EURGBP H4 | Potential bullish breakoutEUR/GBP is trading close to a pullback support and could potentially break above a descending trendline to make a bullish rise to the upside.
Buy entry is at 0.85700 which is a potential bullish breakout level (wait for price to break through the descending trendline for confirmation).
Stop loss is at 0.85350 which is a level that sits under a pullback support.
Take profit is at 0.86150 which is a pullback resistance that aligns close to the 38.2% Fibonacci retracement level.
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🅱️ Bitcoin Moving Below EMA50 Confirms Major CrashThis is not a drill... I repeat, this is not a drill!
Bitcoin is moving once more below EMA50 after a very weak bounce 16-January.
Moving daily below EMA50 simply confirms the upcoming correction without a shadow of doubt. This move is support by low volume and a weak RSI.
This signal only confirms when the day closes below $42,142 (EMA50).
While this is likely to happen today or fast, it can also take its time.
We are looking at the 20th of January, on or around this date (near) for the next major move to fully develop —based on Astrology (planetary movements).
Seeing these bearish signals, no doubt the next major move is down.
Prepare for a correction...
This is not a surprise we've been expecting this for months.
All related markets are also bearish.
The signals are coming from all across.
Prepare accordingly.
We still have some time left.
Thank you for reading.
Namaste.
Using price action & tradingview tools to trade betterHello,
Price action is a vital aspect of trading, and analyzing candlestick patterns is key to understanding market dynamics. The size of candles, representing the range between opening and closing prices, is crucial for traders. Large candles signal strong momentum and potential trends, while smaller candles suggest indecision or lack of clear direction. Traders use candle size to identify entry and exit points, manage risk, and gauge market sentiment. By examining the relationship between candle sizes and volume, traders can make informed decisions based on visual representations of price movements. In summary, candle size is a valuable tool in price action analysis, helping traders interpret market behavior for better decision-making.
A key tool you can use to measure the momentum of an asset is the Date & price range tool . This tool allows users to place points vertically on two different prices. A Text appears along the box displaying the total size of the price moving in terms of actual share price, percentage and time the move took. E.g the chart below shows the move took 3234 days and was +1024.43% in terms of increase.
Once you've got the hang of price action and figured out which way the trend is going, the next big thing is spotting patterns that tell you when to jump in. We focus on two things: motive moves, which show the trend, and corrections, which give us good entry points . Motive moves are like the big, important moves we want to trade, and corrections are where we can get in on the action. Recognizing these patterns helps us know when it's smart to join the market and increases our chances of making successful trades. a good example of these can be identified below
Once you've identified patterns, the next step is deciding when to get in. There are two main types: risk entries and risk-averse entries. Risk entries often align with motive moves, indicating a trader's willingness to take on more risk for potentially higher rewards. Below is a great way of looking at both of this
Risk taking entry
Risk averse entry
This is where the correction has already been broken and a trend determined. The Risk to reward ratio is lower and therefore less profit can be achieved here.
Next we shall be looking at how to look at the indicators to support your trading hypothesis and make better trades.
Good luck and all the best.
Flag and Pennant Chart Patterns🎲 An extension to Chart Patterns based on Trend Line Pairs - Flags and Pennants
After exploring Algorithmic Identification and Classification of Chart Patterns , we now delve into extensions of these patterns, focusing on Flag and Pennant Chart Patterns. These patterns evolve from basic trend line pair-based structures, often influenced by preceding market impulses.
🎲 Identification rules for the Extension Patterns
🎯 Identify the existence of Base Chart Patterns
Before identifying the flag and pennant patterns, we first need to identify the existence of following base trend line pair based converging or parallel patterns.
Ascending Channel
Descending Channel
Rising Wedge (Contracting)
Falling Wedge (Contracting)
Converging Triangle
Descending Triangle (Contracting)
Ascending Triangle (Contracting)
🎯 Identifying Extension Patterns.
The key to pinpointing these patterns lies in spotting a strong impulsive wave – akin to a flagpole – preceding a base pattern. This setup suggests potential for an extension pattern:
A Bullish Flag emerges from a positive impulse followed by a descending channel or a falling wedge
A Bearish Flag appears after a negative impulse leading to an ascending channel or a rising wedge.
A Bullish Pennant is indicated by a positive thrust preceding a converging triangle or ascending triangle.
A Bearish Pennant follows a negative impulse and a converging or descending triangle.
🎲 Pattern Classifications and Characteristics
🎯 Bullish Flag Pattern
Characteristics of Bullish Flag Pattern are as follows
Starts with a positive impulse wave
Immediately followed by either a short descending channel or a falling wedge
Here is an example of Bullish Flag Pattern
🎯 Bearish Flag Pattern
Characteristics of Bearish Flag Pattern are as follows
Starts with a negative impulse wave
Immediately followed by either a short ascending channel or a rising wedge
Here is an example of Bearish Flag Pattern
🎯 Bullish Pennant Pattern
Characteristics of Bullish Pennant Pattern are as follows
Starts with a positive impulse wave
Immediately followed by either a converging triangle or ascending triangle pattern.
Here is an example of Bullish Pennant Pattern
🎯 Bearish Pennant Pattern
Characteristics of Bearish Pennant Pattern are as follows
Starts with a negative impulse wave
Immediately followed by either a converging triangle or a descending converging triangle pattern.
Here is an example of Bearish Pennant Pattern
🎲 Trading Extension Patterns
In a strong market trend, it's common to see temporary periods of consolidation, forming patterns that either converge or range, often counter to the ongoing trend direction. Such pauses may lay the groundwork for the continuation of the trend post-breakout. The assumption that the trend will resume shapes the underlying bias of Flag and Pennant patterns
It's important, however, not to base decisions solely on past trends. Conducting personal back testing is crucial to ascertain the most effective entry and exit strategies for these patterns. Remember, the behavior of these patterns can vary significantly with the volatility of the asset and the specific timeframe being analyzed.
Approach the interpretation of these patterns with prudence, considering that market dynamics are subject to a wide array of influencing factors that might deviate from expected outcomes. For investors and traders, it's essential to engage in thorough back testing, establishing entry points, stop-loss orders, and target goals that align with your individual trading style and risk appetite. This step is key to assessing the viability of these patterns in line with your personal trading strategies and goals.
It's fairly common to witness a breakout followed by a swift price reversal after these patterns have formed. Additionally, there's room for innovation in trading by going against the bias if the breakout occurs in the opposite direction, specially when the trend before the formation of the pattern is in against the pattern bias.
🎲 Cheat Sheet
DOW JONES Why you don't want to miss this rally.Dow Jones (DJI) is pulling back on a technical correction as the 1W RSI got overbought (above the 70.00 mark) on the December 26 1W candle. That was basically the first time since June 01 2021 it got overbought and that time also gave a technical pull-back.
What draws our attention more than that time though is the December 19 2016 pull-back when the 1W RSI was again overbought. The difference here is that the price action and patterns that preceded that pull-back/ consolidation are very similar. A Lower Lows bottom on the 1W MA200 (orange trend-line) that took place on a 1W RSI Higher Lows Bullish Divergence, gave way to a break and sustainable rise above the 1W MA50 (blue trend-line). Following the current pull-back/ consolidation we are at, a very strong Channel Up took place.
As a result, even though the sentiment is bearish on the short-term, possibly until the January 31 Fed Meeting, it is clear that the long-term trend is bullish. Every such correction has high probabilities from now on to be a buy opportunity. The target can be as high as 43000 within 2024.
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3 of the Top Trading StrategiesTrading in the financial markets requires a blend of intuition, analysis, and well-tested strategies. This article delves into three of the top trading strategies that offer valuable insights to traders of all experience levels. We’ll break down their specific components, entries and exits and explain why they work for stock market trading and trading in other markets.
For the best results, head over to FXOpen’s free TickTrader platform. There, you’ll find all of the charts and tools you need to put these trading strategies into practice.
RSI + MACD Divergence
The RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) are two common indicators featured in many day trading guides, known for their ability to help traders identify price changes in fast-moving markets. Both the RSI and MACD are used to gauge the momentum of a trend, but when they diverge from the actual price movement, it's often an early warning sign that a reversal may be due soon.
Entry/Exit Criteria
Entry:
Divergence in RSI and MACD: For a bullish divergence, the price makes a lower low while the RSI and MACD make higher lows. Conversely, for a bearish divergence, the price makes a higher high while the RSI and MACD make lower highs.
RSI movement: An entry signal is given when the RSI crosses above 30 (indicative of potential upward momentum) or dips below 70 (suggesting possible downward momentum).
Stop Losses:
For a bullish divergence: Traders will often place a stop loss slightly below the recent swing low or a support level.
For a bearish divergence: It's typical to set the stop loss just above the recent swing high or a resistance level.
Take Profits:
Traders may consider closing their position when there's a shift in the momentum indicated by either the RSI moving back to the 50 level or the MACD line crossing its signal line.
Why Does This Strategy Work?
When both RSI and MACD show divergence with the price, it's like having two witnesses corroborating the same story. Divergence in these indicators often suggests that the prevailing momentum behind a price trend is weakening. This weakening momentum, coupled with other market factors, can lead to a trend reversal.
By entering a trade when the RSI dips below 70 or rises above 30, traders are attempting to catch the initial phase of a potential trend reversal, capitalising on the early momentum shift. The combined strength and validation from both indicators provide a more robust trading signal, reducing the likelihood of false entries and improving the probability of successful trades.
A Pullback to Support/Resistance
Understanding support and resistance levels is fundamental in technical analysis. These levels represent price points where the asset has historically faced buying or selling pressure, making them pivotal areas to watch.
When the price breaks through these levels and then retraces to test them, traders have an opportunity to capitalise on the market's attempt to reconfirm or challenge the breakout. This price action strategy is preferred by many for its simplicity and repeatability.
Entry/Exit Criteria
Entry:
After a bullish breakout: The price should retrace back to what was previously a resistance level. If this resistance-turned-support holds, it's an indication that the breakout is genuine and the price is likely to continue its upward trajectory.
After a bearish breakout: The price should retrace to the former support level. If this support-turned-resistance holds, it suggests the breakout is valid, and the price may continue its decline.
Stop Losses:
Following a bullish breakout: Traders often position the stop loss just below the new support level (formerly resistance) or an adjacent swing low to safeguard against false breakouts.
After a bearish breakout: The stop loss is typically set just above the new resistance level (formerly support) or a nearby swing high.
Take Profits:
As the price progresses away from the support or resistance level post-pullback, traders could eye subsequent support or resistance levels as potential areas to take profits.
Why Does This Strategy Work?
A pullback to support or resistance is essentially the market's way of reevaluating and confirming its initial breakout decision. If resistance is broken and then successfully tested as a new support, it underscores the market's bullish sentiment. Similarly, if a support level is breached and then reaffirmed as resistance, it underlines the bearish stance of the market.
This self-confirmation builds trust in the breakout's authenticity, allowing traders to join the trend with more confidence. As this dynamic unfolds, it attracts more participants, further fueling the trend's direction.
Stochastic + HMA
The combination of the Stochastic Oscillator and Hull Moving Average (HMA) offers a powerful toolset for traders. Let's briefly introduce both indicators before diving into the strategy.
Stochastic Oscillator: A momentum indicator comparing a particular closing price of an asset to a range of its prices over a certain period. Levels above 80 typically indicate that the asset is overbought, while levels below 20 suggest it is oversold.
Hull Moving Average (HMA): A type of moving average that responds faster to price changes than standard moving averages. It reduces lag and increases responsiveness, making it useful for short-term traders.
Note that this strategy works best when trades are taken in the direction of the overall trend.
Entry/Exit Criteria
Entry:
The Stochastic Oscillator should be either in overbought (>80) or oversold (<20) areas. Once the Stochastic moves back below 80 or rises above 20, it indicates a potential momentum shift.
Subsequently, if the 9-period HMA (blue) crosses over the 21-period HMA (red) shortly after, this acts as a confirmation of a trend reversal. For an uptrend, the crossover of the 9-period HMA above the 21-period HMA confirms a buy signal at the close of the candle. Conversely, for a downtrend, the 9-period HMA crossing below the 21-period HMA confirms a sell signal.
Stop Losses:
Traders often set the stop loss just above (for short positions) or below (for long positions) the nearby swing points to manage risk effectively.
Take Profits:
Traders employing the Stochastic + HMA strategy might look for signs of trend exhaustion or a reversal in the Stochastic Oscillator for clues to take profits.
Additionally, monitoring subsequent crossing of the 9-period HMA back over the 21-period HMA in the opposite direction of the trade, or reaching a nearby support or resistance level, could serve as sensible points to lock in gains.
Why Does This Strategy Work?
The Stochastic oscillator's primary function is to identify overextended conditions in the market. Like all indicators used in isolation, it can provide false signals. However, when paired with the faster-reacting HMA, the Stochastic's early warning is confirmed by the HMA. The quick response of the 9-period HMA to price changes combined with the smoother, longer 21-period HMA gives traders a clear indication of short-term momentum shifts, increasing the likelihood of successful trades in fast-moving markets.
The Bottom Line
In summary, traders exploring various types of trading in the stock market can benefit from these strategies. Moreover, they’re not just limited to stocks; you’ll find the same repeatable trades across the forex, commodities, and crypto* markets. However, it’s vital to remember that the strategies are a framework that should be tailored to a specific trade.
The key to using them effectively is in continuous learning and practice. Once you’re ready to apply them for real, you can consider opening an FXOpen account. When you do, you’ll gain access to a diverse range of markets, competitive trading costs, and rapid execution speeds. Happy trading!
*At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules, respectively. They are not available for trading by Retail clients.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Indicator Insights Part 3: A Different Way to Use RSIIn this instalment of our educational series, Indicator Insights, we shift our focus to the Relative Strength Index (RSI) , exploring a non-traditional approach that harnesses its power to identify strong momentum stocks.
While the conventional use of RSI is often associated with overbought and oversold conditions, our alternative method employs RSI as a relative strength indicator, uncovering stocks exhibiting high levels of relative strength.
Understanding RSI - The Traditional Approach
The RSI is a momentum oscillator that measures the speed and change of price movements. Traditionally, traders use RSI to identify overbought and oversold conditions. The standard interpretation suggests that a stock is potentially overbought when the RSI surpasses 70, indicating a potential reversal or pullback. Conversely, an RSI below 30 might suggest that a stock is oversold, hinting at a possible upward reversal.
A Different Perspective - RSI as a Relative Strength Indicator
Our alternative approach views RSI as more than just an overbought/oversold signal generator. Instead, we leverage it as a relative strength indicator, pinpointing stocks that exhibit robust momentum compared to the broader market. The strategy involves waiting for an RSI reading to reach +75, signalling significant strength, and then strategically entering a position during a pullback when the RSI retreats to 50.
Methodology: Buying Strong Momentum Stocks
Identifying Strong Momentum (RSI +75): Monitor stocks with RSI readings reaching +75, indicating robust upward momentum.
Waiting for the Pullback (RSI 50): Exercise patience and wait for the RSI to retreat to 50. This pullback suggests a temporary cooling-off period in the stock's momentum.
Strategic Entry: Initiate a long position when the RSI starts to move back above 50, anticipating a potential resumption of the strong upward trend.
Advantages of This Approach:
Relative Strength Focus: By emphasising relative strength, this strategy aims to align with stocks demonstrating a sustained and potent upward trend compared to the broader market.
Disciplined Entry: Waiting for the RSI to retreat to 50 provides a disciplined entry point, reducing the likelihood of entering trades during extended periods of overbought conditions.
Momentum Confirmation: Combining RSI readings with a pullback strategy helps confirm the sustainability of the stock's momentum before entering a position.
Potential Limitations:
False Signals: As with any strategy, false signals may occur, especially in volatile markets. Traders should exercise caution and consider additional factors in their decision-making process.
Market Conditions: This method may perform better in trending markets and may be less effective in choppy or sideways conditions.
Worked Example 1: Buying RSI Pullback on Daily Timeframe
Let's illustrate this approach with a practical example:
Stock: Tesco (TSCO)
RSI Reaches +75: RSI for Tesco reaches +75, signalling strong momentum.
Pullback to RSI 50: Tesco experiences a pullback, and RSI retreats to 50.
Strategic Entry: A long position is initiated as the stock shows signs of resuming its strong upward trend and RSI turns back above 50.
Tesco (TSCO) Daily Candle Chart
Past performance is not a reliable indicator of future results
Worked Example 2: Buying RSI Pullback on Hourly Timeframe
Stock: Apple (AAPL)
RSI Reaches +75: Hourly RSI for Apple reaches +75, signalling strong momentum.
Pullback to RSI 50: Apple experiences a pullback, and RSI retreats to 50.
Strategic Entry: A long position is initiated as the stock shows signs of resuming its strong upward trend and RSI moves back above 50.
AAPL Hourly Candle Chart
Past performance is not a reliable indicator of future results
Summary:
This non-traditional use of RSI as a relative strength indicator offers traders a simple way of identifying and capitalising on strong momentum stocks. By waiting for RSI to reach +75 and strategically entering during a pullback to 50, traders can align with stocks exhibiting exceptional strength relative to the broader market.
Disclaimer: This is for information and learning purposes only and is intended for UK audiences. 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. 75% 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.
Learn Best Price Action Patterns by Accuracy
Last year, I shared more than 1300 free signals and forecasts for Gold, Forex, Commodities and Indexes.
In my predictions, quite often I relied on classic price action patterns.
In this article, I will reveal the win rate of each pattern, the most accurate and the least accurate formations of the last year.
Please, note that all the predictions and forecasts that I shared this year are available on TradingView and you can back test any of the setup that I identified this year by your own. Just choose a relevant tag on my TradingView page.
Also, some forecasts & signals were based on a combination of multiple patterns.
Here is the list of the patterns that I personally trade:
🔘 Double Top or Bottom with Equal Highs
The pattern is considered to be valid when the highs or lows of the pattern are equal.
The pattern gives a bearish/bullish signal when its neckline is broken.
🔘 Double Top or Bottom with Lower High/Higher Low or Cup & Handle
The pattern is considered to be valid when the second top/bottom of the patterns is lower/higher than the first one.
The pattern gives a bearish/bullish signal when its neckline is broken.
🔘 Head & Shoulders and Inverted Head and Shoulders
The pattern gives a bearish/bullish signal when its neckline is broken.
🔘 Horizontal Range
The pattern is the extension of a classic double top/bottom with at least 3 equal highs/lows.
The pattern gives a bearish/bullish signal when its neckline is broken.
🔘 Bullish/Bearish Flag
The pattern represents a rising/falling parallel channel.
It gives a bullish/bearish signal when its upper/lower boundary is broken.
🔘 Rising/Falling Wedge Pattern
The pattern represents a contracting rising/falling channel.
It gives a bullish/bearish signal when its upper/lower boundary is broken.
🔘 Rising/Falling Expanding Wedge
The pattern represents an expanding rising/falling channel.
It gives a bullish/bearish signal when its upper/lower boundary is broken.
🔘 Descending/Ascending Triangle
The pattern is the extension of a cup & handle pattern with at least 2 lower highs/lows.
The pattern gives a bearish/bullish signal when its neckline is broken.
Please, also note that all the patterns that I identified and traded were formed on key horizontal or vertical structures.
Remember that the accuracy of any pattern drops dramatically if it is formed beyond key levels.
I consider the pattern to be a winning one if after a neckline breakout, it managed to reach the closest horizontal or vertical structure, not invalidating the pattern's highs/lows.
For example, if the price violated the high of the cup and handle pattern after its neckline breakout, such a pattern is losing one.
If it reached the closest structure without violation of the high, it is a winning pattern.
🔍 Double Top or Bottom with Equal Highs
I spotted 85 setups featuring these patterns.
Their accuracy is 62%.
🥉 Double Top or Bottom with Lower High/Higher Low or Cup & Handle
96 setups were spotted.
The performance turned out to be a little bit higher than a classic double top/bottom with 65% of the setups hitting the target.
🔍 Head & Shoulders and Inverted Head and Shoulders
58 formations spotted this year.
Average win rate is 64%
🏆 Horizontal Range
The most accurate pattern of this year.
More than 148 patterns were spotted and 74% among them gave accurate signal.
🔍 Bullish/Bearish Flag
38 setups identified this year.
The accuracy of the pattern is 57%
Rising/Falling Wedge
The pattern turned out to be a little bit more accurate.
Among 62 formations, 59% end up being profitable.
👎 Rising/Falling Expanding Wedge
The worst pattern of this year.
I recognized 24 patterns and their accuracy was just 51%.
🥈 Descending/Ascending Triangle
64 patterns were identified.
The win rate of the pattern is 66%.
The most important conclusion that we can make analyzing the performance of these patterns is that they all have an accuracy above 50%. If you properly combine these patterns with some other technical or fundamental tools, the accuracy of the setup will increase dramatically.
Good luck in your trading!
❤️Please, support my work with like, thank you!❤️
ORDER BLOCK trading strategyThe order block trading strategy is based on the concept of smart money, focusing on identifying specific zones where institutional traders previously executed their orders. Once we have successfully identified these zones, we patiently wait for the price to revisit these levels.
By using a suitable strategy, we then enter our trades in the anticipated direction.
-What is an Order Block in Forex:
Order blocks are special zones within the market where significant buy or sell orders from major market participants, like institutional traders, have been previously executed.
These order clusters, situated in specific price regions, hold considerable influence over price action, market sentiment, and liquidity.
Order blocks serve as a specialized methodology to determine crucial support and resistance levels, derived from the trading behavior of institutional traders. These levels are subsequently employed as strategic points for initiating or concluding trades.
-Understanding Order Block in Trading:
In Forex or any other market, ict order block represent crucial price levels where we observe significant and aggressive price movements. These levels are characterized by large firms strategically placing their orders, which often results in the market moving forcefully from those points.
To influence the market in a specific direction, smart money or hedge funds execute orders worth billions of dollars at particular price levels. However, not all of their orders are immediately filled. As a result, smart money revisits these levels to execute the pending orders, leading to further movement in the desired direction.
-ICT Order Blocks Definition:
Order blocks can indeed be identified on any time frame, ranging from small time frame like 15m,30 m and m5 to larger time frames like daily or weekly charts.
Order blocks can be classified into two main types: Bullish Order Blocks and Bearish Order Blocks.
1. Bullish Order Block:
A Bullish Order Block is recognized as the last downward candle before the price experiences a significant and aggressive upward movement. It represents a key level where institutional traders placed substantial buy orders, causing the market to rally strongly from that point.
2. Bearish Order Block:
On the other hand, a Bearish Order Block is characterized by the last upward closing candle before the price undergoes a sharp and forceful downward movement. It signifies a critical level where large market participants, such as institutional traders, positioned significant sell orders, resulting in a significant decline in the market.
By identifying and analyzing these Bullish and Bearish Blocks, traders can gain insights into a potential reversal or continuation patterns and utilize them as entry or exit points for their trades.
Trading order blocks go beyond solely identifying the last up or down closing candle. To effectively trade order blocks, it is essential to consider several contextual factors, including:
1. Liquidity Hunt: Market participants, especially institutional traders, may strategically place their orders to trigger stop losses or create a liquidity imbalance. Understanding liquidity patterns and how they can influence price action is crucial.
2. Daily Bias: Evaluating the overall market sentiment and bias for the day is important. This involves considering factors such as news events, economic releases, and geopolitical developments that may impact the market and influence order-block behavior.
3. Interest Rates and Fundamentals: Fundamental factors, including interest rates, economic indicators, and central bank policies, can significantly influence market conditions. Understanding how these factors interact with order blocks can provide valuable insights for trading decisions.
By taking these contextual factors into account, traders can enhance their understanding of order blocks and make more informed trading decisions.
To identify order blocks, price action traders typically examine historical price movements on the chart to locate areas where the market has shown strong reactions.
-How to identifying order blocks:
1. Look for strong price reactions: Analyze the chart to identify areas where the price has displayed significant and notable reactions, such as sharp reversals, extended consolidations, or breakouts.
2. Mark potential order block levels: Once you identify these areas of strong price reactions, mark them as potential order block levels on your chart. These levels represent key price zones where institutional traders may have executed large orders.
3. Assess support and resistance characteristics: Consider how the price behaves with the marked order block levels. If the price bounces off a specific level multiple times, it indicates a robust level of support or resistance, depending on whether the price approached the level from above or below.
4. Watch for role reversal: When an order block level is breached, its role as support or resistance can reverse. For instance, a broken resistance level may transform into a support level, and vice versa. In such cases, traders often wait for a retest of the broken level before entering trades in the direction of the breakout.
By following these steps and considering the principles of support and resistance, traders can effectively identify and utilize order blocks in their trading strategies. However, it’s important to note that order block analysis is just one tool among many in a comprehensive trading approach.
-How To Trade Order Blocks:
The steps you’ve mentioned provide a general guideline for trading order blocks in forex. Here’s a breakdown of each step:
1. Point of Interest (POI): Start by identifying potential order blocks on higher time frames, such as daily and 4-hour charts. These could be areas of consolidation or strong price reactions. Once you’ve marked these POIs, move to the next step.
2. Optimization: Switch to lower time frames like 1-hour, 15-minute, or 5-minute charts to refine and optimize your POIs. By zooming in on these lower time frames, you can better analyze the price action within the identified areas.
3. Price Observation: Keep an eye on the price action in the higher time frame. Monitor how the price behaves as it approaches your POI. This observation helps you determine the strength of the order block and potential trading opportunities.
4. Rejection Analysis: When the price reaches your POI, switch to the lower time frame to examine how the order block reacts to the price. Look for signs of rejection, like fair value gap
5. Entry on Lower Time Frame: Once you’ve observed a rejection or a significant reaction at the order block on the lower time frame, you can plan your entry. Look for suitable entry signals, such as a breakout, pullback, FVG price Imbalance, and more
6. Stop Loss Placement: To manage risk, it’s important to place a stop loss order. Consider setting your stop loss 1 to 5 pips below the order block ict to allow for potential market noise and fluctuations. This helps protect your trading capital in case the trade doesn’t go as planned.
Remember, these steps provide a general framework for trading ict order blocks, but it’s crucial to develop a trading strategy that suits your risk tolerance, trading style, and market conditions.
It’s recommended to thoroughly back test and practice your strategy before applying it with real money. Additionally, staying updated with market news and having proper risk management practices are essential for successful trading.
USDCHF:The Confluence of Trends and FundamentalsHey Traders, in today's trading session we are monitoring USDCHF for a buying opportunity around 0.85300 zone, USDCHF is trading an uptrend and currently is in a correction phase in which it is approaching the trend at 0.85300 support and resistance area.
From a technical perspective, USDCHF exhibits a clear uptrend, and its current correction phase positions it near the critical support and resistance area at 0.85300. Traders will be closely monitoring this level for potential entry points.
Now, let's add a fundamental layer to our analysis. Recent economic indicators, especially the Consumer Price Index (CPI), play a pivotal role in shaping currency dynamics. Examining the previous CPI figures (3.1%, 3.2%, 3.7%) in contrast to the latest readings (3.4%, 3.1%, 3.2%), we observe a nuanced inflationary pattern. This trend suggests a potential strengthening of the US dollar, aligning with the Federal Reserve's dual mandate of price stability and maximum employment.
Considering the CPI data within the broader economic landscape, traders may anticipate increased speculation regarding the Federal Reserve's monetary policy. A growing inflationary environment could prompt the Fed to adopt a more hawkish stance, signaling potential interest rate adjustments in the future. This shift in monetary policy can significantly influence currency valuations, contributing to a possible strengthening of the USD against its counterparts.
In conclusion, as we navigate the intricacies of the forex market, keeping a watchful eye on both technical and fundamental factors is essential. The alignment of a favorable technical setup with evolving fundamental narratives enhances the overall decision-making process for traders.
Trade safe,
Joe.
Bearish Bitcoin Spike on the Weekly"Buy the rumor/Sell the news" is a phenomenon as old as markets. It was like betting on the sun not to rise tomorrow.
I have talked to many Bitcoin enthusiasts who are perplexed by this occurrence. They were assured by various Twitter personalities that this week would see the largest inflow of capital into Bitcoin ever, price would rise, and if they just bought prior to the news they would make tremendous gains. This was never going to happen.
With the close of the prior eventful week's candle we now have a confirmed price Spike on the INDEX:BTCUSD Weekly. On Wednesday amid the "buy the news" nonsense price briefly surpassed a major high set in March 2022 only to retrace the entire ETF launch and then return to the bottom of the prior range. This is a very bearish signal from which price does not typically recover.
The first level of Support will be found around 32.2k; the 50% Retracement of the rally since November 2022. The most ironic, and most likely outcome, is that price retraces the entire ETF hype rally.
Breaking the ETF news high would of course resume the trend upward but at this point despite the memes circulating Twitter trying to reassure all to HODL that is a very low probability with the price action we have seen.
I remain short Bitcoin via pre-existing ETFs such as AMEX:BITI and will be adding to them during the coming week.
Wall Street is not coming to save your longs...
Bitcoin: 40K Break Trend Change?Bitcoin rejects the 50K resistance area and goes from 49K to 41,500 over a two day period. If you have been following my analysis on here you should NOT be surprised. I have been highlighting the extreme risks above 46K in my articles AND my streams since the beginning of the month. Is this an adequate pullback to buy into? I will address that now.
The first question that we must consider is: has anything changed in terms of trend? From a technical perspective, NOT YET. The 40K support is still intact, and until this level is clearly compromised, it is still within reason to anticipate the overall support to hold. One thing to keep in mind though, there is a large red candle coming off a major resistance level and this means momentum is bearish. IF this momentum continues, 40K can break at which point a change in trend would be in play.
For this reason, BEFORE considering any swing trades on the long side, I will WAIT for a complex reversal pattern (see illustration on chart). This can appear in the form of a classic double bottom or failed low in the 40K AREA. A couple of green inside bars is NOT enough in this situation because of the recent surge in momentum. Typically inside bars in this configuration are often momentum continuation patterns which at the moment favors the bears.
In previous reports and streams I have specifically mentioned the relevance of the monthly time frame and potential of a bearish C wave developing. IF 40K breaks, this further confirms that argument. A bearish C wave can potentially lead to a test of 15K (this can take months to play out). It is important to be cognizant of this scenario particularly for investors who plan to dollar cost average into the next pullback. Don't make the mistake to getting too big too soon.
There is no way to know if 15K will be tested, maybe the bottom of C turns out to be 30K, or maybe Wave C never unfolds at all, and 40K holds. The point is, don't get married to any opinions bullish OR bearish. Avoid getting swept up into the nonsense machine (the internet). You only need a few components of information to make reasonable decisions. Start with having a repetitive way to identify trend and changes of trend, and second the same for KEY support and resistance levels. These two components alone can improve decision making because they help you align with market intent.
This game is NOT about "thinking" and being right. It is about ADJUSTING as the market processes new information. Unless you are ahead of the information curve, you have to accept that the market is ALWAYS right. It can do whatever IT wants, WHENEVER it wants for ANY REASON. Charts help to isolate a probable range of scenarios which you can reference to better quantify risk. The more you over think it, the greater the chance that you lose.
Thank you for considering my analysis and perspective.
BTC REJECTED AT GOLDEN POCKET, PRINTS UGLY CANDLENot the move that ETF bulls were looking for, but also not surprising with GBTC now unlocked and putting selling pressure on the market.
Technicals at the moment indicate that more downside is likely.
The weekly candle closed as a shooting star , a candle with a long wick up and red body. This is often the signal of a weakening or ending uptrend. This also happened to have a wick up into the golden pocket, between the 61.8% and 65% retracement levels, a key resistance on the chart.
I have no idea what will happen - nobody does. The chart indicates that bears are back in control for the moment.
We need to see more downside to confirm the bearish candle from last week, or else the shooting star is not that meaningful.
This week will be fun to watch.
$SPX500 2024 Guess for the Year $SPYHere are the actual #'s for you to see the 2024 Wall Street analysts forecasts on the chart. Once those are charted in the black rectangles at the year-end price targets, we can see where there are concentrations of estimates and where investors might pause and sell as the target has been reached for the year.
And then I added in the 9% and 10% green lines to indicate the common average annual compound return of the stock market (excludes dividends).
I could imagine there will be multiple rejections of the cluster where people want to "lighten up at the target" into the election in November. I plotted three pullbacks from the resistance area and then once the doubt is no longer hanging over the market, it can rally and the money chases into stocks.
Election years have often been sideways grind and this year seems like more of the same. The media headlines are negative and investors are scared of a recession and another banking crisis. Inflation is always a fear and the Fed has hiked 500 basis points and although their language has shifted from "higher for longer" over to "easing ahead possibly three rate cuts in 2024" to paraphrase Jerome Powell at the Fed.
The stock market is unchanged after two years and many investors are shell-shocked from the bear market in 2022 and trying to fend off the lure of T-Bills and money market funds with their juicy 4%-5% yields which are the highest they have been in years. Take a look at my interest rate "guess" from last year when rates were near peak to show you what I was thinking back then (hint: topping, down to sideways. See link below).
This is my annual fun 'guess' which has been something I have done for about the last 10 years and with some luck it has at least acknowledged the big factors in the market and even if I am dead wrong I took a shot at it and welcome questions and comments.
Cheers to a healthy 2024 for everyone.
Tim
Jan 11, 2024 10:00AM EST
Algorithmic Identification and Classification of Chart PatternsWelcome to the world of technical analysis, where chart patterns play a pivotal role in shaping trading strategies. This is an ultimate guide designed to help users objectively identify the existence of patterns, define the characteristics and classify them. In this discussion, we will mainly concentrate on the patterns formed by trend line pairs. This includes wedges, triangles and channel type patterns.
🎲 Basic Principle of Identifying the Pattern
It is very important to apply definitely set of rules when identifying the patterns in order to avoid biases or fitting patterns to our opinions. The dangers of overfitting the patterns to our bias is documented in the idea
To identify the patterns objectively, we need to set some ground rules or follow a well-defined technique to derive the patterns. Here is the technique we follow to identify chart patterns.
🎲 Only Indicator Required - Zigzag
Tradingview has plenty of free community scripts for Zigzag indicator. For this demonstration, we are going to use our Multi Timeframe Recursive Zigzag implementation.
Once the indicator is loaded on the chart, go to indicator settings and perform these modifications.
Disable the Labels : The Labels contain information that is needed for this exercise.
Set the Highlight level to 1 or 0 : We can iteratively increase the level and check next levels on the go.
You can also adjust Zigzag Length and Depth Parameters.
🎲 Scanning and Identification of valid Pattern
We can either use 5 pivots or 6 pivots for pattern identification. 5-Pivot based scanning will generate more patterns than 6-Pivot based scanning. 6 pivot patterns are geometrically more accurate however, there is no proof that 6-Pivot based patterns produce better trading outcome.
🎯 Step 1 - On each level of zigzag, mark the last 5 or 6 zigzag pivots.
Since we are using Multi Timeframe Recursive Zigzag implementation, we can gradually increase the zigzag level from 0. This means that on every level, we can check if there are any patterns.
On each level - consider only the last 5 or 6 pivots and mark them on the chart.
Markings on Level 0 would look like this for 5 and 6 pivot scanning
🎯 Step 2: Draw Trend Lines
As part of this step, draw two trend lines.
The first trend line will join pivots 1 and 5 marked in the previous step.
The second trend line will join pivots 2 and 4 marked in the previous step for 5 pivot scanning. For 6 pivot scanning, the trend line joining pivots 2 and 6 will be marked.
🎯 Step 3: Inspect the validity of trend lines
A valid trend line is the one that confirm to below two points
Touches all the alternate pivots. For example, the trend line drawn from pivot 1 to 5 should also make contact with the candle of pivot 3. In case of 6 pivot scanning, the trend drawn from pivot 2 to 6 should also make contact with the candle of pivot 4.
All the candles from the starting pivot to ending pivot of the zigzag should be confined within the trend line pairs. Meaning, no candles should completely go above the upper trend line and no candle should completely go below the lower trend line.
Please note that while verifying the above points, minor adjustments in the alignment of the trend line can be made. Start and end of the trend line does not need to be on the high/low points of the candle, it can also be placed in any of the wick positions.
After adjusting the trend lines, in both type of scanning, we can see that the trend lines confirm to the above-mentioned rules. Hence, we have arrived with valid patterns in both types of scanning on the level 0 zigzag.
🎲 Classification of Patterns
Once the patterns are identified, they need to be classified into different types. We need to apply predetermined rules to objectively classify patterns into what they are. Everyone can build their own rules.
🎯 Properties of Derived Trend Lines
Before classifying the trend lines, we need to understand below properties of the derived trend lines.
▶ Direction of Individual Trend Lines
Both the trend lines needs to be individually classified among these categories
Rising - Trend Line is sharply rising up.
Falling - Trend Line is sharply falling down.
Flat - Trend Line is flat across the pivots.
Bi-Directional - Trend Lines are moving in opposite directions
Please note that, it is less probable for trend line to absolutely flat. Hence, allow angle to have certain degree of threshold to be considered as flat. For example, +- 10 degrees can be considered as flat.
Also, the angle of the trend line can further subjective based on how compressed the chart is. It is recommended to use either log/auto-scale or a specific formula based on ATR to identify the angle.
▶ Characteristic of the Trend Line Pairs
This parameter defines how both trend lines are aligned with respect to each other. Possible options are:
Converging - Trend Lines are converging and when extended towards the right will intersect at a visible distance.
Diverging - Trend Lines are diverging from each other and when extended towards the left will intersect at a visible distance.
Parallel - Trend Lines are almost parallel to each other and may not intersect to either right or to left at a visible distance.
To objectively identify the intersection distance, we further need to use some standard. Here are few options
Fixed Number of Bars : If the trend lines do not intersect to either left or right within X bars (Lets say 100), they can be considered as parallel. Otherwise, they can be classified as converging or diverging based on which side the intersection happens.
Relative to the Length of Pattern : If the length of longest trend line is X bars. The trend lines should converge within 1–2 times the X bars to be considered as converging or diverging. Or else, it can be termed as parallel channels.
🎯 Geometrical Shapes Classification
Following are the main geometrical classifications based on the characteristics of the trend lines and the pair.
Channels - Trend Lines are parallel to each other. And hence they both move in the same directions.
Wedges - Trend Lines are either converging or diverging from each other. However, both trend lines move in the same direction. Both trend lines will be either up or down.
Triangles - Trend Lines are either converging or diverging from each other. But, unlike wedges, upper and lower trend lines will have different direction.
🎲 Types of Patterns
Once we identify the direction and characteristics of trend lines, we can go on and classify the pattern in following categories.
Details below. Please note that examples are generated programmatically.
🎯 Rising Wedge (Contracting)
Rules for Contracting Rising Wedge are as follows:
Both Trend Lines are Rising
Trend Lines are converging.
🎯 Rising Wedge (Expanding)
Rules for the Expanding Rising Wedge are as follows:
Both Trend Lines are rising
Trend Lines are diverging.
🎯 Falling Wedge (Contracting)
Rules for the Contracting Falling Wedge are as follows:
Both Trend Lines are falling
Trend Lines are contracting.
🎯 Falling Wedge (Expanding)
Rules for the Expanding Falling Wedge are as follows:
Both Trend Lines are falling
Trend Lines are diverging.
🎯 Contracting/Converging Triangle
Rules for the Contracting Triangle are as follows
The upper trend line is falling
The lower trend line is rising
Naturally, the trend lines are converging.
🎯 Rising Triangle (Contracting)
The rules for the Contracting Rising Triangle are as follows
The upper trend line is flat
The lower trend line is rising
Naturally, the trend lines are converging towards each other
🎯 Falling Triangle (Contracting)
The rules for the Contracting Falling Triangle are as follows
The upper trend line is falling
The lower trend line is flat
Naturally, the trend lines are converging towards each other
🎯 Expanding/Diverging Triangle
Rules for the Expanding Triangle are as follows
The upper trend line is rising
The lower trend line is falling
Naturally, the trend lines are diverging from each other.
🎯 Rising Triangle (Expanding)
The rules for the Expanding Rising Triangle are as follows
The upper trend line is rising
The lower trend line is flat
Naturally, the trend lines are diverging from each other
🎯 Falling Triangle (Expanding)
The rules for the Expanding Falling Triangle are as follows
The upper trend line is flat
The lower trend line is falling
Naturally, the trend lines are diverging from each other
🎯 Rising/Uptrend Channel
Rules for the Uptrend Channel are as follows
Both trend lines are rising
Trend lines are parallel to each other
🎯 Falling/Downtrend Channel
Rules for the Downtrend Channel are as follows
Both trend lines are falling
Trend lines are parallel to each other
🎯 Ranging Channel
Rules for the Ranging Channel are as follows:
Both trend lines are flat
Naturally, the trend lines are parallel to each other.
Spot Bitcoin ETFs Surge – A Bullish Signal for Market Adoption?Welcome to a pivotal moment in the Bitcoin market! As we witness the launch of several spot Bitcoin ETFs, including giants like Fidelity's FBTC, Bitwise's BITB, and Franklin Templeton's EZBC, the landscape of cryptocurrency investing is evolving before our eyes.
First-day volumes paint a promising picture, with funds that 'Buy Bitcoin' directly, such as FBTC (Fidelity), BITB (Bitwise), and EZBC (Franklin Templeton), accounting for a significant 14.06% of the total volume. This direct investment approach is injecting fresh capital into the spot Bitcoin market, hinting at a bullish outlook for Bitcoin adoption and price movement.
Let's not overlook the powerhouses that follow Bitcoin's price through derivatives, such as the ProShares Bitcoin Strategy ETF (BITO) and Grayscale's GBTC, which command an impressive 85.94% of the total volume. While they may not directly purchase Bitcoin, their market presence can't be ignored, as they reflect growing investor interest and add to the overall Bitcoin market depth.
With the potential move to a T+1 settlement cycle, the market could see increased efficiency and a more immediate impact from ETF inflows. This could be particularly beneficial for ETFs purchasing Bitcoin, as it allows for quicker capital deployment, enhancing the responsiveness of the market to new investments.
But let's temper our optimism with a dose of reality. It's crucial to remember that not all ETFs are created equal – some provide direct exposure to Bitcoin's price movements, while others offer a more nuanced approach through futures and other financial instruments. The true impact of these funds will unfold with time, as we closely monitor their influence on market demand and price dynamics.
In essence, the influx of new Bitcoin ETFs could be a harbinger of increased adoption and integration of Bitcoin into the mainstream financial world. This is a bullish sign for those of us optimistic about the future of digital assets.
Stay tuned for more updates as we navigate this exciting phase of market growth. And remember, despite the complexities, the introduction of these ETFs is a step toward broader acceptance and a testament to Bitcoin's enduring allure.
So..still very Bullish news... still very Good news!
One Love,
The FXPROFESSOR 💙
XRP High probability Uptrend with 70% move with target: $1.042The analysis below outlines a bullish case, with a target price of $1.042, marking a potential 71.76% increase from the current level.
Ascending Channel Formation:
The XRPUSD has been trading within an ascending channel, exhibiting higher lows and higher highs, a classical indicator of a bullish trend. The lower boundary of the channel has consistently provided support, suggesting a strong buying interest.
Consolidation Zone:
Prior to the current price action, XRPUSD was consolidating, with the price oscillating between a well-defined range of support and resistance levels. The upper boundary of this range may act as a springboard for a breakout.
Z-Score Probability Indicator:
The Z-Score indicator has dipped into the red zone, which often precedes a reversal. Given the other bullish signals, this could indicate a potential buying opportunity.
Moving Averages:
XRPUSD is currently trading above its significant moving averages, which have started to trend upwards, suggesting a bullish market structure.
AMD - Approaching All Time HighsHello Traders, welcome to today's analysis of AMD.
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Explanation of my video analysis:
After the massive breakout in 2016 we saw a rally of more than 4.500% on AMD. This rally was perfectly followed by a correction of 70% in 2022. As mentioned in my analysis, I am now waiting for a retracement back to the previous structure and if we have enough bullish confirmation, I will then look for potential trading opportunities.
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I will only take a trade if all the rules of my strategy are satisfied.
Let me know in the comment section below if you have any questions.
Keep your long term vision.
