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Chart Patterns

Unlock Trading Success with These Proven Chart PatternsTechnical Analysis of the Trade: The chart you provided highlights several patterns and levels, which I'll break down into different components for a clear analysis: 1. Market Structure: Ascending Channel: The price is moving within an upward-sloping channel, indicating that the market is in a bullish structure. An ascending channel like this represents a controlled trend higher with occasional corrections, providing potential buying opportunities on pullbacks to the lower boundary of the channel. Trade Implication: As long as price remains within this channel, the overall bias is bullish. A break below the channel, however, would signal a shift in momentum, suggesting a potential sell-off. 2. Bull Flags: Bull Flag 1 (Lower on the chart): This flag formed after a strong upward move, followed by a tight consolidation, which is a classic bullish continuation pattern. The breakout from this flag has already occurred, leading to a further upward push. Bull Flag 2 (Upper on the chart): Similar to the previous one, this bull flag formed after another sharp move up, indicating a potential continuation. The price is currently in the process of consolidating in this flag, which makes this an area of interest for a potential entry on a breakout. Trade Implication : Both flags suggest that the market is in a bullish phase. You could consider entering on a breakout above the upper bull flag, aiming for continuation to the upside. 3. Support/Resistance Zones: 1-Hour Liquidity Zones (LQZ): The chart shows two 1-hour liquidity zones: Upper LQZ (Around 2660): Price is consolidating just below this area. This zone could act as short-term resistance but would be a strong area for a breakout and continuation move higher. Lower LQZ (Around 2640): Should the price reject from the upper bull flag, this area is the next potential support zone where price could find liquidity and buyers might step back in. 4-Hour Liquidity Zone (Around 2622): This lower level is a major support area. If price retraces significantly, this could be a high-probability area for a reversal or continuation of the overall bullish trend. Trade Implication: If the price breaks above the 1-hour LQZ (Upper), it could trigger a bullish continuation. If rejected, you might look for a retracement back to the lower LQZ or even the 4-hour LQZ for a potential buying opportunity. 4. Pattern Confirmation & Confluences: Multi-Touch Confirmation: The price has interacted with significant levels multiple times (ascending channel, bull flags, and liquidity zones), strengthening the idea that these levels are respected by the market. This gives added confidence in the patterns you are trading off of, such as bull flags and support levels​​. Trinity Rule: Before entering a trade, ensure you have at least three confluences. In this case, potential confluences include: Price staying within the ascending channel. Bull flag formation at the current level. Proximity to key liquidity zones. With these three factors, you can confidently look for a continuation to the upside​​. 5. Price Action Signals: Correction vs. Impulse: If the market continues to move upwards impulsively, it supports the bullish continuation thesis. However, if it begins to correct, expect a pullback towards the lower boundaries of the liquidity zones or the lower boundary of the ascending channel. Trade Implication: If you see a sharp impulse (breakout of the upper bull flag), it could be a signal to enter long positions, while a slow corrective move might indicate waiting for a better entry lower. 6. Risk Management: Stop Placement: Place your stop loss below the lower boundary of the second bull flag or below the most recent swing low. For a safer trade, consider setting the stop just below the lower 1-hour LQZ (2640), where price may likely find support. Trade Implication: This gives the trade room to breathe while protecting against a deeper pullback. Take Profit: Based on the bullish pattern, your first take profit should be just above the upper 1-hour LQZ around 2660, with the next take profit near the next liquidity zone or potential resistance levels further up. 7. Probable Scenarios: Bullish Scenario: If price breaks above the upper 1-hour LQZ and the current bull flag, it could rally towards the next significant resistance level (around 2670-2680). Bearish Scenario : If price rejects from the upper bull flag and falls below the lower 1-hour LQZ, it could retrace to the 4-hour LQZ around 2620. This area would then offer a high-probability long entry. Summary of the Trade: Bias: Bullish (based on the ascending channel, bull flags, and liquidity zones). Entry Strategy: Enter on a breakout above the upper bull flag, with the price moving above 2660. Alternatively, if the price retraces, enter near the 2640 (lower 1-hour LQZ) or 2622 (4-hour LQZ). Stop Loss: Below the lower 1-hour LQZ (2640) or the recent swing low within the bull flag consolidation. Take Profit: Around 2670-2680 (based on the next potential resistance and liquidity zones).
OANDA:XAUUSDEducation
by Adlercon333
Entry Types Simplified: The Essential Guide for New Traders!Key Structures and Formations: Ascending Channel: The price has been moving within this channel for a while. An ascending channel indicates an uptrend but also signals that the price is forming higher highs and higher lows, which can later break either direction. Bull Flag: A classic continuation pattern where after a strong bullish move (flagpole), the price consolidated before continuing upwards. This was a great entry point for traders watching for bullish momentum. Failed Flag: It appears there was a bull flag that failed to continue upwards and instead reversed direction. This type of failure is a strong indication for traders to reconsider their long positions or take partial profits. Often when a flag fails, it can lead to an aggressive move in the opposite direction. Zones: 4HR, 1HR, 15M LQZ (Liquidity Zones): These zones mark areas where liquidity is expected to be high, which means these are key levels to watch for price reactions. The 4HR LQZ around 2,622 and the 1HR LQZ around 2,639 are critical areas for price retracement or reversals, particularly in a trending market. Current Price Action: The price is currently hovering near the 15M LQZ (2,655.443), which could act as a short-term support/resistance level. Watching how the price reacts to this zone will provide insight into the next move. If the price continues to drop, the 1HR LQZ around 2,639 may provide support. If that fails, the next likely target is the 4HR LQZ near 2,622. Recommendations Based on Confluence: Check for Multi-Touch Confirmation: If the price interacts with the 4HR or 1HR LQZ zones multiple times and forms a base, this could serve as strong confirmation of a potential reversal or continuation​. Comprehensive Patterns: The failed flag within the larger ascending channel provides a great example of how smaller patterns (failed flag) can give clues about larger moves (channel break)​. Follow the Trinity Rule: As per the Trinity Rule, wait for multiple confirmations across different structures before entering a trade. The liquidity zones and patterns within patterns provide a good basis for this​.
OANDA:XAUUSDEducation
by Adlercon333
How to Trade with the Island Reversal PatternHow to Trade with the Island Reversal Pattern Price action analysis serves as a pivotal methodology in financial markets, offering a means to assess and determine the future price movements of various assets, including stocks, currencies, and commodities. Among the many tools employed within this method, the Island Reversal pattern stands out as a significant indicator of potential trend reversals. What Is an Island Reversal Pattern? The Island Reversal is a technical analysis pattern that signals a potential trend reversal. It typically occurs after a strong uptrend or downtrend and is characterised by a gap in price action, isolating a group of candlesticks. The pattern suggests a shift in market sentiment, indicating that the previous trend may be losing momentum. How to Spot an Island Reversal in the Chart To identify the setup, traders pay close attention to the following characteristics, which can manifest in both bullish and bearish market conditions: Strong Trend: - Bullish: This pattern often materialises after a prolonged downtrend. It signifies a potential price change to the upside. - Bearish: Conversely, in a bullish market, the pattern emerges following a sustained uptrend, suggesting a possible change in a trend to the downside. Gap in Island Reversal: - Bottom Island Reversal: In a bullish context, there is a gap down, creating an "island" of isolated candlesticks, indicating a shift from bearish sentiment to potential bullish momentum. - Top Island Reversal: For a bearish reversal, there is a gap up, isolating a group of candlesticks, signalling a transition from bullish to potentially bearish market sentiment. Isolation: - Bullish Island Reversal: The gap is created by an upward movement that is isolated from the surrounding price action, forming the characteristic island formation. - Bearish Island Reversal: In a bearish context, the gap is formed by a downward movement that does not overlap with the previous, creating a distinctive island formation. How to Trade the Island Reversal Traders employing the setup adhere to a systematic strategy for identifying and capitalising on a potential change in a trend. Patiently awaiting confirmation of the reversal through subsequent price action, traders enter the market upon the break of isolation, where the price decisively moves below (for a bearish scenario) or above (for a bullish scenario) the isolated island. Profit targets may be set by considering key support and resistance levels to potentially enhance precision. The placement of stop-loss orders just above or below the pattern is a critical risk management component. Traders carefully assess the risk-reward ratio to align potential profits with associated risks. This holistic approach reflects a commitment to disciplined decision-making, combining technical analysis and prudent risk management in navigating the complexities of financial markets. Live Market Example The TickTrader chart by FXOpen below shows a bearish setup. The trader takes the short at the opening of the new candle below the Island. Their stop loss is above the setup with a take profit at the next support level. The Bottom Line Although the Island Reversal is a popular technical analysis tool, it's crucial to wait for confirmation and consider other technical indicators to potentially increase the probability of an effective trade. As with any trading strategy, risk management is key to mitigating potential losses. Always adapt your approach based on the specific conditions of the market and use the pattern as one of several tools in your trading arsenal. To develop your expertise, open an FXOpen account to trade in numerous markets with exciting trading conditions. FAQs Why Is Risk Management Important When Trading the Island Reversal? The pattern is considered a strong signal of a change in the price direction, but like all technical patterns, it is not infallible. There is always a risk that the pattern may fail to lead to the expected price movement. Effective risk management helps limit losses in case the trade doesn't play out as anticipated. Should Traders Solely Rely on the Island Reversal for Trading Decisions? No, traders always wait for confirmation and incorporate other technical indicators to potentially enhance the probability of an effective trade. The pattern should be regarded as just one of several tools in a trader's toolkit. Is There a Platform Where Traders Can Apply Their Knowledge of the Pattern in Live Markets? Yes, traders can explore FXOpen’s free TickTrader trading platform to trade in over 600 markets and apply their understanding of the pattern in practical trading scenarios. 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
4
Swing Trade Set UPA simple, Swing Trade Set UP. Often it is simple trade setup that make lots of money. This is one such set up. Here trend is captured with alignment of MA's . 3 MAs are plotted EMA-10, EAM-21 and SMA 50. To pick the trend, first condition is EMA-10 > EMA-21 > SMA 50. Second condition is price above all these MAs. In the chart it is marked wherever this occurred. Now to make entry you have to wait till the stock out performs the Index. It can be captured through plotting a indicator named RS or Relative strength. use Bench mark index as #NIFTY50 or #CNX500. You can see that there are areas where MAs aligned but RS was negative and trend failed. But when all these aligned price moved up nicely. You can exit the trade on deceive break of EMA 21 or SMA 50. Try this on many charts and lean the nuance before making actual trade.
NSE:DEEPAKFERTEducation
by Vasu_devan
The Multitimeframe Bias method for enjoyable trend tradingUnlock the power of Multitimeframe Bias trading! This approach aims to identify and trade with the prevailing trend and momentum by assessing the bias across different timeframes. By determining the alignment of various timeframes, you can anticipate potential rollovers and make more informed trading decisions. Fully aligned and integrated with SB Style trading, this method offers a mechanical system that prevents impulsive trades, ensuring a disciplined and strategic approach to the market. Learn how to leverage Multitimeframe Bias to enhance your trading strategy today!
OANDA:WTICOUSDEducation
by TC888
The Fair Value Gap (FVG)The term "fair value gap" is known by various names among price action traders, including imbalance, inefficiency, and liquidity void. But what do these imbalances mean? They arise when the forces of buying and selling exert considerable pressure, resulting in sharp and rapid price movements. On a chart, a Fair Value Gap appears as a three-candlestick pattern. In a bullish context, an FVG forms when the top wick of the first candlestick does not connect with the bottom wick of the third candlestick. Conversely, in a bearish scenario, the FVG is created when the bottom wick of the first candlestick fails to connect with the top wick of the third candlestick. The gap on the middle candlestick, created by the wicks of the first and third candlesticks, represents the Fair Value Gap. The concept of FVG trading is based on the idea that the market has a natural tendency to self-correct. These price discrepancies or inefficiencies are generally not sustainable over time, and the market often returns to these gaps before continuing in the same direction as the original impulsive move. What are the Types of Fair Value Gaps? 1. Bearish Fair Value Gap A bearish Fair Value Gap occurs when there is a space between the bottom wick of the first candlestick and the top wick of the third candlestick. This gap typically appears on the body of the middle candlestick, and the individual characteristics of each candlestick are not particularly important. What’s crucial in a bearish scenario is that the gap on the middle candlestick results from the wicks of the surrounding candlesticks not connecting. 2. Bullish Fair Value Gap A bullish Fair Value Gap occurs when the top wick of the first candlestick does not connect with the bottom wick of the third candlestick. In this case, the specific direction of each candlestick is not as important. What really matters is that there is a gap in the middle candlestick, where the wicks of the first and third candlesticks have not linked. 3. Inverse Fair Value Gap An Inverse Fair Value Gap is an FVG that has lost its validity in one direction but remains significant enough to influence price movement in the opposite direction. For example, a bullish FVG is deemed invalid if it fails to act as a demand zone. However, it then transforms into an inverse bearish FVG, which may serve as a supply zone capable of holding the price. 4. Implied Fair Value Gap The Implied Fair Value Gap is also a three-candlestick pattern, but it does not feature a gap on the middle candlestick, which is why it’s called an “implied FVG.” Instead, it consists of a larger middle candle flanked by two relatively long wicks from the first and third candles. The “gap” is defined by marking the midpoint of the wick of the first candlestick that touches the middle candle and the midpoint of the wick of the third candle that also touches the middle candle. These two midpoints create the gap. Here are some factors that can lead to the formation of fair value gaps: 1. Economic Data Releases Key economic data releases, such as changes in interest rates or unemployment statistics, can similarly create imbalances. If the data surprises the market, it can trigger a swift price movement in one direction, resulting in a gap. 2. Sudden News Events Unexpected news that significantly affects market sentiment can lead to a rapid increase in buying or selling activity, resulting in a gap as prices adjust to the new information. For instance, if a company unexpectedly reports strong earnings, its stock price may surge, creating a gap on the chart. 3. Market Openings or Closings Gaps may form during periods of low liquidity, such as at market openings or closings. With fewer market participants, even a small amount of buying or selling can cause a noticeable price jump that isn’t quickly countered. 4. Large Institutional Trades Significant trades by institutional investors can also lead to fair value gaps (FVGs). When a hedge fund or financial institution executes a large buy or sell order, it can overwhelm the existing order book, causing a rapid price shift and leaving a gap behind. 5. Weekend Gaps FVG's are often observed between the close on Friday and the open on Monday, reflecting news or events that occurred over the weekend. KEY POINTS TO KNOW - Fair Value Gaps (FVGs) are powerful tools traders use to identify market imbalances and inefficiencies. - FVGs occur when buying or selling pressure leads to significant price movements, leaving behind gaps on price charts. - FVGs can be identified through technical analysis involving the analysis of candlestick patterns and price chart patterns. - Traders can categorize FVGs into two types: Undervalued FVGs, where prices are lower than fair value, and Overrated FVGs, where prices are higher.
Education
by TaylorDeMario
4
TOP 20 TRADING PATTERNS [cheat sheet]Hey here is Technical Patterns cheat sheet for traders. 🖨 Every trader must print this cheatsheet and keep it on the desk 👍 🖼 Printable picture below (Right click > Save Image As…) In finance, technical analysis is an analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis use many of the same tools of technical analysis, which, being an aspect of active management, stands in contradiction to much of modern portfolio theory. The efficacy of both technical and fundamental analysis is disputed by the efficient-market hypothesis, which states that stock market prices are essentially unpredictable, and research on whether technical analysis offers any benefit has produced mixed results. As such it has been described by many academics as pseudoscience. Fundamental analysts examine earnings, dividends, assets, quality, ratio, new products, research and the like. Technicians employ many methods, tools and techniques as well, one of which is the use of charts. Using charts, technical analysts seek to identify price patterns and market trends in financial markets and attempt to exploit those patterns. Technicians using charts search for archetypal price chart patterns, such as the well-known head and shoulders or double top/bottom reversal patterns, study technical indicators, moving averages and look for forms such as lines of support, resistance, channels and more obscure formations such as flags, pennants, balance days and cup and handle patterns. Technical analysts also widely use market indicators of many sorts, some of which are mathematical transformations of price, often including up and down volume, advance/decline data and other inputs. These indicators are used to help assess whether an asset is trending, and if it is, the probability of its direction and of continuation. Technicians also look for relationships between price/volume indices and market indicators. Examples include the moving average, relative strength index and MACD. Other avenues of study include correlations between changes in Options (implied volatility) and put/call ratios with price. Also important are sentiment indicators such as Put/Call ratios, bull/bear ratios, short interest, Implied Volatility, etc. There are many techniques in technical analysis. Adherents of different techniques (for example: Candlestick analysis, the oldest form of technical analysis developed by a Japanese grain trader; Harmonics; Dow theory; and Elliott wave theory) may ignore the other approaches, yet many traders combine elements from more than one technique. Some technical analysts use subjective judgment to decide which pattern(s) a particular instrument reflects at a given time and what the interpretation of that pattern should be. Others employ a strictly mechanical or systematic approach to pattern identification and interpretation. Contrasting with technical analysis is fundamental analysis, the study of economic factors that influence the way investors price financial markets. Technical analysis holds that prices already reflect all the underlying fundamental factors. Uncovering the trends is what technical indicators are designed to do, although neither technical nor fundamental indicators are perfect. Some traders use technical or fundamental analysis exclusively, while others use both types to make trading decisions. Best regards Artem Shevelev
BITFINEX:BTCUSDEducation
by ArShevelev
239
These Market Structures Are Crucial for EveryoneIn this article, we will simplify complex market structures by breaking them down into easy-to-understand patterns. Recognizing market structure can enhance your trading strategy, increase your pattern recognition skills in various market conditions. Let’s dive into some essential chart patterns that every trader should know. Double Bottom / Double Top A double bottom is a bullish reversal pattern that occurs when the price tests a support level twice without breaking lower, indicating strong buying interest. This pattern often suggests that the downtrend is losing momentum and a potential uptrend may follow. Conversely, a double top signals a bearish reversal, formed when the price tests a resistance level twice without breaking through. This pattern indicates selling pressure and suggests that the uptrend may be coming to an end. Bull Flag / Bear Flag A bull flag is a continuation pattern that appears after a strong upward movement. It typically involves a slight consolidation period before the trend resumes, providing a potential entry point for traders looking to capitalize on the ongoing bullish momentum. On the other hand, a bear flag forms during a downtrend, signaling a brief consolidation before the price continues its downward movement. Recognizing these flags can help traders identify potential breakout opportunities. Bull Pennant / Bear Pennant A bull pennant is a continuation pattern that forms after a sharp price increase, followed by a period of consolidation where the price moves within converging trendlines. This pattern often indicates that the upward trend is likely to continue after the breakout. Conversely, a bear pennant forms after a sharp decline, with the price consolidating within converging lines. This pattern suggests that the downtrend may resume after the breakout. Ascending Wedge / Descending Wedge An ascending wedge is a bearish reversal pattern that often forms during a weakening uptrend. It indicates that buying pressure is slowing down, and a reversal may be imminent. Traders should be cautious as this pattern suggests a potential downtrend ahead. In contrast, a descending wedge appears during a downtrend and indicates that selling pressure is weakening. This pattern may signal a bullish reversal, suggesting a possible upward breakout in the near future. Triple Top / Triple Bottom A triple top is a bearish reversal pattern that forms after the price tests a resistance level three times without breaking through, indicating strong selling pressure. This pattern can help traders anticipate a potential downtrend. Conversely, a triple bottom is a bullish reversal pattern where the price tests support three times before breaking higher. This pattern highlights strong buying interest and can signal a significant upward move. Cup and Handle / Inverted Cup and Handle The cup and handle pattern is a bullish continuation pattern resembling a rounded bottom, followed by a small consolidation phase (the handle) before a breakout. This pattern often indicates strong bullish sentiment and can provide a solid entry point. The inverted cup and handle is the bearish counterpart, signaling potential downward movement after a rounded top formation, suggesting that a reversal may occur. Head and Shoulders / Inverted Head and Shoulders The head and shoulders pattern is a classic bearish reversal signal characterized by a peak (head) flanked by two smaller peaks (shoulders). This formation indicates a potential downtrend ahead, helping traders to identify possible selling opportunities. The inverted head and shoulders pattern serves as a bullish reversal indicator, suggesting that an uptrend may follow after the price forms a trough (head) between two smaller troughs (shoulders). Expanding Wedge An expanding wedge is formed when price volatility increases, characterized by higher highs and lower lows. This pattern often indicates market uncertainty and can precede a breakout in either direction . Traders should monitor this pattern closely, as it can signal potential trading opportunities once a breakout occurs. Falling Channel / Rising Channel / Flat Channel A falling channel is defined by a consistent downtrend, with price movement contained within two parallel lines. This pattern often suggests continued bearish sentiment. Conversely, a rising channel indicates an uptrend, with price moving between two upward-sloping parallel lines, signaling bullish momentum. A flat channel represents sideways movement, indicating consolidation with no clear trend direction, often leading to a breakout once the price escapes the channel. P.S. It's essential to remember that market makers, whales, smart investors, and Wall Street are well aware of these structures. Sometimes, these patterns may not work as expected because these entities can manipulate the market to pull money from unsuspecting traders. Therefore, always exercise caution, and continuously practice and hone your trading skills. What are your thoughts on these patterns? Have you encountered any of them in your trading? I’d love to hear your experiences and insights in the comments below! If you found this breakdown helpful, please give it a like and follow for more technical insights. Stay tuned for more content, and feel free to suggest any specific patterns you’d like me to analyze next!
Education
by ArShevelev
5
Quarter Theory: Intraday Trading Mastery - Part 2 ExamplesGreetings Traders! In today's video, we'll continue our deep dive into Quarter Theory Intraday Trading Mastery—a model rooted in the algorithmic nature of price delivery within the markets. We’ll explore the concept of draw on liquidity through premium and discount price delivery, equipping you to identify optimal trading sessions and execute high-probability trades, all while aligning with market bias. This video is part of our ongoing High Probability Trading Zones playlist on YouTube. If you haven't watched the previous videos, I highly recommend doing so. They provide essential insights into identifying and acting on market bias, which Quarter Theory enhances further. I highly recommend you watch ICT2022 Mentorship model on YouTube, it will really help you in your trading journey, the link to the mentorship is provided below. I’ll attach the links to those videos in the description below. Quarter Theory: Intraday Trading Mastery - Part 1 Intro: Premium Discount Price Delivery in Institutional Trading: ICT 2022 Mentorship: www.youtube.com High Probability Trading Zones: www.youtube.com Best Regards, The_Architect
OANDA:NAS100USDEducation
by The_Archi-tect
Proof Technical Analysis Reigns SupremeIn doing my multi-timeframe analysis from earlier in the evening I was bias long. However I wasn't sure if price wanted to make a deeper pullback to the 1H LQZ I had marked up or even come down for the 3rd touch of my trendline in the ascending wedge (reversal pattern). Dropping down to the 5m timeframe I saw price slowing and formed a hover. I could have set an entry using a lower lot size to build a buffer, confidence, and to be able to participate in the markets - but I didn't. I passed out lol. I knew my bias was still correct and I was confident in taking "another" long position. I saw a larger flag with the close of that flag above a resistance zone or LQZ however you want to label it, and knew my bias was still valid. I took my entry as I saw price stalling forming some 5m dojis. After the first big push up I was able to reduced my risk letting the trade play out. My TP was initially aiming for the high of the day. However I was mindful of NY taking longer to play out and I knew I wasn't able to really monitor my trade. So I "didn't get greedy" and snagged my profits at about 80 ticks on the futures chart. This was a huge lesson in trusting the story price tells us through market structure and patterns. Although I didn't participate in my first trade, the trade I did take would have been a great stack-in. I'm glad I was able to participate today as my best and only trading days are Thursdays and Fridays.
OANDA:XAUUSDEducation
by MommaPreneur
2
What are Volume Candles and how to use themVolume Candles are a great chart type you can use to integrate volume analysis into your trading. TradingView is a superb platform that offers this chart type in real-time, so you can immediately get a completely different feel of what the market is actually doing. As an experienced trader, understanding volume candles is crucial in getting a deeper insight into market dynamics. Unlike standard candlestick charts, which focus primarily on price movement, volume candles combine price action with the strength of trading activity (volume). This offers a unique perspective that can give you an edge in reading market sentiment and momentum. What Are Volume Candles? Volume candles are modified candlestick charts where the width of the candle is proportional to the trading volume during the corresponding time period. The typical candlestick elements—open, high, low, and close prices—are still present, but the volume aspect adds an additional layer of information, enhancing the clarity of price action. Key Features of Volume Candles: Height: Represents price movement (just like in regular candlesticks). Width: Indicates the volume of trades within that period. Unique Information You Can Extract from Volume Candles: 1. Volume-Driven Price Action Volume candles show how much trading interest exists at various price levels. When you observe a large volume candle, it tells you that a lot of market participants were active at that price. Conversely, a thin candle signals lower activity. This helps you: A. Identify levels where strong participation occurs (institutional players what I call the puppet master). B. Spot consolidation zones where volume is low, which often precedes significant price moves. 2. Momentum Confirmation High-volume candles that align with price trends suggest strong momentum. Wide Bullish Candles: If you see a wide up candle during an uptrend, it indicates that the buying pressure is backed by solid volume. This gives more credibility to the uptrend and hints at a continued move upward. Wide Bearish Candles: Similarly, a wide down candle during a downtrend signals strong selling pressure. Volume Candle Chart can also be used for day trading purposes where you need to act FAST. This TradingView chart type is extremely good so you don't need to compare the traditional volume bars on the bottom of the chart. IMPORTANT: You must understand the puppet master mentality, which gives you context. *** EXTRA: You can use this theme color.
NASDAQ:COINEducation
by ZoharCho
4
Change of character analysisgood morning traders, this is my analysis of NZDUSD that i forgot to share lol, its a Low probability trade with 65% of win, our key level of a downtrend was broken which confirmed a change of character so I anticipated a new move towards the upside and entered with a tight stoploss and waited for 1H to show us a bullish candle confirmation . The trade is still going up to our prediction reason why I decided to share this is to show people the importance of trend following and how import candlestick confirmation really is. never trade if the trend is not clear and never enter if you don't see a candle confirmation
Education
by StarleXtheTrader
2
What To Expect After The Fed rate Cut: 9-18-2024 (Fed Day)This video is really designed to teach you some basics about Fibonacci Price Theory (FPT) Analysis. I wanted to show you how I see the charts using FPT and why, sometimes, I might be seeing things differently than you do on the charts. In my world, there are simple constructs that are evident on every chart. Supply & Demand zones, trending/flagging, and most importantly Fibonacci Price Theory constructs. Fibonacci Price Theory is the basis of all my analysis. It is the ground-level structure I look for in price on all charts. Then, I move to more advanced indicators and other analysis types to develop a Success/Failure outcome (trend/trade expectation). What I do is not hard to understand - it just takes practice. Fibonacci & Gann techniques are infinitely adaptable to any type of price action. I use another technique I call the Tesla Price Amplitude Arcs which often help me identify where/when price events may happen - but that is for another video (maybe). Ultimately, it comes down to understanding the structure and intent of price action (either success or failure) and how to position your trades for that success or failure of any price event. There are really two types of traders: trend traders and counter-trend traders. Trend traders try to catch the explosive price moves as trend events. Counter-trend traders try to catch major reversal levels in price and try to profit from counter-trend price moves (reversals/reversions). Using FPT, you can learn to execute both type of trading styles and improve your ability to see the market trends/setups more clearly. I hope this video helps you learn to become a better trader and helps you understand my Plan Your Trade videos more clearly. At least you'll be able to understand how I see charts and what drives much of my thinking related to chart. Get some. #trading #research #investing #tradingalgos #tradingsignals #cycles #fibonacci #elliotwave #modelingsystems #stocks #bitcoin #btcusd #cryptos #spy #es #nq #gold
AMEX:SPYEducation
by BradMatheny
7
The "Head and Shoulders": Real success rates.Inverted Head and Shoulders: WATCH volumes when the neckline breaks!! Here is what we can say about the success rate of the inverted head and shoulders pattern in trading: -The inverted head and shoulders pattern is considered one of the most reliable chart patterns to anticipate a bullish reversal. -According to some sources, the success rate of this pattern would be very high, with around 98% of cases resulting in a bullish exit. -More precisely, in 63% of cases, the price would reach the price target calculated from the pattern when the neckline is broken. -A pull-back (return to the neckline after the break) would occur in 45% of cases. -However, it should be noted that these very optimistic figures must be qualified. Other sources indicate more modest success rates, around 60%. -The reliability of the pattern depends on several factors such as respect for proportions, neckline breakout, volumes, etc. A rigorous analysis is necessary. -It is recommended to use this pattern in addition to other indicators and analyses, rather than relying on it blindly. In conclusion, although the inverse head and shoulders pattern is considered a very reliable pattern, its actual success rate is probably closer to 60-70% than the 98% sometimes claimed. It remains a useful tool but must be used with caution and in addition to other analyses. __________________________________________________________________ Head and Shoulders: Here is what we can say about the success rate of the head and shoulders pattern in trading: -The head and shoulders pattern is considered one of the most reliable chart patterns, but its exact success rate is debated among technical analysts. Here are the key takeaways: - Some sources claim very high success rates, up to 93% or 96%. However, these figures are likely exaggerated and do not reflect the reality of trading. - In reality, the success rate is likely more modest. One cited study indicates that the price target is reached in about 60% of cases for a classic head and shoulders pattern. - It is important to note that the head and shoulders pattern is not an infallible pattern. Its presence alone is not enough to guarantee a trend reversal. - The reliability of the pattern depends on several factors such as respect for proportions, the breakout of the neckline, volumes, etc. Rigorous analysis is necessary. - Many experienced traders recommend using this pattern in addition to other indicators and analyses, rather than relying on it blindly. In conclusion, while the head and shoulders pattern is considered a reliable pattern, its actual success rate is probably closer to 60% than the 90%+ sometimes claimed. It remains a useful tool but should be used with caution and in conjunction with other analyses. _____________________________________________________________________________ NB: In comparison, the classic (bearish) head and shoulders pattern would have a slightly lower success rate, with around 60% of cases where the price target is reached.
BITSTAMP:BTCUSDEducation
by Le-Loup-de-Zurich
1
Understanding Candlestick Patterns Understanding Candlestick Patterns Candlestick patterns are one of the most fundamental tools in technical analysis. They provide valuable insight into market sentiment, showing how buyers and sellers are interacting at any given time. By understanding candlestick patterns, traders can make more informed decisions about potential price movements. In this chapter, we’ll explore the basics of candlesticks, including bullish, bearish, and neutral candles, and dive deeper into specific patterns like wickless candles, engulfing patterns, and how to interpret the open and close of a candle. --- What is a Candlestick? A candlestick represents the price action of a security within a specific time frame, such as one minute, one hour, or one day. Each candlestick provides four critical pieces of information: Open: The price at which the asset began trading during the time frame. Close: The price at which the asset finished trading during the time frame. High: The highest price reached during the time frame. Low: The lowest price reached during the time frame. The body of the candlestick represents the distance between the open and close prices, while the “wicks” or “shadows” represent the highs and lows. Bullish Candles A bullish candle forms when the closing price is higher than the opening price, signaling that buyers have control during that period. The body of the candle is typically green or white (depending on charting software), and it indicates upward momentum. Bullish Candle Characteristics: Open price is lower than the close. Buyers have pushed the price higher during the session. Longer bodies suggest stronger bullish sentiment. Example of Bullish Candle: Hammer: A bullish reversal pattern found at the bottom of a downtrend. It has a small body and a long lower wick, showing that sellers tried to push the price lower, but buyers took control by the close, driving the price higher. Bearish Candles A bearish candle forms when the closing price is lower than the opening price, signaling that sellers have control during that period. The body of the candle is typically red or black, indicating downward momentum. Bearish Candle Characteristics: Open price is higher than the close. Sellers dominated the session. Longer bodies suggest stronger bearish sentiment. Example of Bearish Candle: Shooting Star: A bearish reversal pattern found at the top of an uptrend. It has a small body and a long upper wick, indicating that buyers attempted to push the price higher, but sellers gained control, pushing the price down by the close. Neutral Candles A neutral candle forms when there is little difference between the opening and closing prices. This type of candle suggests indecision in the market, where neither buyers nor sellers are fully in control. The candle can have long wicks, showing volatility, but a small body reflects indecisiveness. Example of Neutral Candle: Doji: A Doji candle forms when the opening and closing prices are virtually identical. This pattern often indicates a potential reversal or pause in trend because of the market’s indecision. Wickless Candles A wickless candle is a candlestick that has no upper or lower shadows (wicks), which means the highest and lowest prices during the time frame are exactly at the open or close. These candles signify strong directional moves, as the price doesn’t fluctuate significantly beyond the open and close. Bullish Wickless Candle: The price opens at its low and closes at its high, indicating strong buying pressure throughout the period. Bearish Wickless Candle: The price opens at its high and closes at its low, suggesting strong selling pressure. Interpretation of Wickless Candles: Wickless candles are rare but powerful. They show clear control by one side (buyers or sellers) with little resistance from the other. Traders should watch for these candles during strong trending markets, as they can signal momentum. Wickless Candles and Liquidity In trading, liquidity refers to how easily an asset can be bought or sold without affecting its price. Liquidity is often concentrated at certain price levels, where orders from both buyers and sellers are waiting to be executed. When a wickless candle forms, it can create a liquidity void or gap, since the price hasn’t retraced or tested areas around the open or close of the candle. In simple terms, the lack of a wick suggests the market has skipped over certain price levels without sufficient trading activity. Market participants often believe that price tends to return to these levels in the future, as the market seeks out liquidity to fill these gaps. Why Price Often "Comes Back" to Create a Wick: Liquidity Pools: At untested price levels (around where wicks would normally form), large buy or sell orders may be resting. Market makers and institutional traders are incentivized to revisit these areas to fill unexecuted orders, making it likely that the price will return to this range. Market Efficiency: The market tends to move back to areas of liquidity to balance out price action. Wickless candles show where a rapid price move might have skipped over significant trading interest. Correction or Reversal: In some cases, price retracement occurs when the market "corrects" overextended moves. If a strong bullish or bearish candle lacks wicks, traders may expect a temporary pullback to balance the market. Trading Wickless Candles: Watching for Retracement When you see a wickless candle, it's a potential signal that the price may retrace to "fill" the liquidity void and form a wick. Here's how to trade these setups: 1. Monitor the Wickless Candle: After a strong bullish or bearish candle without wicks, observe the price action in the following periods. Pay attention to areas that the price didn’t test. 2. Wait for Price to Return to the Liquidity Zone: If the market retraces toward the opening or closing price of the wickless candle, it often indicates that the market is filling the liquidity gap. This retracement could provide a trading opportunity. For bullish wickless candles, watch for a retracement to the opening price (the lower end of the candle), where buyers may step in again. For bearish wickless candles, watch for a return to the closing price (the upper end of the candle), where sellers may resume control. 3. Look for Confirmation: Don’t rely solely on the wickless candle. Combine it with other signals, such as support and resistance levels or volume analysis, to confirm if the market is likely to revisit those untested areas. Wickless Candles in Context Wickless candles are not standalone signals; they should be interpreted within the context of the broader market environment. Traders should consider the following: Trend Context: Is the wickless candle part of a strong, established trend? In a powerful trend, price may push ahead without a significant retracement. However, even in trending markets, prices tend to come back and test previous levels eventually. Time Frame: The time frame of the candle matters. A wickless candle on a lower time frame (e.g., 5-minute chart) may quickly retrace, whereas a wickless candle on a higher time frame (e.g., daily or weekly chart) could take much longer to come back to its liquidity zone. Volume: Check for high volume during the wickless candle formation. If there’s a liquidity gap and low volume, it’s more likely that price will retrace to fill those levels.Wickless candles provide important clues about market momentum and liquidity gaps. While they often suggest strong directional movement in the short term, these candles can also indicate areas where price may return in the future to fill untested liquidity. Understanding how to read wickless candles in combination with other technical analysis tools can enhance your ability to identify potential retracement opportunities and anticipate future price movements. Engulfing Candles Engulfing patterns are strong reversal signals that occur when one candle completely engulfs the body of the previous candle. These patterns come in two types: bullish engulfing and bearish engulfing. Bullish Engulfing Pattern Description: A bullish engulfing candle forms when a larger bullish candle fully engulfs the body of the previous bearish candle. This pattern indicates a potential reversal from a downtrend to an uptrend, showing that buyers have overwhelmed sellers. What to Look For: The second candle (bullish) must fully cover the body of the first (bearish) candle. It’s more powerful when it occurs after a prolonged downtrend or near a support level. Bearish Engulfing Pattern Description: A bearish engulfing candle forms when a larger bearish candle fully engulfs the body of the previous bullish candle. This pattern signals a potential reversal from an uptrend to a downtrend, indicating that sellers have taken control. What to Look For: The second candle (bearish) must completely cover the body of the first (bullish) candle. This pattern is stronger when it appears after an extended uptrend or near a resistance level. How to Trade Engulfing Patterns: Entry: For bullish engulfing patterns, enter long trades when the price moves above the high of the bullish candle. For bearish engulfing patterns, enter short trades when the price moves below the low of the bearish candle. Confirmation: Engulfing patterns should be confirmed with increased volume, signaling stronger conviction by buyers or sellers. Engulfing Candles as Demand and Supply Zones Engulfing candles, especially bullish ones, often mark demand zones—areas where buying pressure overwhelmed selling pressure and caused a significant shift in price direction. These zones represent areas where traders and institutions found value and stepped in to buy aggressively, making them key areas for future price reactions. Bullish Engulfing Candles Create Demand Zones: When a bullish engulfing candle forms, the area around the candle's low and close becomes a potential demand zone. When price revisits this area in the future, it’s likely that buyers will step in again, causing the price to bounce. Bearish Engulfing Candles as Supply Zones: While bearish engulfing candles represent supply zones (where sellers dominate), the concept is similar. However, for this discussion, we'll focus on the bullish engulfing candles and their role in creating demand zones.How Engulfing Candles Become Demand Zones Engulfing candles signal strong shifts in market dynamics. Here’s why they often become areas of high demand: 1. Imbalance Between Buyers and Sellers: The large body of the engulfing candle shows that buyers stepped in strongly at that price level, overwhelming sellers. This imbalance creates a "memory" in the market, where participants remember the strength of the move. When the price retraces to this level, there’s a strong likelihood that buyers will re-enter the market, viewing it as an area of value. 2. Institutional Orders: Engulfing candles often indicate areas where institutional traders placed large buy orders. These areas tend to hold significance because institutions may place additional orders at these levels when price returns, reinforcing the demand zone. 3. Market Sentiment Shift: The price action leading to an engulfing candle reflects a sharp change in sentiment. For example, in a bullish engulfing pattern, sellers controlled the market initially, but buyers took over and drove prices up. This sharp reversal marks an area where demand is likely to outpace supply again in the future. Understanding candlesticks and their patterns is a foundational skill in technical analysis. By paying attention to key details such as the open, close, wicks, and the relationship between candles, you can better anticipate price movements and make more informed trading decisions. Candlesticks like bullish, bearish, and neutral patterns, along with specific signals like wickless and engulfing candles, provide valuable insights into the psychology of the market, helping you identify entry and exit points more effectively. In live trading, combining candlestick analysis with other technical indicators, such as moving averages or support and resistance levels, can increase your chances of success. Always remember, though, that no pattern is foolproof, and it’s crucial to use risk management techniques to protect your capital.
OANDA:XAUUSDEducation
by samstoobad