mechanical steps I take when trading my Multi-Timeframe strategy. We take a look at US Treasuries, which have offers a classic lesson in how to apply this approach.
As you will see, throughout the year, this approach took some losses prior to getting involved in the "real" move which we anticipated. No strategy is perfect, and I do not purport this to be perfect. It is a rules based and effective way to read price. This strategy is great for people who don't have a lot of time to spend at the charts. I would classify this more as an "investing" strategy when utilizing the 12M-2W-12H timeframe.
If you have questions about anything in this video, feel free to shoot me a message.
I hope you have all had a great week so far.
Good Luck & Good Trading.
Q4 Bullish Continuation Bitcoin's price action continues to show a strong bullish trend. After multiple corrective pullbacks, the price has consistently rebounded within the established channel. We saw significant corrections of -20%, -22%, and -28%, yet BTC remains on course for a potential breakout towards the next major top in the $100K+ range. With strong support holding at GETTEX:46K and consistent higher lows, this chart highlights the resilience of Bitcoin and its potential for continuation to new highs.
Let's see how the next leg unfolds! 🚀 #BTC #Bullish #Crypto
