USDJPY TRADE RECAPThese entries was one of the aggressive entries taken as we didn't have clear areas of entries. Watch and See how I took These trades
Chart Patterns
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
Evening Star pattern The Evening Star pattern is a technical analysis tool that signals an upward price momentum's reversal to bearish momentum. The pattern rarely appears, but it is considered a reliable bearish indicator. The Morning Star pattern is also a trend-reversal pattern, which is bullish and gives a buying signal.
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.
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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.
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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.
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.
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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.
Trading Near the Bells Part 2: The CloseIn this second part of our series, we shift focus from the market open to the close—the final hour of the trading session. The dynamics of the close are different from the open because the time to act is much shorter. Unlike the open, where you have the whole trading day ahead of you, the close compresses decisions into a much tighter window. This makes the strategies and the mindset for trading the close unique.
In this section, we'll cover two core strategies for trading the close—one momentum-based and one focused on mean reversion. Whether you're riding the final burst of a trend or capitalising on an overextended market move, these setups can help you navigate this high-stakes period effectively.
The Significance of the Close
The final hour of trading—the "Power Hour" —is dominated by institutional traders and large funds rebalancing their portfolios, closing positions, or placing large end-of-day orders. Retail traders often close out positions as well, creating an environment where liquidity spikes and volatility increases. This surge in activity can lead to significant price swings, especially in individual stocks with strong intraday trends or overextended moves.
What happens during this period can set the stage for the next day’s market action. If the close is strong, closing at or near the high of the day, it suggests that buyers were in control and may continue pushing prices higher the following day. Conversely, a weak close at the low could signal selling pressure carrying over into the next session.
Two Key Strategies for Trading the Close
We’ll explore two strategies tailored for this critical time frame. These setups are designed to take advantage of the distinct characteristics of the close: heightened volatility, fast price action, and end-of-day positioning.
Strategy 1: Run into the Close (Momentum)
The "Run into the Close" strategy tends to work well on days where the market has been trending strongly. This strategy takes advantage of the final surge in momentum as large traders and funds push prices even further in the direction of the trend.
This is particularly effective if the market is breaking out from several days of price compression. The idea is to enter on a pullback in the final hour and ride the momentum into the close.
Setup:
• Look for an established trend during the trading session, with price ideally breaking out of multi-day consolidation.
• Watch for a small pullback in the last hour, ideally to the 9-EMA on the 5-minute chart.
• Wait for price to break back above the 9-EMA after the pullback.
Entry:
• Enter following the break back above the 9-EMA on the 5-minute candle chart.
Stop-Loss:
• Place your stop below the low of the pullback.
Trade Management:
• Use the 9-EMA for dynamic risk management—if price closes below it, consider exiting early.
Target:
• Hold the position until just before the close, capturing the final push of momentum.
Example: The S&P 500 had been trending up all day, breaking out from a tight multi-day consolidation. During the last hour of trading, the market pulls back briefly, touches the 9-EMA, and then breaks back above it. This is your entry signal, allowing you to ride the trend into the final minutes of the session.
S&P 500 5min Candle Chart
Past performance is not a reliable indicator of future results
Strategy 2: Revert to VWAP (Mean Reversion)
The "Revert to VWAP" strategy is a mean-reversion play that tends to work well when the market is overextended going into the last hour of trading. Often, prices can move too far from the day's volume-weighted average price (VWAP), and late in the session, there is a tendency for price to revert back toward it.
This strategy uses the Relative Strength Index (RSI) to identify overbought or oversold conditions and then waits for a break of recent swing highs or lows on a 5-minute chart to trigger the entry.
Setup:
• Look for an overextended market going into the final hour of trading. The price should be far away from VWAP.
• Check RSI on a 5-minute chart for overbought (above 70) or oversold (below 30) conditions.
• Wait for price to break above a recent swing high (for a reversal from oversold) or below a swing low (for a reversal from overbought).
Entry:
• Enter a long position if the price breaks above a swing high (from oversold conditions).
• Enter a short position if the price breaks below a swing low (from overbought conditions).
Stop-Loss:
• Place your stop just below the recent swing low (for long positions) or above the recent swing high (for short positions).
Target:
• Target VWAP as the price reverts back toward the average.
Example: As we approached the final hour of the day, the S&P 500 index had moved into an oversold position on the RSI when it tested a key level of swing support. This was followed by a break above a small swing high – triggering a move back towards the true average price for the day – VWAP.
S&P 500 5min Candle Chart
Past performance is not a reliable indicator of future results
Conclusion
Whether you’re aiming to ride the trend with a "Run into the Close" or seeking to capitalise on an overextended market with a "Revert to VWAP" strategy, trading the final hour requires sharp execution and discipline.
Even if you don’t trade the close directly, understanding how the market finishes the day can provide valuable insights for the next session. Watch how the price closes in relation to the day’s range, as this can set the tone for the following day’s market sentiment.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
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Chart Patterns and Key Signals in Live TradingChart Patterns and Key Signals in Live Trading
Chart patterns are powerful tools used by traders to predict future price movements. These patterns emerge from the price action on a chart and provide visual signals that help traders make informed decisions. Understanding and recognizing these patterns in live trading can significantly improve your ability to forecast potential price trends and execute successful trades.
What are Chart Patterns?
Chart patterns form when price movements of a security, such as a stock or currency pair, follow a recognizable formation or trend on a price chart. These patterns represent the collective sentiment of buyers and sellers, indicating periods of consolidation, continuation, or reversal. Traders use these patterns to anticipate where prices may move next and to identify high-probability trading opportunities.
Key Types of Chart Patterns
Chart patterns can be categorized into two main types:
1. Reversal Patterns: These indicate that the current trend is likely to reverse.
2. Continuation Patterns: These suggest that the current trend will continue after a brief pause.
Common Reversal Patterns
Head and Shoulders
Description: The head and shoulders pattern signals a trend reversal. It has three peaks: a higher peak (the head) between two lower peaks (the shoulders). The neckline connects the lows between the two shoulders.
What to Look For:
Uptrend before formation: This pattern is more reliable if it follows a strong uptrend.
Break of the neckline: The trend reversal is confirmed when the price breaks below the neckline, indicating a bearish move.
Live Trading Tip: Wait for the price to break the neckline and retest it before entering a short position to reduce false signals.
Double Top:
Description: A bearish reversal pattern that forms after an uptrend, consisting of two peaks at roughly the same level.
What to Look For:
Resistance level: The two peaks touch a resistance level but fail to break through.
Neckline break: The trend reversal is confirmed when the price breaks below the support level (neckline) between the two peaks.
Live Trading Tip: Enter a short trade after the price breaks below the neckline and possibly retests the support as resistance.
Double Bottom:
Description: A bullish reversal pattern that forms after a downtrend, consisting of two troughs at roughly the same level.
What to Look For:
Support level: The two bottoms touch a support level but fail to break below.
Neckline break: The reversal is confirmed when the price breaks above the resistance level (neckline) between the two troughs.
Live Trading Tip: Enter a long trade after the price breaks above the neckline and retests it as support.
Common Continuation Patterns
Triangles
Symmetrical Triangle:
Description: A continuation pattern characterized by converging trendlines, where the highs and lows converge toward each other.
What to Look For:
Breakout: The pattern is confirmed when the price breaks out of the triangle, either upward or downward, signaling a continuation of the previous trend.
Live Trading Tip: Watch for increased volume during the breakout to confirm its validity. Enter the trade in the direction of the breakout.
Ascending Triangle:
Description: A bullish continuation pattern with a horizontal resistance line and an upward-sloping support line.
What to Look For:
Resistance breakout: The pattern is confirmed when the price breaks above the resistance level, signaling a continuation of the upward trend.
Live Trading Tip: Enter a long trade once the price breaks the resistance and volume spikes, indicating strong buying interest.
Flags and Pennants
Flag:
Description: A continuation pattern that looks like a small rectangular consolidation phase after a strong price movement.
What to Look For:
Strong trend: The flag forms after a sharp price move, followed by a consolidation phase.
Breakout: A breakout from the flag pattern confirms the continuation of the previous trend.
Live Trading Tip: Enter the trade in the direction of the breakout, especially if accompanied by an increase in volume.
Pennant:
Description: Similar to the flag, but the consolidation phase forms a small symmetrical triangle instead of a rectangle.
What to Look For:
Strong trend: A pennant forms after a sharp move, followed by price consolidation.
Breakout: The breakout signals a continuation of the previous trend.
Live Trading Tip: Trade in the direction of the breakout and ensure there’s an uptick in volume for confirmation.
Wedges
Rising Wedge:
Description: A bearish continuation or reversal pattern where the price forms higher highs and higher lows, but the slope of the highs is steeper than the slope of the lows.
What to Look For:
Trendlines converging: The wedge narrows as the highs and lows converge.
Breakdown: The pattern is confirmed when the price breaks below the lower trendline, signaling a bearish move.
Live Trading Tip: Short the trade once the price breaks below the wedge, especially if volume increases.
Key Signals to Look for in Live Trading
1. Volume Confirmation
Description: Volume plays a critical role in confirming the validity of chart patterns. A breakout or breakdown on low volume can be a false signal, whereas high volume supports the strength of the price movement.
What to Look For:
Volume Spike on Breakout: Look for a significant increase in volume during breakouts from chart patterns. This indicates that more traders are participating in the move and that it has momentum.
Divergence between Price and Volume: If price is moving in one direction but volume is decreasing, it may indicate a weakening trend.
2. False Breakouts
Description: A false breakout occurs when the price appears to break out of a pattern but quickly reverses, trapping traders who acted on the breakout.
What to Look For:
Lack of Follow-Through: After the breakout, if the price doesn’t continue in the breakout direction and instead reverses quickly, this could be a false breakout.
Live Trading Tip: To avoid false breakouts, wait for a retest of the breakout level or look for confirmation in volume before entering a trade.
3. Divergence with Indicators
Description: Divergence occurs when the price of an asset moves in one direction while an indicator (such as the RSI or MACD) moves in the opposite direction.
What to Look For:
Bullish Divergence: When price makes lower lows, but the indicator forms higher lows, signaling a potential reversal to the upside.
Bearish Divergence: When price makes higher highs, but the indicator forms lower highs, indicating a potential reversal to the downside.
Live Trading Tip: Use divergence as a signal to prepare for a trend reversal, especially when combined with chart patterns like double tops or bottoms.
Chart patterns are essential for predicting price movements, but they work best when combined with other tools like volume analysis and indicators. As you gain experience in live trading, you'll develop the ability to spot these patterns more easily and understand how to trade them effectively. Always remain patient and look for confirmation signals before entering trades based on chart patterns.
A+ Trade Set ups All From Respecting Simple Levels! We identify high-quality trade opportunities by focusing on key support and resistance levels. By respecting these fundamental price points, traders can enhance their decision-making process. Support levels act as a floor where buying interest tends to emerge, while resistance levels serve as a ceiling where selling pressure usually mounts. Recognizing and adhering to these simple levels helps traders pinpoint entry and exit points more effectively, increasing the probability of successful trades and improving overall trading performance.
AMEX:SPY
Riding The Wave - The Importance of Top-Down AnalysisIn this video I explain why a top-down analysis is important when it comes to increasing the odds of price moving in your favour. I know it is extra work, but it isn't much, especially in terms of being a part of the most lucrative industry in the world.
Trading from the higher timeframe simply allows you to "ride the wave" by going down to trade on the lower timeframe. Now, this is all relative to the timeframes you are on and not based on what is considered high or low timeframes. But simply put, if the higher timeframe is trending or being drawn to a specific price or level, then the displacements in price towards that direction will outweigh any displacements via retracements in the opposite direction.
So, I hope this video gives some insight into this topic if you were wondering if it is really something you should do. If you desire higher win-rates, then the answer is yes.
- R2F
ALL ABOUT FIBONACCIFibonacci retracement levels serve as indispensable tools for evaluating retracement potential and identifying targets
This analytical scheme is most effective in market trends. In a market with an upward trend, the traders' goal is to determine the correction potential and strategically identify entry points for long positions. Conversely, in a downtrend, the focus shifts to evaluating correction potentials and tactically identifying entry points for short positions.
By utilizing Fibonacci levels with precision and insight, traders can navigate market dynamics with greater clarity and strategic foresight.
Operating rules:
●Identify the trend and work according to it
●To determine the correction potential for uptrend use the grid below up.
●To determine the correction potential for downtrend use a top-down grid.
●Find Swing High and Swing Low for correct using the tool.
1. For an uptrend, the Fibonacci grid extends from HL to HH.
After breaking the downtrend from LL to HH.
2. For a downtrend, the Fibonacci grid extends from LH to LL.
After breaking the uptrend from HH to LL.
Settings for corrective movements:
0.5 - fair price (equilibrium).
0.62; 0.705; 0.79 - OTE zone (optimal entry into a deal).
Unlike the standard values, this is a modified version with the highest mathematical expectation of price reversal.
To open a position, we are always interested in the price behavior above or below the 0.5 value.
The smart money will always look to buy at a discount and sell at a premium.
Therefore, to open a short position we always look at the price above 0.5, which is considered a premium. And to open long positions, we look at the behavior of prices below 0.5, which is considered discount prices.
The OTE zone is an extended grid that is always in the premium market when you are looking for a short position, or in the discount market when you are looking for a long position.
These levels act as an area for the optimal entry point.
Correction of the upward impulse.
Fibonacci lines themselves do not act as support or resistance levels. It is not relevant to trade only on the basis of them. The price turns from specific areas that are displayed on the chart.
Correction of the upward impulse.
The price may go beyond OTE, this does not negate the relevance of the setup, HL is still being formed in the discount market.
Correction of the upward impulse.
Not in all cases, the price corrects to the OTE zone: when it reaches the support zone at the 50% level (equilibrium) or slightly below it, a reversal may already begin, because this moment already implies the start of buying or selling with smart money.
Downward impulse correction.
Make it a rule to open positions only after a correction in the premium or discount market, and skip other opportunities.
Take profit according to Fibonacci
In order to determine where you will take profits, you can use negative values.
Settings for setting takes:
-0.27 – take 1
-0.62 – take 2
-1 – take 3 or closing the position
-1.5 / -2 – take 4
Fibonacci take
Negative Fibonacci values can be used effectively on every trade, but try to prioritize the chart to identify more precise zones where price may reverse.
Trend lines - how to build them and how to use them?Before we dive into the world of trend lines, I recommend familiarizing yourself with the support and resistance zone
Here we go:
Trend lines are one of the most universal tools for trading in any market, used in intraday, swing and position trading strategies. Properly drawn on charts, they help to predict the direction of price movement and identify trend reversals.
In addition, trend lines help you to accurately determine the optimal entry and exit points, as well as set a stop loss.
It is recommended not to rely on trend lines alone, but to integrate them with other methods of technical analysis, expanding your trading arsenal.
Often many traders draw too many lines, it is uninformative and useless
How to place trend lines on a chart?
An uptrend is a combination of at least two pullbacks
Similar in a downtrend:
Instructions for markings:
Find at least two points on the chart
Connect them with a line
But, let's remember the Axiom:
1. Randomness
2. Coincidence.
3. Regularity
Until a trendline is pushed back a third time - it is considered unconfirmed...
Once the third bounce has occurred, the line can be considered valid, but does not guarantee that it will necessarily bounce the fourth time!
Like all patterns in the market, trend patterns can be drawn on any timeframe, also - they are more effective on older ones (as well as all others)
How to use trend lines in your trading?
Frequent trades from a trend line are rebound or breakout trades
Example:
Trendline confirmed (bounced three times) - on the fourth approach we can pay attention - what happens next? Price will either bounce from our trendline again or there will be a breakout
Next example:
How can we determine whether there will be a breakout or a bounce? As I said before, you need to take into account the context: indicators, price action, nearby levels and so on (it all depends on your psychology)
How do trend lines fit together?
Support and resistance levels are areas on a chart that indicate potential pressure (on a side)
The same principle applies to trend lines. The only difference is that trend lines are sloped rather than horizontal.
How to properly label/draw trend lines?
Which trend lines are important and which ones should be ignored?
Focus only on the major pivot points
Connect at least two major pivot points.
Adjust the slope of the line to get the most amount of price touching the line, whether it is the shadows of candles or their bodies.
Important clarification - trend lines represent a support zone, not specific levels.
How can you use trend lines?
The trend is our friend. Where the trend goes, so goes we. Trading against the trend is foolish. If you do decide to do it, it must be justified!
Trend lines are the direction of the current market.
Also the trend line itself can be divided into two positions:
If the trend becomes flatter, it means that the market is moving into a state of consolidation
If the trend is becoming steeper, it means that the trend is getting stronger (or perhaps it is reaching its climax and is approaching its final stage).
Trend Lines Entry Point:
Like all other patterns in technical analysis or price action - trend lines can help you find a more favorable entry point in terms of risk-to-reward ratio
How to use a trend line to identify a market reversal?
Chances are you have encountered this before. There is a trend line breakout, you are already expecting a trend reversal, but the market continues its original movement
Like all indicators/patterns - not a panacea. Each strategy has its own risks, just when we add other osnovnopologologayuschih signs to one strategy, the chance of risking a loss - decreases!
Technique for determining a trend reversal:
Wait for a trend breakout
Wait for a lower low/maximum to form.
If the price breaks the previous minimum/maximum, most likely the trend will go in the direction of the breakdown...
Boost your trading with Naked Point of ControlsLearn how to identify and use Naked Points of Control (nPOCs) in your trading sessions. This video explains the concept of nPOCs, their significance on the chart, and practical applications for thesis generation, entries, and trade management. Based on James Dalton's concepts from "Mind Over Markets," this strategy provides a strong edge for traders.
Gold Trading Strategy: A Professional Approach to XAUUSD 👀 👉 This comprehensive video presents a sophisticated trading plan for the XAUUSD (Gold/US Dollar) market, designed to maximize profitability through a structured approach. We delve into crucial aspects of technical analysis and leverage TradingView's advanced tools to gain a competitive edge in the markets.
Key topics covered include:
1. Trend identification and analysis
2. Entry and exit criteria
3. Market overextension assessment
4. Discount entry strategies aligned with institutional positioning
5. Higher timeframe trend analysis combined with 4-hour chart entry points
6. Price action and market structure interpretation
Our methodology emphasizes the importance of avoiding premium entries in bullish markets and instead focuses on identifying optimal discount entry opportunities. By aligning our strategy with institutional movements, we aim to enhance the probability of successful trades.
The video provides a detailed exploration of various technical analysis components, including:
- Trend analysis techniques
- Market structure interpretation
- Price action patterns
- Overextension indicators
- Traded Volume indicators
- Multi-timeframe analysis (higher timeframe trend combined with 4-hour chart entries)
This comprehensive approach to XAUUSD trading is designed to equip traders with the tools and knowledge necessary to navigate the gold market effectively and potentially increase their trading success.
Disclaimer: Trading in financial markets carries a high level of risk and may not be suitable for all investors. The information provided in this video is for educational purposes only and should not be construed as financial advice. Past performance is not indicative of future results. Always conduct your own research and consider your financial situation before making any investment decisions. Trade responsibly and use proper risk management techniques. 📉✅
The “Fan Principle” is a powerful techniqueThe “Fan Principle” is a powerful technique in trading, using trendlines to predict price movements.
Highlights
📈 Powerful Technique: The Fan Principle is formidable in technical analysis.
📉 Identifying Points: Drawing trendlines from three key points.
🔴 Trading Signals: Buy or sell signals can be identified depending on the pattern.
📊 Practical Examples: Analyzing price movements on charts to illustrate the technique.
💰 Profit Opportunities: Strategies can result in significant gains, up to 22%.
🛑 Risk Management: Importance of placing stop-losses to protect investments.
🔍 Additional Resources: Detailed information and charts will be shared to deepen understanding.
Key Insights
📈 Technique Effectiveness: The Fan Principle helps identify clear trends using reference points, making the strategy both simple and effective.
📉 Importance of Confirmation: Validating trendlines with a third point builds confidence in trading signals, increasing the chances of success.
🔴 Warning Signals: Sell or buy signals, as shown in the video, can lead to strategic decisions based on historical analysis.
📊 Visual Analysis: Visualizing data on charts helps understand market movements, which is essential for technical analysis.
💰 Profit Potential: Trades based on the Fan Principle can provide significant profit opportunities, highlighting its effectiveness.
🛑 Protection Strategies: Placing stop-losses above resistance points is crucial to limit losses in the event of adverse market movements.
🔍 Access to resources: The information shared in the description and on other platforms offers ways to deepen the understanding of the technique and improve trading skills.
__________________________________________________________________
The fan principle in trading is a strategy that consists of opening several positions on the same asset at different price levels. Here are the main aspects of this approach:
How it works
The idea is to open several positions (or "lots") on the same financial asset at different price levels, thus forming a "fan" of positions.
These positions are opened at points considered as potential market reversals.
The objective is to let these positions unfold like a fan or to close them gradually according to the evolution of the market.
Advantages
Risk diversification: By entering the market at different levels, the trader reduces the impact of a single bad entry.
Movement capture: This approach allows to take advantage of different phases of a price movement.
Flexibility: The trader can adjust his strategy by closing some positions while keeping others open.
Complementary Tools
The fan principle can be combined with other technical analysis tools to improve its effectiveness:
Fibonacci Fan: This tool automatically draws trendlines at key levels (38.2%, 50%, 61.8%) that can serve as entry points for fan positions.
Gann Angles: These lines, drawn at different angles (82.5°, 75°, 71.25°, etc.), can also help identify potential levels to open positions.
RSI (Relative Strength Index): Some traders combine the fan principle with the RSI to confirm entry points.
Important Considerations
This strategy requires good risk management, as it involves opening multiple positions.
It is crucial to set stop-loss and take-profit levels for each position in the range.
Using this approach requires a thorough understanding of the market and significant trading experience.
High Risk-to-Reward Trading Setup (1:5)My Trading Philosophy:
✨ Simple but Powerful Rules ✨
Strict Risk Management
Disciplined Execution
Focus on Growth
With a 1:5 Risk-to-Reward Ratio, even a few winning trades can double the capital. 📈
Current Setup in Gold:
🔍 I'm currently on the lookout for a 1:5 Trading Setup in gold based on my strategy.
I believe it's forming soon, and in the last 2-3 months, this setup has given me 4 trades—each one profitable. 💰
Understanding Price Clustering in the Bitcoin Market█ Understanding Price Clustering in the Bitcoin Market
Price clustering is a phenomenon where certain price levels, particularly round numbers, tend to appear more frequently in financial markets. This study focuses on how price clustering occurs in the Bitcoin market, providing insights that can be valuable for traders.
█ The Psychology Behind Price Clustering
One of the primary reasons behind price clustering in the Bitcoin market is the psychological impact of round numbers. Market participants often perceive prices ending in 0 or 00 as significant, which leads to a concentration of buy and sell orders around these levels. This behavior is not unique to Bitcoin; it has been observed across various financial markets, from stocks to foreign exchange.
For instance, when Bitcoin prices approach a round number like $30,000 or $50,000, traders might expect strong resistance or support at these levels. This expectation can lead to increased trading activity, causing prices to cluster around these key levels. The psychological importance of these numbers can also cause traders to place stop-loss or take-profit orders around them, further reinforcing the clustering effect.
█ Key Findings from the Study
⚪ Clustering Around Round Numbers: The study highlights that Bitcoin prices tend to cluster around round numbers, such as $10,000, $20,000, or $50,000. This is primarily driven by psychological barriers, where traders view these round numbers as significant price levels, leading to an increased concentration of trading activity.
⚪ Impact of Time Frames: The extent of price clustering varies significantly with the time frame. In shorter time frames (like 1-minute or 15-minute intervals), price clustering is less pronounced due to the randomness of price movements. However, as the time frame lengthens (hourly or daily), the clustering effect becomes more apparent, suggesting that traders may be more likely to anchor their strategies around these round numbers over longer periods.
⚪ Differences in Open, High, and Low Prices: The study also finds differences in clustering patterns between open, high, and low prices. High prices tend to cluster around the digits 8, 9, and 0, while low prices cluster around 1, 2, and 0. Open prices generally show less clustering, suggesting they are less influenced by immediate market psychology. This pattern suggests that traders should pay particular attention to high and low prices during trading sessions, as these are more likely to show clustering around key levels.
High Price: This is the highest price that Bitcoin reaches during a specific time period (for example, during a day or an hour). The study found that high prices cluster more around certain numbers, especially numbers ending in 0 or 9. So, high prices often end in numbers like $10, $100, $1,000, or $9,999 because traders tend to react to these round numbers.
Low Price: This is the lowest price Bitcoin hits during a certain time period. Similar to high prices, low prices also cluster, but more around numbers ending in 0 and 1. So, low prices might end in numbers like $10, $1,001, or $5,001.
Why is there a difference?
High prices tend to cluster at numbers ending in 0 or 9 because those feel like natural stopping points for traders.
Low prices tend to cluster at numbers ending in 0 or 1 for similar reasons.
⚪ Price Level Influence: The study highlights that clustering behavior changes with the overall price level of Bitcoin. At lower price levels (e.g., below $10,000), there is more clustering around multiples of 5, such as $25, $50, or $75. As the price increases, the significance of these smaller increments diminishes, and clustering around larger round numbers becomes more dominant.
█ Practical Insights for Retail Traders
Understanding price clustering is crucial for traders because it sheds light on how market participants behave, particularly around psychologically significant price levels. These insights can help traders anticipate where the market might encounter resistance or support, allowing them to make more informed decisions.
⚪ Identify Key Psychological Levels: Retail traders can benefit from identifying and monitoring round number levels in Bitcoin prices, such as $10,000, $30,000, or $50,000. These levels are likely to act as psychological barriers, leading to increased trading activity. Understanding these levels can help traders anticipate potential support or resistance areas where price reversals may occur.
⚪ Adjust Trading Strategies Based on Time Frame: The study suggests that the effectiveness of using price clustering in trading strategies depends on the time frame. For short-term traders, clustering may be less reliable, but for those operating on longer time frames, clustering around round numbers could provide actionable signals for entry or exit points.
⚪ Focus on High and Low Prices: Retail traders should pay particular attention to clustering in high and low prices during a trading session. These prices are more likely to exhibit clustering, indicating areas where traders might place stop-loss orders or where price reversals could occur. By aligning their trades with these clusters, traders could improve their risk management. If you’re setting stop-loss orders, for instance, placing them just beyond a cluster point could help you avoid being stopped out prematurely by normal market noise. Similarly, identifying clusters at high prices could offer better opportunities for taking profits.
⚪ Consider the Overall Price Level: The level at which Bitcoin is trading also affects clustering. For example, when Bitcoin is at a lower price, traders might find opportunities by focusing on price levels ending in 5 or 0. However, as Bitcoin’s price increases, clustering becomes more concentrated around larger round numbers. Adjusting trading strategies to consider the current price level can enhance decision-making.
Price Clustering at Low Levels (<$10 USD):
There is significant clustering at prices ending in 0, but also notable clustering at prices ending in 5, which acts as a psychological barrier at these lower levels. Prices ending with 50 are also frequently observed as significant psychological barriers. Clustering is weaker overall at these levels compared to higher price ranges, but still noticeable at certain intervals.
Price Clustering at Mid-Levels ($100–$1,000 USD):
Clustering becomes more focused on round numbers like 00, 50, and 25. As prices increase, clustering around smaller numbers like 5 or 10 reduces. Larger psychological barriers, such as 100 and 500, emerge as significant points of clustering.
Price Clustering at Higher Levels (≥ $10,000 USD):
At these price levels, clustering becomes even more prominent around major round numbers like 10,000, 20,000, etc. The last two digits 00 become much more frequent, and there is almost no clustering at digits like 5 or 1. Clustering becomes very strong at larger round figures, with a strong psychological barrier hypothesis at play.
Summary of Clustering at Different Levels:
Low Prices (<$10): Clustering at 5, 10, 50, and 100.
Mid Prices ($100–$1,000): Strong clustering at 00, 50, and 25.
High Prices (≥$10,000): Dominant clustering around 00 and multiples of 1,000 (e.g., 10,000, 20,000).
█ Conclusion
Price clustering is more than just an academic concept; it’s a practical tool that can significantly enhance your trading strategy. By understanding how prices tend to cluster around psychological levels, adapting your approach based on time frames, and recognizing the impact of Bitcoin’s price level, you can make more informed trading decisions. By integrating these insights into your trading plan, you’re not only aligning your strategy with the behavior of the broader market but also positioning yourself to capitalize on key price movements. Whether you’re a seasoned trader or just starting out, the knowledge of price clustering can help you navigate the volatile Bitcoin market with greater confidence and precision.
█ Reference
Xin, L., Shenghong, L., & Chong, X. (2020). Price clustering in Bitcoin market—An extension. Finance Research Letters, 32, 101072.
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Disclaimer
This is an educational study for entertainment purposes only.
The information in my Scripts/Indicators/Ideas/Algos/Systems does not constitute financial advice or a solicitation to buy or sell securities. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.
All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on evaluating their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
My Scripts/Indicators/Ideas/Algos/Systems are only for educational purposes!
Trading Near the Bells Part 1: The OpenWelcome to our 2-part series on how to trade the two most intense, liquid, and volatile periods of the trading day: the open and the close. These moments bookend the trading session and are critical for traders who thrive on fast-paced environments.
In Part 1, we’ll focus on the open—the first hour after the market bell rings. We will explore why this period offers unique trading opportunities, examine key price patterns, and discuss proven strategies for capturing profit while managing risk during this high-volatility window. From gap trading to opening range breakouts, understanding the open is essential for those looking to capitalise on the rush of liquidity and order flow at the start of each session.
The Significance of the Open
The open is often the most critical time of the trading day. It sets the tone for the session as market participants react to overnight developments, including earnings reports, geopolitical events, and economic data releases. The first hour of trading typically sees a surge in volume as traders place orders based on these new inputs, creating significant liquidity and volatility. This influx of activity can result in sharp price moves, offering traders the chance to capture quick profits.
Additionally, the open provides vital clues about market sentiment. The price action within the first 30-60 minutes can hint at whether the market will experience a trend day or a range-bound session. Understanding how to interpret and trade this period effectively can give traders a strategic edge, allowing them to capitalise on these early movements while managing risk appropriately.
Three Strategies for Trading the Open
1. Gap and Go
The "Gap and Go" strategy focuses on stocks or index’s that gap up or down significantly at the open and continue to move in the same direction. This strategy works best when the gap is backed by a fundamental catalyst, such as a strong earnings report, positive economic data, or a major news announcement. Gaps that are supported by solid news or events tend to continue in the same direction as they attract significant buying or selling pressure.
Additionally, this strategy is most effective when the price is breaking out of a period of compression or a key level of resistance. For instance, if a stock has been consolidating under a major resistance level and gaps up on strong earnings, it is likely to trigger further buying as traders who were waiting for the breakout jump into the trade.
• Key Setup: Look for gaps backed by a catalyst and breaking out of key technical levels.
• Entry: Enter in the direction of the gap if the price holds above or below the opening range.
• Stop-Loss: Set your stop near the gap level or below the opening range to protect against a quick reversal.
Example Gap and Go:
In this example, the S&P 500 gaps above both a descending trendline and a key resistance area at the open – backed by inflation data that had come in lower than expected. The gap holds within the first hour and continues to rise throughout the session, demonstrating how the early price action set the stage for the rest of the day.
S&P 500 5min Candle Chart
Past performance is not a reliable indicator of future results
2. Opening Range Breakout (ORB)
The Opening Range Breakout strategy involves identifying the high and low of the first 15-30 minutes of trading and looking for a breakout beyond this range. This strategy works best when the breakout aligns with the broader market trend. If the larger trend is bullish and the stock or currency pair breaks above its opening range, it indicates that the market is continuing in the direction of the prevailing trend, providing a higher probability trade.
• Key Setup: Works well when the breakout is in line with the bigger picture trend.
• Entry: Enter long if the price breaks above the opening range with strong volume, or enter short if it breaks below.
• Stop-Loss: Place stops just inside the opening range to protect against false breakouts.
Example ORB:
In this scenario, the S&P 500 establishes a clear range within the first hour. A decisive break below this range leads to a cascade of selling pressure, indicating how the breakout set the tone for the rest of the session.
S&P 500 5min Candle Chart
Past performance is not a reliable indicator of future results
3. Gap Fade
The Gap Fade strategy involves trading against the initial gap, assuming the move is overextended or lacks a fundamental catalyst. This strategy works particularly well when the gap occurs without significant news or events to justify the price movement. Traders using this approach bet that the market has overreacted to the gap and that the price will reverse and "fill" the gap by moving back toward the previous day's close.
Additionally, this strategy is effective when the gap coincides with a trend that has become extended on higher timeframes, suggesting that the market is due for a correction or reversal. For example, if a stock gaps up but has been in a prolonged uptrend and appears overbought on the daily chart, it may be primed for a pullback.
• Key Setup: Best used when there is no significant catalyst behind the gap and when the trend is extended.
• Entry: Short-sell if the gap appears overextended and lacks momentum, aiming to catch the reversal.
• Stop-Loss: Set your stop above the high of the opening range for shorts (or below the low for longs) to limit losses in case the move continues.
Example Gap Fade:
In this example, the S&P 500 gaps higher but stalls at a key resistance area. The market fails to continue higher during the first hour, leading to a break below resistance and a downtrend for the rest of the session.
S&P 500 5min Candle Chart
Past performance is not a reliable indicator of future results
Conclusion
The market open is a dynamic period full of opportunity for traders who are prepared to act quickly. Whether you prefer trading with the momentum of a Gap and Go, riding the trend with an Opening Range Breakout, or fading an overextended Gap, understanding the unique characteristics of the open is a crucial element of short-term trading. By using these strategies and adjusting them to the day's market conditions, you can navigate the volatility of the open with confidence and precision.
In Part 2 we’ll dive into trading the close—the other bookend of the trading day with its own set of challenges and opportunities.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83.51% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Why Most Traders Fail—and How You Can Succeed!The charts you provided showcase potential scenarios based on different liquidity zones (LQZ) on multiple timeframes, such as 15M, 1H, and 4H. Let's break down the key insights from the images:
Key Levels:
Weekly Flag Trendline: This yellow trendline represents the long-term trend and acts as a major resistance or support. It’s crucial to monitor price action around this level for significant moves.
4HR LQZ (Liquidity Zone) at 2,532.077: This level signifies an important area of liquidity on the 4-hour chart. It’s a potential reversal point or continuation area depending on how the price interacts with it.
1HR LQZ and 15M LQZ: These shorter timeframe liquidity zones are at 2,482.129 and 2,470.544 respectively. They act as interim targets or bounce zones based on the smaller trend movements.
Price Action Context:
Wedge Formation: The rising wedge pattern visible in all the charts, combined with slowing momentum near the top, suggests possible bearish pressure. Wedges often lead to sharp breakouts, so a breakout to the downside would align with the wedge structure.
Multi-Touch Confirmation: The multiple touches on trendlines, both support and resistance, increase the probability of significant movements. This concept is supported by multi-touch confirmation techniques.
Scenario Planning:
Upside Potential: A breakout above the 4HR LQZ suggests further bullish momentum, likely toward higher liquidity zones. This can result in a continuation to the upside, as shown with the green line projection on some charts.
Downside Risks: A breakdown below the wedge support and failing to hold the 15M or 1HR LQZ may lead to a bearish move toward the lower liquidity targets. The yellow line projections suggest a pullback to 2,485.055 and potentially lower.
The Trinity Rule Approach:
Confluence Setup: If price interacts with three major zones (like the 4HR LQZ, wedge support, and Weekly Flag Trendline), we can assess whether these align with other signals. This rule adds extra confirmation for higher-probability setups, as discussed in your document.
Overall, price action shows a decision point around the wedge and liquidity zones, with strong reactions expected in either direction.
All About the Head & Shoulders Pattern(Beginner-Friendly) Part.2Hello, everyone.
Today, I’m excited to share the second part of my educational series on chart patterns.
In this post, we’ll be focusing on the 'Head and Shoulders' and 'Inverse Head and Shoulders' patterns.
For those who missed the first part, you can catch up here:
↓↓↓
As always, I’ve kept the explanations simple and beginner-friendly. I hope this guide provides you with valuable insights!
Here’s today’s outline:
————
✔️ Outline
1. What is the Head and Shoulders pattern?
Definition
Key components
Characteristics
2. Head and Shoulders
Basic features
Examples
3. Inverse Head and Shoulders
Basic features
Examples
————
1. What is the "Head and Shoulders" pattern?
1) Definition
The Head and Shoulders pattern is a well-established reversal formation that appears after an uptrend and signals the potential start of a downtrend. It indicates that buying pressure is weakening and selling pressure is gaining momentum.
2) Key components
Left Shoulder: The initial peak, where the price rises and then pulls back.
Head : The highest peak, situated between the two shoulders, representing the final bullish push.
Right Shoulder: The third peak, which is typically lower than the head but similar to the left shoulder, signaling diminishing buying interest.
Neckline: A key support line drawn across the lows of the left and right shoulders. A decisive break below this neckline confirms the reversal and the beginning of a downtrend.
3) Characteristics
Reversal signal: The Head and Shoulders pattern marks a transition from an uptrend to a downtrend.
Easy identification: The structure is visually distinctive, with three clear peaks.
Neckline significance: A break below the neckline serves as a confirmation signal for the downtrend.
Volume dynamics: Volume typically rises during the formation of the left shoulder and head, decreases during the right shoulder, and surges again when the neckline is breached.
————
2. Head and Shoulders (Reversal from uptrend to downtrend)
1) Basic features
End of an uptrend: The Head and Shoulders pattern forms at the end of a bullish phase, signaling a weakening in buying strength.
Distinct peak heights: The head is always higher than the shoulders, which are generally symmetrical, though the right shoulder may sometimes be slightly lower, enhancing the pattern’s reliability.
Neckline as a trigger: The neckline acts as a critical support level. A break below it confirms the pattern and signals the onset of a bearish trend.
Volume confirmation: Volume increases during the left shoulder and head formations, weakens during the right shoulder, and spikes when the neckline is broken, confirming a potential sell-off.
Price target: After the pattern completes, the expected price drop is typically equal to the distance between the head and the neckline, providing traders with a target.
2-1) Example 1
In this example, we see a fakeout at the right shoulder, followed by a sharp decline.
After a brief retest of the neckline, the price broke through and continued its downtrend.
2-2) Example 2
In this chart, a fakeout occurred when the price dropped from the head and formed the neckline, misleading many market participants. After forming the right shoulder, the price successfully declined. There were two retests, which confirmed the reliability of the pattern.
————
3. Reverse Head and Shoulders (Trend reversal from downtrend to uptrend)
1) Basic features
End of a downtrend: The Inverse Head and Shoulders pattern typically forms at the end of a downtrend, signaling a potential reversal to the upside.
Formation of lows: Like the standard Head and Shoulders, this pattern consists of three lows—left shoulder, head, and right shoulder—with the head being the lowest point.
Neckline significance: The neckline is drawn across the highs of the left and right shoulders. A break above this line confirms the reversal and acts as a strong buy signal.
Volume pattern: Volume tends to decrease during the formation of the pattern but surges when the neckline is broken, signaling strong buying momentum.
Target setting: After the pattern is confirmed, the expected price rise is often equal to the distance from the head to the neckline, which helps traders set profit targets.
2-1) Example 1
After the Head and Shoulders pattern formed, the price broke above the neckline, successfully reversing the downtrend into an uptrend. A buy strategy would have yielded profits at the breakout point.
2-2) Example 2
In this example, a smaller Reverse Head and Shoulders pattern formed within the head of a larger pattern (see Example 3). After two successful retests, the price reversed into a strong uptrend.
2-3) Example 3
This example showcases the smaller Reverse Head and Shoulders pattern mentioned in Example 2, located within the head. After two successful retests, a buy strategy could have led to profits as the price reversed into an uptrend.
————
✔️ Conclusion
"Charts are the maps of the market."
The Head and Shoulders and Reverse Head and Shoulders patterns we’ve covered in this post are key signals that frequently appear in the market. Charts aren’t random—they are visual representations of market psychology and investor behavior. As traders, our role is to interpret these maps, navigate the market, and make informed decisions.
Investing is more than just buying and selling. Sometimes the market may move contrary to our expectations, while other times we seize opportunities and achieve success. Each experience is a chance to learn and grow. The more experience you gain, the more paths you’ll recognize on the chart.
Success in this market requires persistence, patience, and continuous learning. Understanding and analyzing chart patterns like the ones discussed here is just the beginning. I hope this post has helped you gain a deeper understanding of the market and make more informed decisions.
The market is always evolving, but within that evolution lies opportunity. The key is developing the ability to spot those opportunities. With knowledge, experience, and confidence, you’ll find greater success.
Stay prepared, and always listen to what the market is telling you.
Master Trading with Heiken Ashi Candles in 11.32 minutes Let’s talk about how to DOMINATE the market using Heiken Ashi candles for perfect entries and exits! This is where your trading game levels up.
First, when those candles start turning smooth and green with no wicks at the bottom, that's your entry signal! It’s like the market saying, "Hop on, this train is about to take off!" You ride those green candles as long as they stay strong and wick-free at the bottom.
Now, here’s the key – watch for red candles starting to form with wicks on top! That’s your signal to EXIT! Don’t get greedy, secure those gains, and get out before the market turns against you.
With Heiken Ashi, you get smoother trends, cleaner signals, and better trades! Enter with confidence, exit with precision, and OWN the market!
That's it, fast and powerful! Now go crush those trades!
Thesis Generation for mutitimeframe SB Style Trading explainedIn this video, I guide you through the complete process of generating a trading thesis and selecting pairs for my shortlist. We'll begin with a theoretical explanation and then apply it to today's NAS situation. My analysis incorporates the Stacey Burke trading style alongside a mechanical multi-timeframe bias analysis. A consistent and clear analysis process, repeated daily, is crucial for continuous improvement. I hope you find this helpful!
All About the Flag Pattern (Beginner-Friendly)Hello everyone,
Today, I’ve prepared an educational guide on chart patterns, specifically focusing on the Flag Pattern.
This content is designed to be easy for beginners to follow, so I hope you find it engaging and informative. :)
Below is the outline I’ll be using for this post:
————
✔️ Outline
1. What is a Flag Pattern?
Definition
Key Components
Characteristics
2. Bullish Flag Pattern
Basic Characteristics
Examples
3. Bearish Flag Pattern
Basic Characteristics
Examples
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1. What is a Flag Pattern?
1) Definition
A Flag Pattern forms during a brief consolidation phase after a strong price movement, often signaling the continuation of a trend. It typically appears when prices make a sharp move, either up or down, followed by a period of sideways or slightly counter-trend movement.
Flag Patterns can occur in both uptrends and downtrends, named for their resemblance to an actual flag. After a strong price move, the market consolidates briefly before continuing in the original trend direction.
2) Key Components
Flagpole: The initial strong price movement that sets the overall trend direction before the consolidation phase.
Flag: The consolidation period where prices move sideways or slightly counter to the trend, often forming a rectangle or parallelogram. This phase typically occurs with a decrease in trading volume.
Breakout: The moment when the price resumes its original trend direction. In an uptrend, this is an upward breakout, and in a downtrend, a downward breakout, confirming the continuation of the trend.
3) Characteristics
Duration: The Flag Pattern typically lasts longer than the Flagpole but varies depending on the timeframe.
Volume: Volume usually decreases during the Flag’s formation and increases once the breakout occurs.
Reliability: The Flag Pattern is considered a reliable indicator of trend continuation, making it a favorite among traders using trend-based strategies.
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2. Bullish Flag Pattern
1) Basic Characteristics
A Bullish Flag forms after a strong upward price movement, signaling a temporary consolidation phase. During this consolidation, volume typically decreases, suggesting that the market is pausing rather than reversing. After this phase, the price often continues its upward trend, accompanied by an increase in volume. Bullish Flag Patterns also help relieve overbought conditions in technical indicators, providing the market with a chance to prepare for another move up.
2-1) Example 1
This chart from May 2023 shows a strong Flagpole followed by a long consolidation phase (Flag). The volume then increased as the price broke out, completing the Bullish Flag Pattern.
2-2) Example 2
In this chart from March 2021, we see a similar setup: a strong Flagpole, followed by a consolidation phase, leading to a breakout that continued the upward trend.
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3. Bearish Flag Pattern
1) Basic Characteristics
The Bearish Flag Pattern is the inverse of the Bullish Flag. It follows a strong downward move (Flagpole) and is followed by a period of consolidation (Flag) with decreasing volume. Like its bullish counterpart, the Bearish Flag can relieve oversold conditions, leading to a continuation of the downtrend after a breakout.
2-1) Example 1
This chart from May 2022 displays a Bearish Flag Pattern: a strong downward Flagpole, followed by a Flag consolidation phase. After the consolidation, a breakout occurred, continuing the downtrend.
2-2) Example 2
This chart from February 2022 also illustrates a strong downward Flagpole, followed by a consolidation phase (Flag), leading to a breakout that completed the Bearish Flag Pattern.
This guide will help you better understand the Flag Pattern and how it can be used in your trading strategy effectively!
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✔️ Conclusion
I hope the various Flag Patterns and market analysis techniques covered in this post prove helpful in your investment journey. Chart analysis is not merely a technical skill but also a deeper understanding of market psychology and movement. Flag Patterns, along with other chart patterns, visually reflect the psychological dynamics of the market. Mastering their use can greatly contribute to successful trading.
That being said, the crypto market is inherently unpredictable and fast-moving. While technical analysis is a valuable tool, it’s important to adopt a comprehensive approach that considers broader market trends and external factors. I encourage you to apply the insights gained from this post with a balanced and cautious perspective when making investment decisions.
New opportunities are constantly emerging, and those who are prepared to seize them will find success. The chart represents the market’s voice. Listening to it, interpreting it, and making informed decisions based on that interpretation is "the essence" of chart analysis.
I sincerely hope that, through continuous learning and experience, you’ll evolve into a more confident and successful investor.
USDJPY~Currency Carry Trade~Forex Fundamentals The upper pane is inverted USDJPY, ie JPYUSD.
THE lower pane is US10, or inverted US10Y.
When interest rate in US rises against/faster than/compared with interest rate in JP, the exchange rate of USJPY follows as well.
Investors will simply pull out the capitals from Japan and park them in US for better return. If you can rent out your resources at the price of 5%, why wasting them only earning 1%.
Capital tends to flow to the people/places/projects that can utilize it most.
