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Chart Patterns

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
Editors' picks
BITFINEX:BTCUSDEducation
by ArShevelev
238
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.
Editors' picks
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
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. 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.
CAPITALCOM:US500Education
by Capitalcom
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.
Editors' picks
TVC:SILVEREducation
by samstoobad
1
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
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AMEX:SPYEducation
by ThePrintingRoom
4
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
Education
by Road_2_Funded
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.
Education
by truepersonal
14
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...
BINANCE:BTCUSDEducation
by truepersonal
13
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. 📉✅
Editors' picks
FX:XAUUSDEducation
by tradingwithanthony
17
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.
BITSTAMP:BTCUSDEducation
by Le-Loup-de-Zurich