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Example of how to use the Trend-Based Fib Extension tool Hello, traders. If you "Follow", you can always get new information quickly. Please also click "Boost". Have a nice day today. ------------------------------------- There was a question about how to select the selection point when using the Trend-Based Fib Extension tool, so I will take the time to explain the method I use. Since it is my method, it may be different from your method. - Before that, I will explain the difference from the general Fibonacci retracement tool. The Fibonacci retracement tool uses the Fibonacci ratio as the ratio to be retracement within the selected range. Therefore, the low and high points are likely to be the selection points. The reason I say it is likely is because the lowest and highest points are different depending on which time frame chart it was drawn on. Therefore, in order to use a chart tool that specifies a selection point like this, you must basically understand the arrangement of candles. If you understand the arrangement of candles, you can draw the support and resistance points that make up it and determine the importance of those support and resistance points. The HA-MS indicator that I am using is a more objective version of this. Unlike the published HA-MS indicator, several have been added. I do not plan to disclose the formulas of these added indicators yet. However, if you share my ideas, you can use them normally at any time. The selection point for using the current Fibonacci retracement tool is the point that the fingers are pointing to. In other words, the 1st finger is the low point, and the 2nd finger is the high point. One question may arise here. Why is it the position of the 1st finger? The reason is that it is the starting point of the current wave. Therefore, you can find out the retracement ratio in the current rising wave. In fact, it is not recommended to use the Fibonacci ratio as support and resistance. This is because it is better to use the Fibonacci ratio to check how much wave is being reached and how much movement is being shown in chart analysis. However, the Fibonacci ratio can be usefully used when the ATH or ATL is updated. - If the Fibonacci Retracement tool was a chart tool that found out the retracement ratio in the current wave, the Trend-Based Fib Extension tool can be said to be a chart tool that found out the extension ratio of the wave. Therefore, while the Fibonacci Retracement tool requires you to specify two selection points, the Trend-Based Fib Extension tool requires you to specify three selection points. That's how important it is to understand the arrangement of the candles. The chart above is an example of drawing to find out the extension ratio of an uptrend The chart above is an example of drawing to find out the extension ratio of a downtrend Do you understand how the selection points are specified by looking at the example chart? - The chart above is the chart when the 1st finger point is selected. The chart above is the chart when the 1-1 hand point is selected. When drawing on a lower time frame chart, you should be careful about which point to select when the arrangement of the candles is ambiguous. Examples include the 1st finger and the 1-1 finger. It may be difficult to select 1-1 and 1 depending on whether they are interpreted as small waves or not. The lower the time frame chart, the more difficult this selection becomes. Therefore, it is recommended to draw on a higher time frame chart if possible. The reason is that the Fibonacci ratio is a chart tool used to analyze charts. In other words, it is not drawn for trading. In order to trade, you trade based on whether there is support or resistance at the support and resistance points drawn on the 1M, 1W, and 1D charts. - Thank you for reading to the end. I wish you successful trading. --------------------------------------------------
BITSTAMP:BTCUSDEducation
by readCrypto
7
Price Action Trading: Key ConceptsPrice Action Trading: Key Concepts Price action is a popular trading method where traders analyse raw price movements on a chart, without relying on technical indicators. Traders identify patterns, trends, and key levels that help them understand market behaviour. This article explores what price action is, the key concepts, and how to get started with a price action strategy. What Is Price Action Trading? Price action is the movement of an asset’s price over time, and it’s one of the purest forms of market analysis. When using price action, indicators like moving averages or oscillators take a back seat, with traders focusing solely on the movement of the market itself. In studying how prices behave in real-time or historically, traders can spot trends, patterns, and potential turning points in the market. At its core, price action is about reading the market’s “story” through its movements. Traders look at how an asset has moved in the past—whether it’s rising, falling, or ranging—to understand what it might do next. This analysis often revolves around key levels, such as support (where prices tend to stop falling) and resistance (where they tend to stop rising). Because price action relies purely on market data, it offers a clear view of sentiment without the “noise” of external indicators. This makes it a go-to method for traders who prefer a straightforward approach. Price action also can be used in any market—whether it’s forex, stocks, or commodities—and across various timeframes too, from short-term day trading to long-term investing. Understanding this style isn’t automatic—it requires practice, observation, and an eye for patterns. However, once traders get the hang of it, price action can provide valuable insight into the market’s behaviour and help them analyse future trends. Key Price Action Concepts Now, let’s take a look at some core price action concepts. Support and Resistance Support and resistance levels are foundational in price action analysis. These are key levels that the market has historically struggled to move past. Support represents a level where the market tends to stop falling, acting like a “floor,” as buying pressure increases. Resistance is the opposite, serving as a “ceiling” where upward movements tend to halt, as selling pressure grows. Traders use support and resistance to identify potential levels where the market might reverse or pause. If a price breaks through one of these levels, it can signal a continuation of the trend, while a bounce off the level might indicate a reversal. Trends At its simplest, a trend shows the direction in which a given market is headed. In an uptrend, prices are making higher highs and higher lows, showing consistent bullish momentum. In a downtrend, the opposite is true: prices make lower lows and lower highs, indicating bearish sentiment. Swing highs and lows are critical when spotting trends. A swing high is a peak formed when the market moves up and then reverses down. A swing low is the opposite. Tracking these highs and lows allows traders to identify the current trend. Trendlines and Price Channels A trendline is a straight line that connects multiple swing highs or swing lows in a trending market. It visually represents the direction of the trend and helps traders spot potential areas where the market may find support or resistance. When two parallel trendlines are drawn—one connecting swing highs and the other swing lows—it forms a price channel. Channels help traders see the range in which the price is moving, and it’s common for prices to bounce between the upper and lower boundaries of the channel. Breakouts from them can signal a shift in trend direction. Candlestick Patterns Candlestick patterns are formed by the movement of price over a specific period and are widely used in price action trading. Some common candlestick price action trading patterns include: - Pin Bar/Hammer/Shooting Star: A candle with a long wick and small body, indicating a rejection of higher or lower prices. It can suggest a potential trend reversal. - Engulfing Pattern: A two-candle pattern where the second candle fully engulfs the previous one, signalling a shift in momentum. A bullish engulfing pattern suggests buyers are taking control, while a bearish engulfing pattern shows sellers are gaining strength. - Doji: A candle with little to no body, where the open and close prices are nearly identical. It suggests indecision in the market and can signal a potential reversal, depending on where it appears in a trend. Chart Patterns Price action chart patterns are shapes that form on a chart, which traders use to determine future price movements. They can indicate the continuation or reversal of a trend. Some common chart patterns include: - Head and Shoulders: A reversal pattern that signals a shift from an uptrend to a downtrend (or vice versa). It consists of three peaks, with the middle one being the highest (the "head") and the outer two being lower (the "shoulders"). - Double Top/Double Bottom: These reversal patterns form when the price tests a level twice and fails to break through, indicating a potential reversal. - Triangles: Symmetrical, ascending, or descending triangles indicate consolidation periods before a breakout. Breakouts A breakout occurs when an asset moves outside a defined support, resistance, or trendline level. Breakouts can signal that the market is gaining momentum in a particular direction. When prices break beyond a support or resistance level, it can suggest that traders are pushing prices in a given direction and that momentum is likely to continue. Traders often watch for breakouts from chart patterns like triangles or channels. Reversals A reversal happens when a market trend changes direction. In an uptrend, a reversal would occur when prices stop making higher highs and higher lows and start forming lower lows instead. Reversals are often marked by candlestick patterns or chart patterns like head and shoulders or double top/bottom. Retracements A retracement is a temporary reversal in the direction of a trend, where the asset moves against the prevailing trend but eventually continues in the same direction. Traders often use tools like Fibonacci retracement levels to identify potential areas where the market might retrace before resuming its original trend. Volume Volume measures how much of an asset is being traded over a certain period. In price action trading, volume is used to confirm the strength of market movements. For example, if the price breaks through a significant resistance level with high volume, it can indicate that the breakout is more likely to be sustained. On the other hand, breakouts on low volume might suggest the move lacks conviction and could reverse. Volatility Volatility refers to the degree of price movement in the market over time. Price action traders pay attention to volatility because it can influence how they interpret patterns and levels. In periods of high volatility, an asset may break through key levels quickly, while in low volatility periods, it might stay within a narrow range. How Traders Read Price Action Let’s now look at an overview of how the process typically unfolds: 1. Beginning with a Clean Chart Price action trading doesn’t rely on indicators, so the first step is to clear the chart of anything unnecessary. Traders focus on raw market data, meaning you’ll only initially need candlesticks or bars in a price action chart. 2. Identifying Market Structure Once the chart is clean, traders assess the market structure. This means figuring out whether the market is trending or ranging. In a trend, prices make consistent highs and lows, moving upwards or downwards. If the market is ranging, the price moves horizontally within a set range between support and resistance levels. 3. Looking for Patterns and Key Levels Next, traders focus on spotting recurring patterns and identifying key levels where the price has previously reacted. Patterns such as candlestick formations and chart setups (e.g., triangles or head and shoulders) give insight into what the market might do next. These patterns help traders anticipate reversals or breakouts based on past behaviour. Key levels like support and resistance guide where the price might stall or reverse. 4. Analysing Price Movements in Real-Time As the price moves, traders observe how it reacts to these key levels or patterns. Does it slow down near resistance, or does it break through with momentum? Does it pull back to support before continuing upward? These real-time reactions tell traders whether the market is maintaining its trend or if a reversal could be on the horizon. 5. Confirming with Volume and Volatility Traders often look at volume and volatility to further validate what’s happening on the chart. Higher volume can suggest stronger market moves, while volatility reveals how quickly the market is shifting. These extra layers of analysis provide confirmation of whether a breakout or reversal is likely to hold. Building a Price Action Trading Strategy Creating a price action trading strategy is about developing a personalised approach based on key patterns and setups that resonate with you. The steps mentioned above form the foundation of price action trading. However, traders usually build their own strategy over time, focusing on a handful of setups they find effective. Initially, traders choose a few concepts to work with and avoid getting overwhelmed by too much information. For example, you could look for pin bars that appear during retracements at support or resistance in line with a trend. Another approach might be identifying a breakout after a double top or bottom, especially if it’s backed by high volume. Alternatively, traders often use candlestick patterns to trade the upper and lower boundaries of a price channel. Setups like these can be backtested in trading platforms with FXOpen, using historical data to understand why and where certain setups work. It does take time to develop an eye for price action patterns, but it’s worth the effort to be able to identify opportunities well before lagging technical indicators do. Lastly, risk management is crucial when trading price action. Before you try out any setup, try to understand the best risk management practices for that pattern. For instance, traders might place a stop-loss just beyond a pin bar’s wick or slightly below the lows in a double bottom to limit potential losses if the market moves unexpectedly. The Bottom Line Price action offers traders a straightforward way to analyse market movements and make decisions based on real-time data, prioritising repeating patterns rather than indicators. To put price action trading into practice, consider opening an FXOpen account to access more than 700 live markets and our advanced low-cost, high-speed trading environment. FAQ What Is Price Action? The price action meaning refers to the movement of an asset's price over time. Traders analyse these movements, without relying on indicators, to identify trends, patterns, and potential turning points in the market. How to Read Price Action? Reading price action involves analysing market movements on a clean chart. Traders identify trends, key levels of support and resistance, and chart and candlestick patterns. What Is Price Action Trading? Price action trading is a strategy where traders make decisions based on the raw movements of an asset. Instead of using technical indicators, they focus on chart patterns, trends, and levels of support or resistance to analyse the market. What Is the M Pattern in Price Action? The M pattern, or double top, is a bearish reversal pattern that looks like the letter "M." It forms when the price tests a resistance level twice but fails to break through, signalling a potential move downwards. Do Price Patterns Work? Price patterns can work, but they are not foolproof. They are often used to identify potential market movements, but outcomes may vary depending on market conditions and other factors. Do Professional Traders Use Price Action? Yes, many professional traders use price action as a core part of their trading strategies. It provides a direct way to analyse market behaviour without relying on external indicators. 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.
Education
by FXOpen
3
Testing Candlestick Patterns on Real DataIn his fundamental book "Encyclopedia of Candlestick Charts," Thomas Bulkowski tested dozens of candlestick patterns using S&P market data. His research revealed that many well-known patterns perform quite differently from what conventional wisdom suggests. In this video, I’ll show you how to conduct a similar analysis using your own data to determine whether those fancy "Hammers" and "Shooting Stars" actually give you an edge in trading.
AMEX:SPYEducation
by hermes_trisme
Top 3 Must-Know Candlestick Patterns for BeginnersGet your cup of coffee or tea ready we are doing a crash course on Candlesticks today I’m walking you through three candlestick patterns every beginner trader should know—Doji, Engulfing Candles, and Hammers (including the Inverted Hammer). These patterns are super helpful when you’re trying to spot market reversals or continuations. I’ll show you how to easily recognize them and use them in your own trades. Let’s keep it simple and effective. Key Takeaways: Doji: Indicates indecision, potential reversals. Engulfing Candles: Bullish or bearish reversal signals. Hammer & Inverted Hammer: Bullish reversal after a downtrend. Trade what you see and let’s get started! Mindbloome Trader
Education
by Mindbloome-Trading
4
How to Identify Candlestick Strength | Trading Basics Hey traders, In this educational article, we will discuss Please, note that the concepts that will be covered in this article can be applied on any time frame, however, higher is the time frame, more trustworthy are the candles. Also, remember, that each individual candle is assessed in relation to other candles on the chart. There are three types of candles depending on its direction: 🟢 Bullish candle Such a candle has a closing price higher than the opening price. 🔴 Bearish candle Such a candle has a closing price lower than the opening price. 🟡 Neutral candle Such a candle has equal or close to equal opening and closing price. There are three categories of the strength of the candle. Please, note, the measurement of the strength of the candle is applicable only to bullish/bearish candles. Neutral candle has no strength by definition. It signifies the absolute equilibrium between buyers and sellers. 1️⃣ Strong candle Strong bullish candle signifies strong buying volumes and dominance of buyers without sellers resistance. Above, you can see the example of a strong bullish candle on NZDCHF on a 4H. Strong bearish candle means significant selling volumes and high bearish pressure without buyers resistance. On the chart above, you can see a song bearish candle on EURUSD. Usually, a strong bullish/bearish candle has a relatively big body and tiny wicks. 2️⃣ Medium candle Medium bullish candle signifies a dominance of buyers with a rising resistance of sellers. You can see the sequence of medium bullish candles on EURJPY pair on a daily time frame. Medium bearish candle means a prevailing strength of sellers with a growing pressure of bulls. Above is the example of a sequence of medium bearish candles on AUDUSD pair. Usually, a medium bullish/bearish candle has its range (based on a wick) 2 times bigger than the body of the candle. 3️⃣ Weak candle Weak bullish candle signifies the exhaustion of buyers and a substantial resistance of sellers. Weak bearish candle signifies the exhaustion of sellers and a considerable bullish pressure. Usually, such a candle has a relatively small body and a big wick. Above is the sequence of weak bullish and bearish candles on NZDCHF pair on an hourly time frame. Knowing how to read the strength of the candlestick, one can quite accurately spot the initiate of new waves, market reversals and consolidations. Watch how the price acts, follow the candlesticks and try to spot the change of momentum by yourself.
OANDA:XAUUSDEducation
by VasilyTrader
9
Charting the Markets: Top 10 Technical Analysis Terms to KnowWelcome, market watchers, traders, and influencers to yet another teaching session with your favorite finance and markets platform! Today, we learn how to marketspeak — are you ready to up your trading game and talk like a Wall Street pro? We’ve got you covered. This guide will take you through the top technical analysis terms every trader should know. So, kick back, grab a drink, and let’s roll into the world of candlesticks, moving averages, and all things chart-tastic! 1. Candlestick Patterns First up, we have candlesticks , the bread and butter of any chart enthusiast. These little bars show the opening, closing, high, and low prices of a stock over a set period. Here are some key patterns to recognize next time you pop open a chart: Doji : Signals market indecision; looks like a plus sign. Hammer : Indicates potential reversal; resembles, well, a hammer. Engulfing : A larger candle engulfs the previous one, suggesting a momentum shift. Want these automated? There's a TradingView indicator for that. 2. Moving Averages (MA) Next, we glide into moving averages . These are practically lines that smooth out price data to help identify trends over time. Here are the big players: Simple Moving Average (SMA) : A straightforward average of prices over a specific period of days. Exponential Moving Average (EMA) : An average of prices but with more weight to recent prices, making it more responsive to new information. 3. Relative Strength Index (RSI) The RSI is your go-to for spotting overbought and oversold conditions. Ranging from 0 to 100, a reading above 70 means a stock might be overbought (time to sell?), while below 30 suggests it could be oversold (time to buy?). Super common mainstay indicator among traders from all levels. 4. Bollinger Bands Bollinger Bands consist of a moving average with two standard deviation lines above and below it. When the bands squeeze, it signals low volatility, and when they expand, high volatility is in play. Think of Bollinger Bands as the mood rings of the trading world! 5. MACD (Moving Average Convergence Divergence) The MACD is all about momentum. It’s made up of two lines: the MACD line (difference between two EMAs) and the signal line (an EMA of the MACD line). When these lines cross, it can be a signal to buy or sell. Think of it as the heartbeat of the market. 6. Fibonacci Retracement Named after a 13th-century mathematician, Fibonacci retracement levels are used to predict potential support and resistance levels. Traders use these golden ratios (23.6%, 38.2%, 50%, 61.8%, and 100%) to find points where an asset like a stock or a currency might reverse its direction. 7. Support and Resistance Support and resistance are the battle lines drawn on your chart. Support is where the price tends to stop falling — finds enough buyers to support it — and resistance is where it tends to stop rising — finds enough sellers to resist it. Think of these two levels as the floor and ceiling of your trading room. 8. Volume Volume is the fuel in your trading engine. It shows how much of a stock is being traded and can confirm trends. High volume means high interest, while low volume suggests the market is taking a nap from its responsibilities. 9. Trend Lines Trend lines are your visual guide to understanding the market’s direction. Technical traders, generally, are big on trend lines. You can draw them by connecting at least a couple of lows in an uptrend or at least a couple of highs in a downtrend. They help you see where the market has been and where it might be headed. 10. Head and Shoulders No, it’s not shampoo. The head and shoulders pattern is a classic reversal pattern. It consists of three peaks: a higher middle peak (head) between two lower peaks (shoulders). When you see this take shape in your chart, it might be time to rethink your position. What’s Your Favorite? So there you have it, a whirlwind tour of the top technical analysis terms that’ll help your trading yield better results and, as a bonus, make you sound like a trading guru. What’s your favorite among these 10 technical analysis tools? Share your thoughts in the comments below!
Education
by TradingView
18
A Practical Guide For Candlestick Patterns!Intraday trading is a method of investing in cryptocurrencies where the trader buys and sells cryptocurrencies on the same day without any open positions left by the end of the day. Intraday traders aim to either purchase a cryptocurrency at a low price and sell it at a higher price or short-sell a cryptocurrency at a high price and buy it at a lower price within the same day. This requires a good understanding of the market and relevant information to help them make the right decisions. In the cryptocurrency market, the price of a cryptocurrency is determined by its demand and supply, among other factors. Tools such as candlestick chart patterns are very helpful to traders. We will discuss these candlestick charts and offer steps to help you read them.
Education
by CRYPTOMOJO_TA
10
Most powerfull candlestick pattern Pulse Pin Scalping Strategy Greetings, traders! 📈 Excited to share with you my latest discovery - the Pulse Pin Pattern! 🕯️✨ This three-candlestick formation is a powerful tool for identifying potential trend reversals or continuation. Let's dive into the details for both bullish and bearish scenarios. Bullish Pulse Pin Pattern: In the bullish case, keep an eye out for the following conditions: Candle 2 Breaks Below Candle 1: Ensure that the second candle breaks and closes below the first candle. Candle 3 Breaks High of Candle 1: The third candle must break the high of the first candle and close with its body above it. When these conditions are met, it signals a potential bullish setup. Seize the opportunity by opening a buy trade and setting your stop-loss below the low of candle 2. Aim for a target that is twice the risk for a rewarding risk-reward ratio. Bearish Pulse Pin Pattern: Conversely, for the bearish case, watch for the following criteria: Candle 2 Breaks Above Candle 1: Confirm that the second candle breaks and closes above the first candle. Candle 3 Breaks Low of Candle 1: The third candle should break the low of the first candle and close with its body below it. Once these conditions align, it indicates a potential bearish Setup. Capitalize on this by initiating a sell trade and setting your stop-loss above the high of candle 2. Target a gain that is twice the risk for a favorable risk-reward ratio. Remember, always conduct thorough analysis and risk management before executing any trades. Happy trading! 💹🚀 #PulsePinPattern #TechnicalAnalysis #TradingView #TradeSmart #AHTConcepts
OANDA:XAUUSDEducation
by CryptoAntidote
7
Mastering Trading with Support and Resistance LevelsTrading with support and resistance levels is a fundamental strategy that offers insights into market psychology and potential trade entry and exit points. This guide will explore how to effectively trade using these levels, highlighting the importance of confirmation, rejection patterns, candlestick patterns, and confluence with other indicators. Understanding Support and Resistance - Support : A price level where a downtrend may pause due to a concentration of demand. - Resistance : A price level where an uptrend can pause or reverse because of a concentration of selling interest. The Significance of Confirmation Confirmation is crucial when trading with support and resistance, as it ensures that the price respects these levels before making a trade. Waiting for confirmation reduces the risk of false signals. Candlestick Patterns: The Language of the Markets Understanding candlestick patterns is essential for interpreting market sentiment at support and resistance levels. Patterns like bullish engulfing or bearish engulfing suggest strong reversals. Finding Confluence with Other Indicators Confluence enhances the reliability of trading signals. Combining support and resistance analysis with other indicators like moving averages or the stochastic RSI can provide stronger entry or exit signals. Integrating Support and Resistance into Your Trading Identify key levels : Mark clear support and resistance levels on your chart. Wait for confirmation : Confirm the level is holding through candlestick patterns or price action before trading. Look for rejection patterns : Observe candlestick formations for reversal signals. Seek confluence : Use other indicators to validate your trading signals. Manage your risk : Always set a clear stop-loss order to manage potential losses. By employing these strategies, traders can enhance their market navigation skills, focusing on managing risk and seizing the right opportunities. With patience and practice, trading with support and resistance levels can be a vital part of a successful trading approach.
Education
by AlgoAlpha
High probability setupThis is what I'm going to be looking in the market for the next long term journey, this is a special setup based on patience, strategy and price action, high probabilities and high R:R, works better in high timeframes, we have just wait for the firt confirmation which is: 1. Shift of structure, after watching that we have to look for: 2. A good RESISTANCE/SUPPORT zone where the price is rejecting in Daily of 4H and search for a: 3. Chart pattern which can be a HEAD AND SHOULDERS OR DOUBLE BOTTOM, DOUBLE TOP..., if we have these confirmations, we can look for the last which is: 4. Candlestick pattern: in the shift of the structure which can be an engulfing, an evening/morning star or marubozu, also can be a doji with the wick for our direction Each one of these confirmations are 22% probabilities for our strategy, after getting all them we can enter the trade, put the stop loss a bit above or below the last structure point and take a 1:3 risk reward and the most important part is: SET THE TRADE AND FORGET, Allow the price to go where it has to go, don't change the T.P, don't change the S.L, accept the risk of the trade and take a loss if is the case or take a win if the market allows that, and continue with the plan, IT'S IMPOSSIBLE TO HAVE A 100% CHANCES, so even if you have all this confirmation, you can lose and you have to ACCEPT IT, for that: Stick to the RISK MANAGEMENT thinking in percentage, I recommend to use a 1%-2% per trade, and that's all BE PATIENT AND SMART, THINK IN LONG TERM Remember: "The market is a mechanism for transferring money from the impatient to the patient"
EIGHTCAP:XAUUSDEducation
by TraderEaglefx
Advanced Candlestick Pattern AnalysisAdvanced Candlestick Pattern Analysis Welcome to the intricate world of advanced candlestick patterns, a realm where subtle shifts in market sentiment are captured in the form and structure of candles on a chart. This article delves into some of the more sophisticated patterns that, while less common, offer insightful signals to those who can identify them. For readers eager to try spotting these patterns themselves, FXOpen's free TickTrader platform provides an ideal canvas to practise and observe these formations in real-time markets. Island Reversal Pattern The Island Reversal pattern is a distinct formation in advanced candlestick patterns, marked by a gap on both sides of a cluster of candles. This pattern signifies a possible reversal of the current trend. It appears as a small 'island' of trading activity separated by gaps from the larger price movement, indicating a sudden shift in market sentiment. Traders often view the Island Reversal as a strong signal. They typically wait for confirmation in the form of a price moving away from the 'island' before executing trades. For instance, traders might buy once the price moves above the pattern in a bullish island reversal. Conversely, in a bearish reversal, selling occurs when prices drop below the island. Stop-loss orders are generally placed on the opposite side of the gap, limiting potential losses if the expected trend reversal does not materialise. Hook Reversal Pattern The Hook Reversal pattern forms part of advanced candlestick analysis and is characterised by two candlesticks, where the first one aligns with the trend and the second is the opposite. Also, the second candlestick opens and closes within the first one. It can indicate a potential reversal in the current trend, particularly in a highly traded market. In response, traders often seek additional confirmation before acting, such as a continued movement toward the reversal. For instance, in a Bullish Hook Reversal, they might enter a long position when subsequent candles continue to rise. Stop-losses are commonly set just below the low of the second candle in a bullish reversal or above the high in a bearish reversal to manage risk effectively. Triple Gap (San-ku) Candlestick Pattern The Triple Gap (San-ku) candlestick pattern is a notable formation in candlestick chart pattern analysis, often signalling an impending trend reversal. It emerges through three consecutive candlesticks, each marked by gaps between them, reflecting a buildup of momentum. Typically, at least two of these sessions feature notably large candles. In recognising the San-ku, traders view it as a caution against the prevailing trend's sustainability, acknowledging that such accelerated momentum cannot persist indefinitely. This pattern does not pinpoint the exact reversal moment but indicates its likelihood shortly. Prudent traders often wait for further confirmation, such as a change in direction, before adjusting their positions. Stop-loss orders are strategically placed above a swing high/low to minimise potential losses if the anticipated trend reversal does not materialise promptly. Kicker Candlestick Pattern In stock analysis, candlestick patterns like the Kicker play a crucial role. This pattern is characterised by a drastic change in market sentiment, reflected by two candles moving in opposite directions. The first candle follows the current trend, while the second moves sharply in the opposite direction with a price gap, which strengthens the reversal signal. The Kicker is considered one of the most powerful reversal indicators. For a bullish kicker, traders might initiate a buy when the second candle's upward trend is confirmed, while in a bearish kicker, a sell is considered when the market continues trading downwards after the second candle. Stop-losses are often placed just beyond the start of the second candle to manage risk. Three Line Strike Pattern The Three Line Strike pattern, in the realm of trading candlestick analysis, is a unique trend continuation signal. It consists of three consecutive candles following the current trend (either bullish or bearish), followed by a fourth candle that strikes through the range of the first three. A bullish Three Line Strike starts with three rising green candles, followed by a long red candle that closes below the first candle's open price. This reflects a temporary pullback before the uptrend resumes. Conversely, in a bearish pattern, three falling red candles are followed by a green candle that closes above the first candle's open price, indicating a brief upward correction before the downtrend continues. Traders typically use this pattern to reinforce their confidence in the prevailing trend. Stop-loss orders are placed just beyond the fourth candle's extreme to protect against unexpected reversals. Belt Hold Pattern In the candlestick chart technical analysis, the Belt Hold stands out as a key reversal indicator. It’s characterised by a single, long candlestick that signals a shift in market momentum. In a downtrend, a bullish Belt Hold is represented by a long green candle, opening at its low and closing near its high. This reflects a possible shift to an upward trend. Conversely, during an uptrend, a bearish Belt Hold is identified by a long red candle, opening at its high and closing near its low, indicating a potential reversal to a downward trend. Traders typically look for additional market confirmation after a Belt Hold emerges before executing trades. For risk management, stop-loss orders are commonly placed just past the extreme end of the Belt Hold candle. Concealing Baby Swallow In candle technical analysis, the Concealing Baby Swallow is a rare but noteworthy bearish continuation formation. It consists of four candles in a downtrend, where the first two are black Marubozu candles (candles without shadows), indicating strong selling pressure. The third candle, also black, opens with a gap down. The fourth candle completely engulfs the third and closes within the first candle's body. This pattern may reflect a strong continuation of the bearish trend, with the fourth candle's engulfing nature indicating the concealment of any bullish attempt to reverse the trend. Traders often interpret this as a signal to maintain or initiate short positions, with stop-loss orders set above the high of the fourth candle. On-Neck The On-Neck is a bearish continuation formation in candlestick charting. It typically emerges in a downtrend and is composed of two candles: the first is a red candle, followed by a green candle. The second candle opens lower than the first candle's close and closes near the low or close of the first candle but not below it, creating a pattern that resembles a neck. This pattern indicates that selling pressure remains dominant despite a brief bullish interlude. Traders often view the On-Neck as a confirmation to continue or initiate short positions, expecting the downtrend to persist. For risk management, a stop-loss is usually placed just above the high of the second candle to protect against potential trend reversals. The Bottom Line In conclusion, mastering these advanced candlestick patterns may potentially enhance trading strategies. Each pattern provides unique insights into market dynamics, offering traders valuable tools for decision-making. To apply these concepts in real-world trading, consider opening an FXOpen account, a broker that provides robust platforms and resources to support 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.
NASDAQ:AMZNEducation
by FXOpen
3
Most Powerful Candlestick Patterns Candlestick patterns are like building blocks in understanding how the stock market behaves and how prices might change. Knowing about these patterns can really help you make smarter decisions when trading. I. Introduction to 35 Candlestick Patterns Candlestick patterns are visual representations of price movements within a specific time frame. Each candlestick represents the opening, closing, high, and low prices for that period. The body of the candlestick is the difference between the opening and closing prices, while the wicks or shadows represent the price range. II. Bullish Candlestick Patterns A bullish candlestick pattern is essentially a visual signal that appears on a price chart, indicating a potential upward momentum or trend in the market. It’s like a green light for traders, suggesting that the price of the asset is likely to go up. Traders use these patterns to time their entry into the market with the goal of capitalizing on the anticipated price increase. Bullish Single Candlestick Patterns: Hammer: A single candlestick pattern characterized by a small body and a long lower wick, signaling a potential bullish reversal after a downtrend. Inverted Hammer: Another single candlestick pattern with a small body and a long upper wick, indicating a potential bullish reversal after a downtrend. Black Marubozu: A single candlestick pattern characterized by a long black body with no shadows, representing a strong bearish sentiment. White Marubozu: A single candlestick pattern characterized by a long white body with no shadows, representing a strong bullish sentiment Bullish Double Candle Patterns: Bullish Engulfing: A two-candle pattern where a small bearish candle is followed by a larger bullish candle that engulfs the previous one, suggesting a potential trend reversal to the upside. Bullish Piercing Pattern: A two-candle pattern starting with a bearish candle followed by a larger bullish candle that opens below the previous day’s low and closes more than halfway into the prior bearish candle. Bullish Counterattack: A two-candle pattern starting with a bearish candle, followed by a larger bullish candle that engulfs the entire range of the previous bearish candle. Tweezer Bottom: A two-candle pattern occurring after a downtrend, characterized by two consecutive bearish candles with similar lows, suggesting potential support and a bullish reversal. Mat Hold: A five-candle pattern suggesting a continuation of a bullish trend. It begins with a bullish candle followed by a bearish candle, a long bullish candle, a small bullish or bearish candle, and ends with another bullish candle. Bullish Triple Candle-Sticks Pattern: Morning Star Pattern: A three-candle pattern starting with a bearish candle, followed by a small indecisive candle (often a doji), and then a bullish candle, indicating a potential bullish reversal. Three White Soldiers: A bullish formation consisting of three consecutive long bullish candles. Each candle closes higher than the previous one, suggesting a strong potential upward movement. Rising Three Methods: A five-candle pattern signaling a continuation of the current bullish trend. It starts with a long bullish candle, followed by three smaller bearish candles, and ends with another long bullish candle. Upside Tasuki Gap: A three-candle pattern involving a bullish candle, a gap up, a bearish candle, and finally another bullish candle that opens within the range of the previous bearish candle. III. Bearish Candlestick Patterns A bearish candlestick pattern is a visual cue on a price chart that suggests a potential downward momentum or trend in the market. It’s akin to a red light for traders, indicating that the price of the asset is likely to decrease. Traders pay close attention to these patterns to time their entry into the market, aiming to profit from the expected price decline. Single Candle Patterns: Hanging Man: A single candlestick pattern resembling a hanging man, signaling a potential bearish reversal after an uptrend. Learn more about Hanging Man Candlestick Shooting Star Pattern: A single candlestick pattern characterized by a small body and a long upper wick, suggesting a potential bearish reversal. Bearish Engulfing: A two-candle pattern where a small bullish candle is followed by a larger bearish candle that engulfs the previous one, indicating a potential trend reversal to the downside. Black Marubozu: A single candlestick pattern characterized by a long black body with no shadows, representing a strong bearish sentiment. Double Candle Patterns: Evening Star Pattern: A three-candle formation indicating a potential bearish reversal. It starts with a bullish candle, followed by a small indecisive candle and ends with a bearish candle. Dark Cloud Cover: A two-candle pattern starting with a bullish candle followed by a larger bearish candle that opens above the previous day’s high and closes more than halfway into the prior bullish candle. Bearish Harami: A two-candle pattern. The first candle is a large bullish one, followed by a smaller bearish candle that is entirely within the range of the bullish candle. This pattern indicates a potential bearish reversal. Bearish Counterattack: A two-candle pattern starting with a bullish candle, followed by a larger bearish candle that engulfs the entire range of the previous bullish candle. On-Neck Pattern: A two-candle pattern where the first day has a long black body followed by a second day with a small body that closes slightly above the previous day’s low. Triple Candle Patterns: Three Black Crows: A bearish formation consisting of three consecutive long bearish candles. Each candle closes lower than the previous one, suggesting a strong potential downward movement. Three Inside Down: A bearish reversal pattern. It consists of a bullish candle, a smaller bearish candle that is completely within the range of the previous candle, and a larger bearish candle. Three Outside Down: A three-candle pattern. It starts with a bullish candle, followed by a larger bearish candle that completely engulfs the previous bullish candle, and then another bearish candle. Neutral Candlestick Pattern A neutral candlestick pattern doesn’t strongly indicate either a bullish or bearish trend. It’s like a yellow light, suggesting caution and indicating that the market is uncertain or indecisive about its direction. Traders look at these patterns to assess the market’s stability or potential upcoming change in trend. Single Candle Patterns: [/b Doji: A single candlestick pattern with a small body, indicating market indecision. It suggests a potential trend reversal, whether bullish or bearish. Spinning Top: A single candlestick pattern with a small body and long upper and lower wicks, signaling market indecision and potential trend reversal. High Wave: A single candlestick pattern characterized by a long upper and lower wick relative to the body, suggesting high market volatility and uncertainty. Double Candle Patterns: Tweezer Top: A two-candle pattern occurring after an uptrend, characterized by two consecutive bullish candles with similar highs, suggesting potential resistance and a bearish reversal
Education
by Golden_Star1994
1
Learn Profitable Doji Candle Trading Strategy In the today's post, I will share my Doji Candle trading strategy. This strategy combines the elements of multiple time frame analysis, price action and key levels. Step 1 Analyze key levels on a daily time frame. Identify vertical and horizontal supports and resistances. Here are the key structures that I spotted on on AUDUSD. Step 2 Look for a formation Doji Candle on a key structure. This rule is crucially important: we will trade only the Doji candles that are formed on key levels. From key supports, we will look for buying, and we will look for shorting from key resistances. Look at this Doji Candle that was formed on a key daily support on AUDUSD. Step 3 Look for a horizontal range on a 4h/1h time frames. Doji Candle signifies indecision. Quite often, you will notice the horizontal ranges on lower time frames when this candlestick is formed. Here is a horizontal range that was formed on a 4H time frame on AUDUSD after a formation of Doj i. Step 4 Look for a breakout of the range. To sell from a key resistance, we will need a bearish breakout of the support of the range. That will be our bearish confirmation. To buy from a key support, we will need a bullish breakout of the resistance of the range. It will be our bullish signal. Here is a confirmed breakout of the resistance of the range with a 4H candle close above. That is our bullish confirmation on AUDUSD. Step 5 Buy aggressively or on a retest. After you spotted a confirmed breakout of the range, open a trading position aggressively or on a retest. Personally, I prefer trading on a retest. If you sell, a stop loss should be above the high of the range and your target should be the closest key daily support. If you buy, your stop loss should be below the low of the range and a take profit will be on the closest daily resistance. On AUDUSD, a long position was opened on a retest. Stop loss is lying below the lows. Take profit is the closest resistance. Here is how the great strategy works! Always patiently wait for a confirmation! That is your key to successful trading Doji Candle. ❤️Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
5
Think You Know Candlestick Patterns?Welcome to the world of candlestick patterns! 💜If you appreciate our charts, give us a quick 💜 Doji candlesticks, with their equal or nearly equal open and close, offer crucial insights into market indecision. Understanding these formations is key to anticipating potential reversals and trade decisions. Let’s delve deeper into their significance and how to incorporate them effectively into your trading strategy. Understanding Doji: A Doji occurs when opening and closing prices are almost identical, signaling market indecision. Neutral Nature: Doji are neutral signals, highlighting the tug-of-war between buyers and sellers. Psychological Insight: Forming amid market uncertainty, Doji reflect hesitancy and potential trend shifts. 4 Types of Doji and Their Meanings: Dragonfly Doji: Description: Open and close near the high of the day. Interpretation: Sellers drive prices down, but buyers regain control. Action: Explore long positions with support from trend analysis and resistance levels. Gravestone Doji: Description: Open and close occur near the low of the day. Interpretation: Buyers initially push prices up, but sellers regain control. Action: Consider short positions if confirmed by trend analysis and support/resistance levels. Traditional Doji: Description: Open and close are almost identical. Interpretation: Strong market indecision; trend reversal potential. Action: Confirm with trend analysis; consider reversal or continuation trades accordingly. Long-Legged Doji: Description: Significantly long upper and lower shadows. Interpretation: Represents high indecision; neither buyers nor sellers dominate. Action: Await confirmation from other indicators for trade decisions. Incorporating Doji Into Your Strategy: Combining with Support/Resistance: Doji at key support/resistance levels enhance their significance. Use them to validate potential reversal points. Utilizing Trend Analysis: Doji are potent when aligned with prevailing trends. In an uptrend, Doji signal potential reversals, while in downtrends, they may indicate trend exhaustion. Implementing Fibonacci Levels: Combine Doji with Fibonacci retracement levels for robust entry/exit points. A Doji at a Fibonacci level strengthens the reversal signal. Risk Management: Define stop-loss and take-profit levels logically. Doji, while insightful, don’t guarantee outcomes. Protect your investments with sound risk management. Remember, successful trading is a blend of strategy, discipline, and adaptability. Doji candlesticks, as valuable tools, provide glimpses into market psychology. When integrated wisely, they can bolster your trading decisions, enhancing your overall effectiveness in the dynamic world of trading.
Education
by Vestinda
Hammer of Trend ChangeThe Hammer and Inverted Hammer candlestick patterns, two powerful tools adept traders employ for reversals. If you appreciate our charts, give us a quick 💜💜 Here’s what you need to know: 1. Understanding the Essence: Hammer: This pattern typically emerges at the culmination of a downtrend, indicating a potential bullish surge. Its small body and extended lower wick signify the bears' struggle to maintain lower prices. Inverted Hammer: Contrarily, this pattern usually appears at the end of an uptrend, foreshadowing a possible bearish move down. Its small body and prolonged upper shadow denote the weakening grip of the bulls. 2. Decoding the Signals: While Hammers don’t provide direct trading signals, they suggest a shift in momentum. Traders often see them as a sign of potential upward movement after a downtrend. Inverted Hammers, appearing after an uptrend, hint at a potential reversal. The failed attempt by the bulls to sustain higher prices signifies a looming bearish sentiment. 3. Crafting Your Strategy: When dealing with Hammers, traders might enter immediately after its formation or wait for confirmation with a bullish candle. Setting a stop-loss just below the recent low and targeting a significant resistance level is a common strategy. For Inverted Hammers, a similar approach can be employed, focusing on prior support-turned-resistance levels. Vigilance and additional technical analysis are crucial for accurate predictions. 4. A Word of Caution: While these patterns are robust, they should never be sole trading indicators. Combining them with other technical tools enhances accuracy and confidence in your trades. 5. Practice and Precision: Prior to real trades, practice these strategies on demo accounts or paper trading. Platforms like TradingView, Vestinda and others like MetaTrader offer a conducive environment for refining your skills. Incorporating Hammer and Inverted Hammer patterns into your trading toolkit empowers you to detect potential trend shifts. Remember, in trading, nuanced insights can translate into significant profits. Happy trading!
Education
by Vestinda
5
What is Tweezer Top and Bottom Patterns?Welcome to the world of trading patterns. If you appreciate our charts, give us a quick 💜💜 Today let's explore Tweezer top and bottom patterns, often referred to as simply "tweezers," are powerful candlestick formations that hold the potential to unveil significant shifts in market sentiment. These patterns materialize as twin candles appearing at the culmination of a trend, indicating the impending transition of market dynamics. In this exploration, we'll delve into the intricacies of these patterns, unveiling their secrets for traders seeking to navigate the ever-evolving landscape of financial markets. Tweezer Top: A tweezer top pattern occurs during an uptrend when the price reaches a high point and then experiences a sudden reversal. It is characterized by two consecutive candlesticks with almost identical highs. The pattern suggests that the bulls are losing their grip, and a potential trend reversal or a bearish correction might follow. Traders often interpret the tweezer top as a signal to consider selling or shorting an asset, especially if it appears after a prolonged uptrend. However, it's essential to confirm this pattern with other technical indicators or chart patterns to increase its reliability. Tweezer Bottom: Conversely, a tweezer bottom pattern emerges in a downtrend when the price reaches a low point and then reverses its direction. Similar to the tweezer top, tweezer bottoms consist of two consecutive candlesticks with nearly identical lows. This pattern signifies a potential end to the bearish trend, indicating that the bulls might take control soon. Traders view the tweezer bottom as a signal to consider buying or going long on an asset, particularly if it appears after an extended downtrend. As with any trading pattern, it's crucial to validate the tweezer bottom with other technical tools to confirm the potential trend reversal. Key Considerations: Confirmation is Key: Tweezer patterns, while useful, should always be confirmed by other technical indicators or chart patterns before making trading decisions. Volume Analysis: Analyzing trading volumes during the formation of tweezer patterns can provide additional confirmation of the potential trend reversal. Market Context: Consider the overall market context and fundamental factors influencing the asset to make well-informed trading decisions.
Education
by Vestinda
2
Using Candle Wicks to refine your daytrading entriesIn the video I discuss the importance of 'Candle Wicks' in price action and how I use them to refine an entry. I like to use the 1 minute chart for my entries and have certain criteria to trade with the trend (which I discuss in the video). When trying to trade with the predominant trend up/down, I look to trade retracements. One thing I look for is wicks into the EMAs and then a reversal of the previous candle. I find these greatly help my timing for entries and can greatly reduce my risk. I hope that you enjoy the video and are able to use in your own trading. ** If you like the content then take a look at the profile to get more daily ideas and learning material ** ** Comments and likes are greatly appreciated **
Education
by TradeTheStructure
Candlestick pattern: Shooting starShooting Star is a bearish candlestick reversal pattern. It signifies the end of an uptrend and the potential start of a downtrend. Its opposite is the Morning Star. When analyzing this pattern, we should observe if the confirming candle closes within the lower third of the range formed. This condition acts as a filter when deciding whether to initiate a trade or not. This filter makes sense because a stronger confirming candle indicates greater rejection of the uptrend continuation, thus increasing the likelihood of the pattern's success and the formation of a new downtrend. On the other hand, if the confirming candle does not close below two-thirds of the range formed, it could indicate weakness in the direction of the trend and decrease the probability of the start of a new downtrend.
NASDAQ:AAPLEducation
by JRiquelmeTrading
Chart pattern: Head and Shoulders (H&S)The Head and Shoulders, from now on referred to as H&S, is a chart pattern used in technical analysis of stock markets. It is a pattern that indicates a reversal, signaling the end of a trend and the beginning of a new trend in the opposite direction. It is one of the most important and widely used patterns due to its high reliability and the number of required implications. However, this does not mean it is infallible, as its success rate is around 70%. Regarding its potential projection, if the price breaks below the support line after the formation of the Right Shoulder (RS), the range between the maximum price of the Head (H) and the support line is measured. This distance is then applied to the breakout point, as shown in the image, to obtain the minimum pattern projection.
Education
by JRiquelmeTrading
1