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4 Classic Bullish Patterns EVERY TRADER Must Know In the today's post, we will discuss accurate bullish price action patterns that you can apply for trading any financial instrument. 1️⃣Bullish Flag Pattern Such a pattern appears in a bullish trend after a completion of the bullish impulse. The flag represents a falling parallel channel. The market corrects itself within. Bullish breakout of the resistance line of the channel is a strong bullish signal that can be applied for buying the market. Best entries should be placed immediately after a breakout or on a retest. Safest stop loss is below the lows of the flag. Target - the next key resistance. Here is the example of a bullish flag pattern that was formed on Gold on a 1H time frame. As you can see, after the breakout of the resistance of the flag, a strong bullish rally initiated. 2️⃣Ascending Triangle Such a pattern forms in a bullish trend on the top of the bullish impulse. The market starts consolidation, respecting the same highs and setting higher lows simultaneously. The equal highs compose a horizontal resistance that is called the neckline. Its breakout is an important sign of strength of the buyers. Buy the market aggressively after a violation, or set a buy limit order on a retest. Stop loss should lie at least below the last higher low within a triangle. Target - the next strong resistance. Take a look at that ascending triangle formation on EURUSD. Bullish breakout of its neckline was a perfect bullish signal. 3️⃣Falling Wedge That formation is very similar to a bullish flag pattern. The only difference is that the price action within the wedge is contracting so that the trend line of the wedge are getting closer to each other with time. Your signal to buy is a bullish breakout of the resistance of the wedge. Stop loss is strictly below its lows. Target - the next key resistance. GBPUSD formed a falling wedge on a 4H time frame, trading in a strong bullish trend. You can behold how nicely the price bounced after a breakout of its upper boundary. 4️⃣Horizontal Range Similarly to the ascending triangle, the horizontal range forms at the top of a bullish impulse in a bullish trend. The price starts consolidation, then, setting equal highs and equal lows that compose a horizontal channel. Breakout of the resistance of the range is a strong trend-following signal. Buy the market aggressively after a breakout or conservatively on a retest. Stop loss will lie below the lows of the range. Target - the next strong resistance. Dollar Index formed a horizontal range, trading in a strong bullish trend. Breakout of the resistance of the range triggered a bullish rally. The best part about these patterns is that they can be applied on any time frame. Whether you are a scalper, day trader or swing trader, you can rely on these formations and make consistent profits.
FOREXCOM:XAUUSDEducation
by VasilyTrader
10
Trading 101: The benefits of hard closesIntroduction: In the world of technical analysis, traders are constantly searching for new and innovative methods to gain an edge in the market. One such technique that has gained popularity in recent years is the use of "hard closes." In this idea, we will delve into what hard closes are, why they are considered superior to conventional crossover methods, and the benefits and practical applications of incorporating hard closes into your trading strategy. Understanding Hard Closes: A "hard close" is a unique approach to analyzing price movements in financial markets. Unlike traditional moving average crossovers, which rely on the intersection of two moving averages, hard closes focus on the closing price of an asset. In essence, a hard close is an inflexible criterion that triggers a signal when the closing and opening price of an asset meets specific predetermined conditions. How to Spot Hard Closes: Let's say we have a level of resistance, and we are waiting for the price to break out so that we can long it, an up candle must open above the level of resistance, as well as close above it (because it also has to be an up candle). Similarly, if we are looking for a support breakout, we need a down candle to open below the level of support and close as a down candle. Hard closes can be used on both horizontal levels and trendlines. Why Hard Closes Are Better: Reduced Noise: Hard closes eliminate a significant amount of noise present in conventional crossover methods. By focusing solely on opening and closing prices, they filter out intra-period fluctuations as well as fakeouts and provide a cleaner and more precise signal. Benefits of Hard Closes: Risk Management: By reducing false signals, hard closes help traders make more informed decisions. This, in turn, enhances risk management strategies, preventing traders from entering ill-timed trades. Versatility: Hard closes can be applied to various assets and timeframes as well as different kinds of levels, making them suitable for day traders, swing traders, and long-term investors alike. Practical Uses of Hard Closes: Trend Confirmation: Hard closes can be used to confirm the strength and direction of an existing trend. A bullish hard close, for example, can reinforce the conviction of a bullish trend. Entry and Exit Points: Traders can employ hard closes to identify precise entry and exit points for their trades. This approach minimizes the guesswork involved in trading decisions. Filtering Signals: Hard closes can be integrated into existing trading strategies to filter out less reliable signals, enhancing the overall effectiveness of the strategy. In conclusion, hard closes represent a powerful and innovative approach to technical analysis that offers several advantages over conventional crossover methods. Their ability to reduce noise, improve accuracy, and adapt to different trading styles makes them a valuable addition to any trader's toolkit. Whether you are a seasoned professional or a novice trader, consider exploring the potential of hard closes to enhance your trading strategy and gain a competitive edge in the financial markets.
Education
by AutomatedTradingAlgorithms
3
Top 10 Trading IndicatorsWelcome to the dynamic world of trading indicators! These meticulously crafted metrics, born from the intersection of mathematics and market psychology, offer traders a distinct advantage by transforming raw market data into actionable intelligence. Join us as we embark on a journey through the top 10 trading indicators, exploring their intricacies, strengths, and applications in deciphering the ever-shifting landscape of global markets. Whether you're a seasoned trader seeking to refine your strategies or a novice investor eager to grasp the essentials, this exploration promises to illuminate the fascinating realm of trading indicators and their pivotal role in the pursuit of financial success. 1. Moving Averages (MA) The Moving Average often referred to as the SMA (Simple Moving Average), serves as a valuable tool for discerning the prevailing direction of a current price trend, while filtering out short-term price fluctuations. Through a calculated amalgamation of price points over a defined time span, divided by the total data points, the MA indicator presents a singular trend line that encapsulates the overall trajectory. The timeframe utilized for the MA computation dictates the dataset employed. For instance, a 200-day MA necessitates 200 days' worth of data. By harnessing the insights offered by the MA indicator, one can delve into the realm of support and resistance levels, gaining insights from past price movements and the market's historical evolution. This, in turn, facilitates the anticipation of potential future patterns with enhanced precision. 2. Average True Range (ATR) The Average True Range (ATR) is a widely used technical indicator designed to measure market volatility and assess potential price movement within a given trading period. Developed by J. Welles Wilder, ATR offers traders insights into the range of price fluctuations, accounting for both intraday price spikes and overnight gaps. Unlike many other indicators, ATR does not provide directional signals but instead focuses on quantifying volatility levels. ATR is computed by considering the true range for each trading period, which involves calculating the greatest value among three key metrics: the difference between the high and low prices of the current period, the absolute value of the difference between the previous period's high and the current period's close, and the absolute value of the difference between the previous period's low and the current period's close. These true range values are then smoothed over a specified number of periods, often 14, to create the ATR line. Traders employ the ATR indicator for multiple purposes. It aids in setting stop-loss levels, as larger ATR values suggest increased volatility and the potential for wider price swings. Additionally, ATR can assist in determining position sizing, with lower volatility suggesting smaller trade sizes and vice versa. Overall, ATR provides a valuable quantification of market volatility, enabling traders to adapt their strategies to prevailing market conditions and manage risk more effectively. 3. Stochastic oscillator The Stochastic Oscillator is a momentum-based technical indicator that offers traders insights into potential trend reversals and overbought or oversold conditions in a market. Developed by George C. Lane, this oscillator compares the most recent closing price of an asset to its price range over a specified period, typically 14 periods. The resulting value, often expressed as a percentage, indicates the relative position of the closing price within that range. The Stochastic Oscillator comprises two lines: %K, the faster line that represents the current price's relationship to the recent range, and %D, a smoothed moving average of %K, providing a more stable signal. Traders commonly use the Stochastic Oscillator to identify potential turning points in price trends. When the oscillator ventures into the overbought zone (typically above 80), it suggests that the asset might be overvalued, potentially signaling an impending price reversal or correction. Conversely, readings in the oversold zone (typically below 20) indicate potential undervaluation and may signal an upcoming price bounce. By analyzing the crossovers, divergences, and relationships between %K and %D, traders can derive valuable insights into the market's underlying momentum, facilitating more informed trading decisions and strategic entries or exits. 4. Moving average convergence divergence (MACD) The Moving Average Convergence Divergence (MACD) is a versatile and widely used technical indicator that provides traders with insights into trend direction, momentum shifts, and potential buy or sell signals. Created by Gerald Appel, the MACD consists of two main components: the MACD line and the signal line. The MACD line is derived from the difference between two exponential moving averages (usually 12-period and 26-period EMAs), reflecting the convergence or divergence of short-term and long-term price trends. The signal line, often a 9-period EMA of the MACD line, acts as a trigger for potential trade entries or exits. Traders leverage the MACD for various purposes. When the MACD line crosses above the signal line, it generates a bullish signal, indicating a potential upward price momentum and suggesting a favorable buying opportunity. Conversely, when the MACD line crosses below the signal line, a bearish signal is generated, suggesting a potential downward trend and a possible selling opportunity. Additionally, traders analyze the MACD histogram, which represents the difference between the MACD line and the signal line, providing insights into the strength and intensity of price momentum. With its ability to capture both short-term and long-term trends, the MACD remains a valuable tool for traders seeking to navigate complex market dynamics and make well-informed trading decisions. 5. Bollinger bands (BB) Bollinger Bands, a cornerstone of technical analysis, provide traders with a unique perspective on price volatility and potential trend reversals. Created by John Bollinger, this indicator comprises three distinct lines that encapsulate price action: the middle band, typically a simple moving average (SMA), and an upper and lower band, which flank the middle band at a specified standard deviation distance. The width between the upper and lower bands dynamically adjusts according to market volatility, expanding during periods of heightened price swings and contracting during calmer phases. These bands offer traders invaluable insights into market dynamics. When prices gravitate towards the upper band, it suggests potential overbought conditions, signifying that prices might have risen too far, too fast, potentially foreshadowing a reversal or corrective move. Conversely, when prices approach the lower band, it indicates potential oversold conditions, implying that prices might have fallen excessively and could be due for a rebound. Additionally, traders scrutinize Bollinger Band squeezes, characterized by a contraction of the bands, as they often precede significant price breakouts. By incorporating Bollinger Bands into their analytical toolkit, traders gain a nuanced understanding of price movements and volatility patterns, enabling them to make more informed decisions and better navigate the intricacies of financial markets. 6. Relative Strength Index (RSI) The Relative Strength Index (RSI) stands as a pivotal momentum oscillator in the realm of technical analysis, offering traders a comprehensive measure of an asset's strength and potential overbought or oversold conditions. Conceived by J. Welles Wilder, the RSI compares the magnitude of recent price gains to losses over a specific time frame, typically 14 periods. This computation yields a value between 0 and 100, with readings above 70 often indicating overbought conditions, implying that the asset may have experienced excessive buying and could be due for a price correction. Conversely, readings below 30 signify potential oversold conditions, suggesting that selling pressure might have driven the asset's price too low and could lead to a rebound. Traders wield the RSI as a versatile tool to uncover potential trend reversals and assess the underlying strength of an asset. By identifying divergence between the RSI and price movements, traders can pinpoint situations where momentum might be shifting before it becomes evident through price action alone. Moreover, the RSI's ability to generate signals when crossing key thresholds adds an element of decisiveness to trading strategies, guiding traders on when to buy or sell based on the prevailing market sentiment. With its capacity to unveil underlying market dynamics, the RSI empowers traders with a deeper comprehension of asset behavior, enabling them to make more informed decisions and navigate market fluctuations with greater confidence. 7. Fibonacci retracement Fibonacci analysis, rooted in the pioneering work of Leonardo Fibonacci, has become an essential tool in technical analysis, guiding traders and analysts in deciphering potential price levels, retracements, and extensions within financial markets. The Fibonacci sequence, a mathematical progression where each number is the sum of the two preceding ones (1, 1, 2, 3, 5, 8, 13, and so on), forms the foundation of this technique. In trading, Fibonacci ratios such as 0.618 (Golden Ratio), 0.382, and 0.236 are applied to various price movements to identify significant levels of support and resistance. These ratios, when combined with key price points, create Fibonacci retracement and extension levels that aid in predicting potential price reactions and trend continuations. Traders utilize Fibonacci analysis to comprehend price patterns, predict reversals, and identify areas of interest for market entry or exit. The technique's widespread application spans across different timeframes and asset classes, making it a versatile tool for both short-term traders seeking precise entries and long-term investors analyzing broader trends. By integrating Fibonacci ratios with chart patterns, trendlines, and other technical indicators, traders can enhance their decision-making processes, improve risk management, and gain a deeper understanding of market psychology as reflected in price movements. 8. Ichimoku Cloud The Ichimoku Cloud, a distinctive and comprehensive technical indicator developed by Goichi Hosoda, stands as a multifaceted analytical tool that provides traders with a holistic view of an asset's price action and potential trend direction. Comprising five lines and a shaded area, the Ichimoku Cloud offers a layered perspective that transcends traditional technical analysis. At its core, the indicator features the Senkou Span A and Senkou Span B lines, which, when combined, form the cloud-like area on the chart. The cloud serves as a dynamic support and resistance zone, with its thickness reflecting market volatility and potential trend shifts. The Tenkan-sen and Kijun-sen lines, akin to fast- and slow-moving averages, contribute to the indicator's depth by indicating current momentum and trend direction. Finally, the Chikou Span, plotted backward, provides insights into the relationship between current and past prices. Traders and analysts employ the Ichimoku Cloud for its comprehensive insights into market conditions. The cloud's shifting nature offers early indications of potential trend changes, while crossovers between the Tenkan-sen and Kijun-sen lines provide buy or sell signals. Furthermore, the Ichimoku Cloud accommodates various timeframes, catering to both short-term and long-term trading strategies. Its intricate combination of lines and the cloud presents traders with a holistic picture of price dynamics, enhancing decision-making through a blend of trend analysis, momentum assessment, and support/resistance identification. 9. Standard deviation The Standard Deviation indicator, a fundamental component of technical analysis, offers traders a quantitative tool for assessing the volatility and dispersion of price data within a given trading period. By quantifying the degree of variability in prices around their average or mean, this indicator aids in comprehending market dynamics and potential price fluctuations. Computed by analyzing the differences between each data point and the mean, squaring these differences, averaging the squared values, and finally taking the square root of the result, the Standard Deviation indicator produces a numerical value that represents the degree of price dispersion. A higher value suggests greater market volatility and potential risk, while a lower value indicates more stable and predictable price movements. Traders harness the Standard Deviation indicator to achieve a variety of objectives. Firstly, it helps identify periods of heightened market volatility, guiding traders to exercise caution or implement risk management strategies during times of potential turbulence. Secondly, it contributes to the assessment of potential price targets and support/resistance levels. By recognizing how price data typically deviates from the mean, traders can anticipate potential price levels at which reversals or trend changes might occur. Furthermore, the Standard Deviation indicator can be employed in conjunction with other technical tools to fine-tune trading decisions and develop strategies that align with prevailing market conditions. Its quantitative approach to measuring volatility enhances traders' ability to make informed choices and navigate market uncertainty with a greater degree of confidence. 10. Average Directional Index (ADX) The Average Directional Index (ADX), a pivotal technical indicator, empowers traders with insights into the strength of a prevailing trend and the potential for trend reversals. Developed by J. Welles Wilder, the ADX operates in conjunction with two companion lines, the Positive Directional Index (+DI) and the Negative Directional Index (-DI). The +DI line gauges upward movement's strength, while the -DI line measures downward movement's strength. The ADX itself is a non-directional indicator, designed to quantify the intensity of the trend rather than its direction. The ADX is particularly valuable for traders seeking to gauge the robustness of trends and assess their suitability for trading strategies. When the ADX value is ascending, it suggests an intensifying trend, while a descending ADX indicates a weakening trend or a market in consolidation. A low ADX reading may signify a lack of trend, while a high ADX reading implies a strong, sustainable trend. Traders often use the ADX alongside other technical indicators, such as moving averages or trendlines, to validate the strength of a trend before executing trades. This versatile indicator plays a vital role in enhancing traders' ability to navigate markets by offering a quantifiable measure of trend strength and aiding in the identification of opportune entry and exit points.
Education
by SciLog
Japanese Candlesticks - Doji CandlesAs traders, if we want to improve our technical analysis knowledge to better develop our price action skills, we owe it to ourselves to grasp candlestick patterns, in this case the Doji candlestick pattern. This post will go into further detail about this unique candlestick group and will also explain the psychology behind these patterns and how they can affect future price movements in the market. Before we go into further detail about doji candles, there are times this post will mention the words: 'OPEN PRICE, 'CLOSE PRICE, 'HIGH PRICE, 'LOW PRICE, 'UPPER WICK, 'LOWER WICK, and 'BODY.' So what are these? OPEN PRICE: Open means a candlestick's first price when it started. CLOSE PRICE: Close means a candlestick's last price when it ended. HIGH PRICE: High means how high the price went during that candlestick. LOW PRICE: Low means how low the price went during that candlestick. UPPER WICK: An upper wick forms when the high price of the candlestick is higher than the close price (bull candle) or open price (bear candle) of the period. LOWER WICK: A lower wick forms when the low of the candlestick is lower than the close price (bear candle) or open price (bull candle) of the period. Body: The visual difference between the candlestick's open and close prices. What is a Doji candlestick? The Doji Japanese candlestick pattern is a class of single-bar indecision patterns whose open and close prices are either identical or close to identical and therefore either do not have bodies or have very small bodies. A doji candlestick pattern generally suggests indecision or uncertainty in the markets. The reason for this is because of the psychological meaning behind a doji candle. As previously mentioned, all doji candles' open and close prices are either identical or close to identical, meaning that during the time of the candle's formation, buyers (bulls) and sellers (bears) were both at a complete standoff and neither one came out on top. There are different types of doji patterns depending on where the open and close prices are, and these types are known as: doji star, gravestone doji, dragonfly doji, long-legged doji, and four-price doji. Technical traders use the 'doji' term to refer to all of the above patterns but specifically call out a doji by its proper name when they want to be more specific, e.g., a dragonfly doji. Doji Star The doji star (also known as 'standard doji' or 'neutral doji') is a pattern that is composed of an upper and lower wick on either side of the opening and closing price that are approximately the same length. The doji star’s main features are: Identical or close to identical opening and closing prices. The upper wick and lower wick are approximately the same length. Overall, it has a cross shape. It indicates indecision: the market hesitates between two directions. When a doji star appears at the top of a bullish swing or at the bottom of a bearish swing, this is seen as a sign that there may be a possible change in the trend. The reason for this is due to the neutral formation of the candle and what it means psychologically: this candle pattern tells us that buyers and sellers were completely equal; it is not possible at this moment to judge which side of the market has the upper hand, so if a doji star appears near the top or bottom of a trend swing, then it is possible that there may be hesitation or uncertainty to continue the trend. Gravestone Doji  The gravestone doji pattern is formed by a candle that has only the upper wick. This indicates that the price tried to move higher but failed to do so and closed at a price identical to or close to identical to both the open and low prices. The gravestone doji’s main features are: A long upper wick. No lower wick Open and close prices are identical or close to identical to the low price. Overall, the pattern has an inverted 'T' shape. This pattern is most significant at the top of a bullish swing. It indicates indecision; this has a more bearish bias because of the upside rejection of the high price from the sellers. The psychology behind the gravestone doji usually indicates that the buyers might be losing power because they can no longer drive the price up and the sellers might be in control. When a gravestone doji pattern appears, especially at the top of a bullish swing, this is seen as a positive sign that there may be a possible change in the trend. Dragonfly Doji The dragonfly doji pattern is formed by a candle that has only the lower wick. This indicates that the price tried to move lower but failed to do so and closed at a price identical to or close to identical to both the open and high prices. The dragonfly doji’s main features are: A long lower wick. No upper wick. Open and close prices are identical or close to identical to the high price. Overall, the pattern has a 'T' shape. This pattern is most significant at the bottom of a bearish swing. It indicates indecision; this has a more bullish bias because of the downside rejection of the low price from the buyers. The psychology behind the dragonfly doji usually indicates that the sellers might be losing power because they can no longer drive the price down, and the buyers might be in control. When a dragonfly doji pattern appears, especially at the bottom of a bearish swing, this is seen as a positive sign that there may be a possible change in the trend. Long-legged Doji The long-legged doji pattern is just like the doji star, but with a longer upper and lower wick on either side of the opening and closing price. This pattern suggests not only market uncertainty but also more market volatility due to the longer wicks on either side. The long-legged doji's main features are: Identical or close to identical to the open and close prices. The long upper wick and the long lower wick are approximately the same length. Overall, it has a cross shape. It indicates indecision and higher volatility; the market hesitates between two directions. Four-Price Doji The four-price doji pattern (also called 'doji of four prices') is the rarest doji pattern type; it is extremely rare on the chart, especially on the higher time frame charts. It represents a straight horizontal line (only the body, without any upper and lower wicks). The pattern is formed when all four prices are the same: open, high, low, and close. The four-price doji's main features are: Completely flat horizontal body with no upper or lower wick. Overall, it has a 'dash' shape. Open, high, low, and close prices are all identical. As rare as this doji pattern is, it does form from time to time. This happens either on very low-liquid assets or when volumes severely drop on the market, for example, during holidays or near the start or close of a trading session. Be careful with short time frames! Doji candles appear far too often in shorter timeframes; traders on short-term timeframes do not generally take them as serious signals for predicting future price movements. Doji candles on shorter time frames are not as psychologically impactful as doji candles that form on longer-term charts. A big reason for this is due to the fact that it is a lot easier for a doji candle to develop in a shorter time frame than in a longer one. For example, it is far easier for a one-minute candle to have an identical or close to identical open and close price than it is for a daily candle to have an identical or close to identical open and close price. Additionally, short-term timeframes feature a lot of price noise, which can be confusing for traders. EURUSD 1 Minute Chart As you can see in the image above, doji candles appear too many times in the shorter time frames to be effective. Advantages and Disadvantages With all technical analysis methods in the financial markets, there are advantages and disadvantages to them, and doji candle patterns are no different. The advantages and disadvantages of doji candle patterns are: Technical traders use Japanese candlestick patterns to help understand and predict future price movements. Doji candles can be very effective in doing this, and traders should pay attention to them when they form on their charts as they can provide potential trading opportunities. However, due to their limitations, traders should use additional technical analysis methods alongside any doji pattern to predict future price movements. Doji candles are indecision candles and therefore do not guarantee trend reversals, but make sure you are cautious of them, observe them, and, most importantly, learn from them! Trade safely and responsibly. BluetonaFX
Education
by BluetonaFX
2
Market Direction - Trend StrengthThe strength of a trend can be a key factor in predicting future price movements. This post will specifically cover how to identify trends, how to determine trend strength, and how to use it to your advantage when trading the markets. Characteristics of a Trending Market To begin, let us understand how to identify a trending market. A trending market is a market that is either making higher highs followed by higher lows (UPTREND) or lower lows followed by lower highs (DOWNTREND). What does this typically look like? Let's see: Uptrend Downtrend Now that we understand how to identify uptrends and downtrends, let's delve further and discuss how to use trend strength to your advantage when trading the markets. Fibonacci Retracement Tool The Fibonacci retracement tool is used in trending markets to determine how strong the trend is. It uses natural numbers to determine the high-probability price levels that the market will hit and continue in its initial direction. This method will use four Fibonacci levels: 38.2%, 50%, 61.8%, and 78.6%. One thing to mention is that in a trending market, the chart is made up of two waves: impulsive and retracement. After an impulsive wave, a retracement wave will usually form; after a retracement wave, the impulsive wave will usually form. The impulsive wave represents the strong momentum of buyers and sellers. The retracement wave shows the weakness of buyers and sellers. Therefore, we must look at the retracement wave when it comes to deciding the strength of a trend. For example, in an uptrend, the impulsive wave will be bullish; therefore, the retracement wave will be bearish. In a downtrend, the impulsive wave will be bearish; therefore, the retracement wave will be bullish. The retracement wave shows the strength of the opposite side of the market. For example, if the impulsive wave is bullish, buyers are stronger. Then, in the retracement wave, sellers will try to dominate the buyers. Therefore, the deeper the retracement goes, the stronger sellers will be than buyers, and the weaker the bullish trend strength will be. With the Fibonacci retracement tool, there are three scenarios to determine trend strength: Strong Trend Strength: 38.2% Fibonacci Retracement Moderate Trend Strength: 50%–61.8% Fibonacci Retracement Weak Trend Strength: 78.6% Fibonacci Retracement The above examples show why the Fibonacci retracement tool can be extremely effective in determining not only how strong a trend is, but also how likely it is to continue past the beginning of the impulsive wave. Bollinger Bands Bollinger Bands are very effective in reading trend strength. Bollinger Bands are based on price volatility, which means that they expand when the market is trending and there are big prices, and they contract during sideways consolidations when the market ranges. Bollinger Bands consist of two outer bands (top and bottom bands) on each side and a moving average in the centre between the outer bands (middle band). One of the main reasons Bollinger Bands are so effective in reading trend strength is that they do not lag as much as other indicators because they always change automatically with the price. Three important points to note when using Bollinger Bands to read trend strength: If price pulls away from the outer band and heads towards the middle band as the trend continues, this is a key indication that the trend strength may be weakening. During strong trends, prices stay close to the outer band and significantly away from the middle band. Repeated pushes into the outer bands that do not actually reach the band indicate a lack of trend strength. Let's see a chart example of Bollinger Bands reading trend strength: As you can see, using Bollinger Bands can provide traders with very useful information about trend strength and the balance between bulls and bears. Price Rejection We do not always need indicators or tools to read trend strength; it is possible to do this just by looking at a naked chart. The way rejected continuations or reversals happen on charts can be a huge indicator of being able to read trend strength. Before understanding the price rejection, it is important to know about the wick or shadow of the candlestick. Upper wick The upper shadow shows that the price went up and then came down again. This indicates that buyers wanted to increase the price, but sellers dominated the buyers to push the price back down. Lower wick The lower shadow represents that the price went down and then came back up. This indicates that sellers wanted to lower the price, but buyers dominated the sellers to push the price back up. Identifying price rejection Traders should first wait for the price to reach a strong support or resistance level. Then, at the support or resistance level, candlesticks will likely make wicks opposite the trend due to the strength of the level. For example, wicks or shadows will form on the upper side at the resistance zone, while at the support zone, wicks or shadows will form on the lower side of the candlesticks. These wicks or shadows are identified as price rejections in the market. Price rejections are very important, especially in identifying trend strength, because they accept or reject the identification of key levels in the market. For example, if you are unsure whether a support zone will hold or break, you can see whether price rejection will occur at that level. Let's see a chart example of price rejection and how you can use it to identify trend strength: The chart above is proof alone that trend strength can be identified by just looking at the price action of a chart. Understanding the strength of a trend does not have to be complex. Trend strength can be identified simply by using the three different techniques we have covered in this educational post. The best thing we can all do as traders is to be simplistic and not overcomplicate things; this becomes especially easier when you accept that nothing in the market is certain. Each market has its own unique market conditions and will not trade rationally all of the time. Therefore, when a trade does not go your way even though your trend strength signals were high and you followed the market, understand that it is just one trade and that the market is completely neutral. It is neither personally on your side nor personally against you. Trade safely and responsibly. BluetonaFX
Education
by BluetonaFX
37
Guide to Recession - What Is It? Recession is a scary word for any country An economic recession occurs when the economy shrinks. During recessions, even businesses close their doors. Even an individual can see these things with his own eyes: 1. People lose their jobs 2. Investment lose their value 3. Business suffers losses Note: The recession is part of an economic cycle. If you haven't read that article, you can check it below: What is the Recession? Two consecutive quarters of back-to-back declines in gross domestic product constitute a recession. The recession is followed by the peak phase. Even if a recession lasts only a few months, the economy will not reach its peak after serval years when it ends. Effect on supply & Demand - The demand for goods decreased due to expensive prices. Supply will keep increasing, and on the other hand, demand will begin to decline. That causes an "excess of supply" and will lead to falling in prices. A recession usually lasts for a short period, but it can be painful. Every recession has a different cause, but they have the main reason for the cause of the recession. What is depression? - A deep recession that persists for a long time eventually leads to depression. During a recession, the inflation rate goes down. How to avoid recession? 1. Monetary Policy - Cut interest rates - Quantitative easing - helicopter money 2: Fiscal policy - Tax Cut - Higher government spending 3: higher inflation target 4: Financial stability Unemployment : We know that companies are healthy in expansion, but there is a saying, "too much of anything can be good for nothing." During peak, The company is unable to earn the next marginal dollar. Companies are taking more risk and debt to reset the growth Not only companies but investors and debtors also invest in risky assets. Why does lay-off occur? After the peak phase, companies are unable to earn the next marginal dollar. Now, the business is no more profitable. CCompaniesstart to reduce their costs to enter into a profitable system. For example - Labour Now, Companies are working with fewer employees. Fewer employees must work more efficiently. Otherwise, they may be lay-off by the company too. You can imagine the workload and pressure. You may argue that they should leave the company! Really? Guys, we just discussed the employment rate declines. How will you get a job when there is no job? Now, you get it! Let's assume the effects of the recession on the common man: Condition 1: He may be laid off. Condition 2: Perhaps he will be forced to work longer hours. The company is unable to maintain a positive outlook. Fewer employees are doing more work due to massive lay-off. His wages decline, and he has no disposable income. As a result, consumption rates are reduced, resulting in lower inflation rates. A slowdown in the economy is caused by lower prices, which decrease profits, resulting in more job cuts. Four Causes of Recession: 1. Economic Shocks 2. Loss of Consumer 3. High-interest rates 4. Sudden stock market crash 1) Economic shocks - When there is an external or economic shock the country faces. For example, COVID-19, 2) Consumer confidence - Negative perception about the economy and the company from consumers who lack confidence in their spending power. Instead of spending, they will choose to save money. As there is no spending, there is no demand for goods and services. The absence of spending results in a lack of demand for goods and services. 3) High-interest rates - High-interest rates will reduce spending. Loans are expensive, so few people take them out. Consumer spending, auto sales, and the housing market will be affected. There can be no good demand if there is no lending. There will be a decline in production. 4) Sudden stock market crash - evade people's trust in the stock market. As a result, they do recall their money and emotion drives them crazy. It can also be considered a psychological factor. As a result, people will not spend money and GDP will decline. Consumer Spending: During the recession, consumers don’t have additional income called disposable income. Consumer spending parts -- Durable goods - Lasts for more than one year -- Non-durable goods - Lasts for less than one year -- Service - Accounting, legal, massage services, etc. Durable goods surfer during the recession. Non-durable goods are recession-proof because their day-to-day fundamentals are not affected by recessions. Let's take an example of two stocks, ABC Food vs ABC car But, will you stop buying food because of the recession? Will you reduce your consumption of toothpaste, bread, and milk? The answer is "NO". Consumers buy the same amount of food in good or bad times, On the other hand, consumers only trade in or trade off their car purchase when they are not only employed but optimistic about the safety of their jobs & confident that they could get a promotion or a high paid job with another employer. And People's disposable income is absorbed during the recession. Consumer spending is the crucial point to displacing recession. Auto sales: As we discussed, few people buy cars during a recession. New car sales count as economic growth. You may have heard about 0% loans. The company facilitates a 0% loan to increase auto sales. Mostly, people repair their cars or buy old cars during the recession. You may see a boost in the used car market and spare parts selling companies’ sales. Home sales/housing markets: I have a question now! Which is your biggest asset? Most of you will say, my home! New home sales are part of economic growth. Also, house price impact how wealthy consumer feel. Higher the home prices, the more they feel rich, and vice versa. When home prices are higher, consumers feel they are wealthy and they are willing to spend. But when house price declines, they reduce spending/consumption. If your biggest asset price declines, you don’t spend and the economy takes a longer time to recover. A higher rate stops increasing the home price because they have to pay more EMI. central bank reduces rates during the recession, and the housing market rate boosts because the loan/EMI is cheap. Interest rates: Generally, interest rates decline during a recession. Central banks cut interest rates that’s why loans become cheap. Benefits of Lower interest rates - - - Boost in the housing market. - - Increase sales of durable goods - - Boost in business investment - - Bonds and interest rates have an inverse relationship. An economic downturn tends to bring investors to bonds rather than stocks, which can perform well in a recession. - - During the recession, interest rates are lower and banks higher the criteria for getting loans, so that people can face the abstracts while lending money. Stock Market: I want to clarify that, the stock market is not an economy. The economic cycle is lagging behind the market cycle and sentiment cycle. It gives me a chill as a technical analyst and a sad moment as an economics lover. Sometimes it's ahead, and sometimes it's behind. Recession = bear market . Recession-Proof Industries: * Consumer staples * Guilty pleasures * Utilities * Healthcare * Information technology * Education I will write about this in the future, but for the time being, let's get back to technical analysis .
NASDAQ:MSFTEducation
by Money_Dictators
8
Making Sense of the Market (Educational Post) 📑3rd Week May 23'Hello Traders. Today I have created a summary of this previous week's price action on a Session-Session basis. I explain in detail each of the 15 Sessions and how they relate to the overarching destination for the weekly candle. I hope you enjoy and please leave some feedback in you found this either useful or interesting. Best, Shrewdcatfx 🐱‍👓 Key for Chart 1 = Asian Session 2 = London Session 3 = New York Session Monday - Black Numbers Tuesday - White Numbers Wednesday - Purple Numbers Thursday - Red Numbers Friday - Blue Numbers Important Level's Weekly Level - 1.0866 Daily Level - 1.08739 ( Created after Tuesday's Daily Candle Closure) Daily Level - 1.08532 Daily Level - 1.08401 Daily Level - 1.07597 15 Sessions Breakdown Monday - ( Black Numbers ) 1 First Asian session begins by going up and rejecting (1.08537) Daily Level. Buyers are stepping in early in the week and the new weekly candle is pulling up. 2 The First London session of the week is a catalyst to create a Higher High in market structure on the Intraday timeframes. However with the new 4hr candle price pulls back down and drops before seeing once again another opportunity for Buys 3 The first New york session of the week combined with manufacturing data saw one more push to the upside which turned out to be the High of the day. As NY session progressed price pulled back and found support at the 1.0866 weekly level before bouncing once again. Tuesday - ( White Numbers) 1- 2nd Asian session of the week price consolidates inside of the previous NY session range, not much occurs 2- London session pulls back and retests 1.0866 weekly level where price finds support once again Price consequrntly bounces and creates a new weekly High above the Monday NY session manufacturing data highs. This london session Bullish push turns out to be the high of the week 3- New York Session price eases off the high prices created during London session. Retail sales data is released and volatility and volume shakes up price in the short term but continues to ease off the highs from london session. Price drops further adn london close prints the low of the day. The daily candle closes below our 1.0866 weekly level after attempting to push up with manufacturing data and retail sales data Wednesday - (Purple Numbers) (The close of the Tuesday daily candle creates our 1.08754 Daily Level) 1. Asian Session - Pulls up to retest our new formed Daily level 1.08754. As we move through Asian Open and the 4hr candle associated with it price appears to be backing off and rejecting the new formed Daily level 1.08754. 2. At this point we have 2 Daily Candle closures above 1.08537 Daily Level, however as we move into the third london session of the week price is beginning to crease below this daily level 1.08537. Price is also continuing to reject our new formed 1.08754 Daily level from Asian session. Price effortlessly drops through 1.08537 and quickly reaches our next potential support at Daily level 1.08393 . Price keeps pushing down and it is clear that the weekly candle has flipped bearish, dropping below our Monday Asian session prices and creating a fresh low on the week. 3. NY session sees a short lived continuation but quickly reverses pulling back up and clearing out fomo sellers . Price pulls back and does a textbook break and retest at the price where the weekly candle opened on Monday Asian price consolidates at the break and retest area 1.085 Thursday - ( Red numbers) 1. Asian session completes the break and retest at 1.085 and prices begins to head back towards the low created during the previous NY session 2. London Open provides a catalyst for a continuation of momentum to the dowside as we head back towards the previous NY session Low. We touch the NY session low and create a new low price on the week. 3. New York Session Open and Unemployment data is due to release. Yes, Unemployment data is the catalyst to punch out even more lows on the week Price make a very nice and lenngthy push from here on this thursday. Friday - (Blue Numbers) 1. The Thursday daily candle closes bearish but above our 1.07597 Daily Level. Asian session attempts multiple times to keep dropping below 1.07597 but buyers hold firm here. 2. As the final London session of the week approaches prices begins to bounce off 1.07597 and creates a High on Intraday timeframes. Then comes london open and price continues to pull back to the upside Simultaneusly we can observe that as the weekly candle comes to a close, the candle is pulling back up and creating a bottom wick. 3. New York Session provides a catalyst to continue pulling back up before violently whipsawing and ranging to end off the week
Education
by ShrewdCatfx
📚 Bow & Arrow Pattern 🏹Hello TradingView Family / Fellow Traders. This is Richard, also known as theSignalyst. Today, I want to share an interesting pattern that I always use to speculate (to an extent) the next move of an asset. 🏹 I call it the "Bow & Arrow" pattern. This pattern can be either bullish or bearish, but for today, I will be focusing on the bullish reversal patterns. On the chart, I have highlighted three previous examples for illustration purposes (in red, orange, and purple). The pattern consists of three cycles: 1️⃣ First, there is a bearish impulse that breaks below a major low. 2️⃣ Second, a correction forms followed by another bearish impulse. 3️⃣ Third, the bulls take over, resulting in a complete shift in momentum. 📉 We can clearly see this pattern playing out nicely on the XRP weekly chart. If we apply the same logic and pattern to the current price action, we would expect the next bullish impulse movement (3️⃣) to start soon, which should be confirmed on lower timeframes. 🗒 What do you think? Always remember to follow your trading plan regarding entry, risk management, and trade management. Good luck! And always remember: All strategies are good if managed properly! ~Rich
Education
by TheSignalyst
22
A study of price action in a trending marketThis is not a trade idea, but just a guide about what to look for when a trend is starting. 1) Almost always a market will consolidate (range bound) before a trend starts. 2) You can trade the top and bottom of the range, but usually you have no idea if the range will break at the top or bottom, so it is better to wait for a breakout to show you the direction. 3) Sometimes there can be a false break, so staying more patient and await a retest is the safer option. Yes, there is a chance that a retest may not happen and you will miss the optimal entry but that is a price you have to be willing to pay if you want to trade as safely as possible. In this example of AUDCHF this week, you actually got a perfect retest and this was a good spot to enter a short. 4) Next we see a stair stepping kind of PA with market testing the previous support. All of these are good locations to enter a trade or to add additional positions. 5) I will admit that this text book style of PA does not happen all the time, but it does happen. The key is to recognize it soon and take advantage of it by adding more positions - of course as dictated by the risk management/trading plan that you have created for yourself. A well trending market is the time to increase your risk to the max that you have allowed yourself. 6) So how long should you stay with such a trade? - I will suggest that you stay in it as long as the trend continues. In most cases, the trend will not just reverse on a dime - you should see another consolidation period that shows the bears(or bulls in case of an uptrend) no longer have complete control of the market. The other side will make a series of attempts to move the market in the other direction. That should be your cue to close the position. 7) Sometimes, however the market can make a V bottom. This is usually caused by news releases, so be careful in such situations. Finally I will add that you should be comfortable switching to the 15m or even the 5m chart and study PA as the trend slows down. You will extract maximum benefit from these trades if you develop your skills of reading price action. No one can teach you that - it is screen time and practice that will enhance your skills. Feel free to demo trade on this aspect as you improve. Mark the spot where you exited a trade and go back and check later how far the move actually went. As you can see from my chart you don't need any indicator at all if you can read price action. Good luck!!
Education
by Trading_Vista
2
Ninja Talks EP 15: Indicators Vs Naked( Warning - May cause offense and distress) It's a tale as old as the markets themselves - to use indicators or to not use indicators, that is the question. And to bring the answers you so desire it's none other than yours unruly - me, Ninja Nick! So buckle up because my way is totally biased, based, unapologetic and of course 100% correct forever and always. Now on with the show... I'd like to take this opportunity to apologize to absolutely nobody! The pure price action specialist does whatever the fook he wants. I hope that answers the question of what side I'm on - for those that didn't get the Conor McGregor reference, I'm against trading indicators - with one caveat... * ...I understand that people can make them work, I'm not saying they're useless, but for me in my over 10 years of experience I'm yet to see one that jumps out at me like a supermodel in the street. So with that said, here are some reasons I personally loathe, hate and despise (most) trading indicators: (1) They're BS marketing techniques - case in point, the founder of the MACD said he gave it an acronym name because acronym products create more mystery and sell better. And he's not wrong, but still, BS marketing technique. (2) Too many variables to take into consideration before placing a trade and for someone that practices KISS (Keep it Simple Stupid) I find it's complexity more offensive than putting ketchup on a steak. (3) Your charts look like an A.I rendition of a Pablo Picasso painting, so for that brilliant reason I'm out. (4) The data is lagging - we already get the milk skimmed off out Tea by complex algorithms so why would I outsource my decision making further to baby Terminator? Not on my watch - I won't be back. (5) I love pure price action and I don't know why, I've tried everything over my vast learning curve from financial filings, indicators, depth of market trading, algorithms, you name it I've fumbled with it and I can confidently say without a shadow of a doubt that my genius would be nothing without a pure virgin chart as my canvas. So that's all for this episode, if you liked this then follow and drop a like for the algo (the good kind). And always remember, keep your blades sharp Ninja! Nick
Education
by NinjaTradingServices
Learn How to Trade Cup and Handle (rare but profitable pattern)☕ If you are studying a price action, you should definitely know Cup and Handle formation. Being applied properly, it can generate big profits. In this educational article, I will teach you how to identify this pattern. We will discuss its psychology and I will share with you 2 trading strategies. 📏And let's start with the structure of the pattern. The pattern has 3 important elements: Cup - long-term correctional movement that tends to move steadily from a bearish trend to a bullish trend. Handle - short-term correctional movement with signs of bullish strength. Neckline - upper horizontal boundary of the pattern - a strong resistance that the price constantly respects. ⚠️Being formed, it warns you about a highly probable coming bullish movement. The trigger that confirms the initiation of a bullish wave is a breakout of the neckline of the pattern and a candle close above. Here is the example of a completed C&H with a confirmed neckline breakout, indicating a highly probably coming bullish movement. Depending on the preceding price action, Cup & Handle Pattern can either be a trend-following or reversal pattern. 📉If the pattern is formed after a bearish impulse. It is considered to be a reversal pattern. Here is the example of a reversal C&H that I spotted on EURUSD. 📈If the pattern is formed at the top of a bullish impulse, it is considered to be a trend following pattern. Here is the example of a trend following C&H that I spotted on GBPJPY Index. The thing is that while the price forms the C&H, buying volumes are accumulating. Even though, buyers are hesitant and reluctant initially, their confidence grows, and the accumulation leads to explosive neckline breakout. There are 2 strategies to trade this pattern. ✔️Strategy 1. That approach is quite risky, but the reward can be quite substantial. You should monitor the price action when the price is forming a handle. Occasionally, the price starts trading in a falling channel: parallel or contracting one. Your trigger will be a bullish breakout of its resistance and a candle close above. Once the violation is confirmed, you can buy aggressively or set a buy limit order on a retest. Stop loss will lie below the lows of the channel. Target will be the closest key resistance. Here is the example of the handle being a falling channel. 📍Strategy 2. Wait for a breakout of a neckline of the pattern. Once a candle closes above that, it will confirm the violation. Buy the market aggressively or set a buy limit on a retest of a broken neckline then. Stop loss will lie below the lows of the handle. Target will be the closest key resistance. Here is the example of the trade based on a confirmed breakout of a neckline of C&P on NASDAQ Index. Applied properly, the strategies may reach up to 70% win rate. As always, the best pattern will be the one that forms on a key level. Try it, test it, and good luck in your trading journey. ❤️Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
9
Chart Patterns: Mastering Price Patterns for Successful TradesChart patterns are powerful tools that allow traders to anticipate market movements and make informed trading decisions. This trading idea focuses on mastering various price patterns to enhance trading proficiency. By gaining expertise in recognizing and interpreting chart patterns, traders can identify high-probability trade setups, optimize entry and exit points, and increase their chances of success in the market. Objective: The objective of this trading idea is to equip traders with a comprehensive understanding of different price patterns and their significance in technical analysis. By mastering these patterns, traders can effectively analyze market trends, identify potential reversals or continuations, and make well-timed trading decisions. Key Components: Introduction to Price Patterns: Begin by understanding the fundamentals of price patterns and their importance in technical analysis. Learn about the types of patterns, including reversal patterns (such as head and shoulders, double tops/bottoms) and continuation patterns (such as flags, triangles, and rectangles). Gain insights into the characteristics and significance of each pattern in predicting future price movements. Reversal Patterns: Dive into studying popular reversal patterns that indicate potential trend reversals. Explore patterns such as head and shoulders, double tops/bottoms, and triple tops/bottoms. Understand how to identify these patterns, confirm their validity through volume analysis, and generate entry or exit signals. Analyze real-life examples to strengthen your pattern recognition skills. Continuation Patterns: Explore continuation patterns that suggest the resumption of existing trends. Study patterns like flags, triangles (ascending, descending, symmetrical), rectangles, and wedges. Learn how to interpret these patterns to validate trend direction, anticipate breakout or breakdown levels, and improve trade entries. Understand the importance of volume and other technical indicators in confirming continuation patterns. Complex Patterns: Delve into more advanced and complex patterns, such as the cup and handle, head and shoulders inverse, and ascending/descending triangles with multiple touches. Gain insights into the nuances of these patterns, their variations, and their potential impact on price movements. Understand how to incorporate these patterns into your trading strategies for enhanced accuracy. Pattern Confirmation: Learn techniques to confirm the validity of price patterns and reduce false signals. Explore additional tools and indicators such as trendlines, moving averages, Fibonacci retracements, and oscillators to validate and reinforce pattern signals. Understand the importance of multiple confirmations for higher-probability trades. Trade Management and Risk Control: Develop effective trade management techniques to maximize profits and minimize risks when trading price patterns. Learn how to set appropriate stop-loss levels based on pattern structures and support/resistance levels. Understand position sizing and risk-reward ratios to optimize risk management. Explore techniques for trailing stops and scaling out of positions to maximize gains. Backtesting and Paper Trading: Apply your knowledge by backtesting price patterns using historical market data. Utilize paper trading or demo accounts to practice trading based on your analysis without risking real capital. Evaluate the performance of your pattern-based strategies, identify strengths and weaknesses, and refine your trading approach. By mastering price patterns and effectively utilizing them in your trading approach, you can significantly improve your trading outcomes. This trading idea aims to provide you with the knowledge and skills necessary to navigate the markets with greater precision, identify high-probability trade setups, and achieve consistent trading success. Note: Trading carries a level of risk, and past performance is not indicative of future results. It is important to conduct thorough research, practice proper risk management, and consider personal circumstances before making any trading decisions.
NASDAQ:NVDAEducation
by LuminoAlgo
Expert Tips for Successful Stocks, Futures, Fx, Crypto, Trading Price action technical analysis is a popular and effective approach to navigating the financial markets, including stocks, options, futures, Forex, Crypto, and Commodity trading. This article will provide expert tips and insights to help you successfully trade various financial instruments using price action technical analysis. By understanding and applying these concepts, you can improve your trading skills and potentially achieve greater profitability. 1. Understanding Price Action Technical Analysis Price action technical analysis is a method of analyzing financial markets by focusing on the price movements of assets, rather than relying on indicators or other external factors. This approach is based on the belief that historical price movements can provide valuable insights into future price trends and potential trading opportunities. Importance of Price Action Price action is the most direct and real-time reflection of the market's sentiment and the forces driving it. By studying price action, traders can gain a deeper understanding of the market dynamics and make more informed trading decisions. With practice, traders can develop an intuitive sense of the market's behavior, allowing them to quickly adapt to changing conditions and capitalize on opportunities. Key Concepts in Price Action Technical Analysis There are several key concepts in price action technical analysis that traders must understand to effectively navigate the markets. These include support, resistance, trend, and fibonacci levels. By mastering these concepts, traders can identify potential entry and exit points, manage risk, and maximize profits. 2. Analyzing Stocks with Price Action Technical Analysis Stocks are a popular financial instrument for traders, and price action technical analysis can be particularly useful for identifying potential opportunities in this market. By analyzing the price movements of stocks, traders can gain insights into the underlying forces driving the market and make more informed decisions about when to buy or sell. Identifying Support and Resistance Levels Support and resistance levels are critical concepts in price action technical analysis. These levels represent psychological barriers where the forces of supply and demand meet. When the price of a stock reaches a support or resistance level, it often experiences a reversal or a consolidation before continuing its trend. Support Support is a price level where the stock's downward movement is halted due to the presence of a strong buying interest. When a stock reaches a support level, it is likely to experience a bounce or a temporary pause in its downward trend. Resistance Resistance, on the other hand, is a price level where the stock's upward movement is halted due to the presence of strong selling interest. When a stock reaches a resistance level, it is likely to experience a pullback or a temporary pause in its upward trend. Identifying Trends Trends are an essential aspect of price action technical analysis, as they provide traders with a directional bias for their trades. A trend is a sustained movement in the price of a stock in a particular direction, either upward (bullish) or downward (bearish). Uptrends An uptrend is characterized by a series of higher highs and higher lows, indicating that the stock's price is consistently rising over time. In an uptrend, traders should generally look for buying opportunities, as the stock is likely to continue its upward trajectory. Downtrends A downtrend, on the other hand, is characterized by a series of lower highs and lower lows, indicating that the stock's price is consistently falling over time. In a downtrend, traders should generally look for selling opportunities, as the stock is likely to continue its downward trajectory. Using Fibonacci Levels Fibonacci levels are a powerful tool in price action technical analysis, as they can help traders identify potential support and resistance levels, as well as possible entry and exit points. The Fibonacci sequence is a series of numbers in which each number is the sum of the two preceding ones, starting from 0 and 1. In trading, Fibonacci retracement levels are derived from this sequence and are used to predict potential price reversals. 3. Trading Options with Price Action Technical Analysis Options are another popular financial instrument for traders, and price action technical analysis can be used to identify potential opportunities in this market as well. By analyzing the price movements of the underlying asset, traders can make more informed decisions about when to buy or sell options contracts. Understanding Options Options are financial instruments that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price (called the "strike price") on or before a specified expiration date. There are two types of options: call options, which give the buyer the right to buy the underlying asset, and put options, which give the buyer the right to sell the underlying asset. Analyzing Options with Price Action Technical Analysis When trading options, price action technical analysis can be used to identify potential entry and exit points, as well as to manage risk. By analyzing the price movements of the underlying asset, traders can gain insights into the market dynamics and make more informed decisions about when to buy or sell options contracts. Identifying Support and Resistance Levels As with stocks, support and resistance levels are critical concepts in price action technical analysis for options. By identifying these levels, traders can determine potential entry and exit points for their options trades, as well as manage risk. Identifying Trends Trends are also essential when trading options, as they provide traders with a directional bias for their trades. By identifying the trend of the underlying asset, traders can make more informed decisions about which options contracts to buy or sell. 4. Analyzing Futures with Price Action Technical Analysis Futures are another popular financial instrument for traders, and price action technical analysis can be used to identify potential opportunities in this market as well. By analyzing the price movements of the underlying asset, traders can make more informed decisions about when to enter or exit futures positions. Understanding Futures Futures are financial contracts that obligate the buyer to purchase an asset (or the seller to sell an asset) at a predetermined future date and price. Futures contracts are standardized and traded on exchanges, allowing traders to speculate on the future price movements of various assets, such as commodities, currencies, and indices. Analyzing Futures with Price Action Technical Analysis When trading futures, price action technical analysis can be used to identify potential entry and exit points, as well as to manage risk. By analyzing the price movements of the underlying asset, traders can gain insights into the market dynamics and make more informed decisions about when to enter or exit futures positions. Identifying Support and Resistance Levels As with stocks and options, support and resistance levels are critical concepts in price action technical analysis for futures. By identifying these levels, traders can determine potential entry and exit points for their futures trades, as well as manage risk. Identifying Trends Trends are also essential when trading futures, as they provide traders with a directional bias for their trades. By identifying the trend of the underlying asset, traders can make more informed decisions about which futures contracts to buy or sell. 5. Trading Forex with Price Action Technical Analysis Forex, or foreign exchange, is the largest and most liquid financial market in the world, making it a popular choice for traders who want to capitalize on short-term price fluctuations. Price action technical analysis can be particularly useful for forex traders, as it allows them to identify potential trading opportunities based on the movements of currency pairs. Understanding Forex The Forex market is where currencies are traded, allowing traders and investors to speculate on the relative value of one currency against another. Forex trading involves the simultaneous buying of one currency and selling of another, with currency pairs representing the value of one currency relative to the other. Analyzing Forex with Price Action Technical Analysis When trading forex, price action technical analysis can be used to identify potential entry and exit points, as well as to manage risk. By analyzing the price movements of currency pairs, traders can gain insights into the market dynamics and make more informed decisions about when to enter or exit forex positions. Identifying Support and Resistance Levels As with other financial instruments, support and resistance levels are critical concepts in price action technical analysis for forex. By identifying these levels, traders can determine potential entry and exit points for their forex trades, as well as manage risk. Identifying Trends Trends are also essential when trading forex, as they provide traders with a directional bias for their trades. By identifying the trend of a currency pair, traders can make more informed decisions about which forex positions to take. 6. Trading Crypto with Price Action Technical Analysis Cryptocurrencies, such as Bitcoin and Ethereum, have gained significant popularity in recent years, offering traders another market to navigate using price action technical analysis. By analyzing the price movements of cryptocurrencies, traders can identify potential trading opportunities and make more informed decisions about when to enter or exit positions. Understanding Crypto Cryptocurrencies are digital or virtual currencies that use cryptography for security and operate on a decentralized network, such as a blockchain. These digital assets have gained popularity due to their potential for significant price appreciation, as well as their use as an alternative to traditional currencies. Analyzing Crypto with Price Action Technical Analysis When trading cryptocurrencies, price action technical analysis can be used to identify potential entry and exit points, as well as to manage risk. By analyzing the price movements of cryptocurrencies, traders can gain insights into the market dynamics and make more informed decisions about when to enter or exit crypto positions. Identifying Support and Resistance Levels As with other financial instruments, support and resistance levels are critical concepts in price action technical analysis for cryptocurrencies. By identifying these levels, traders can determine potential entry and exit points for their crypto trades, as well as manage risk. Identifying Trends Trends are also essential when trading cryptocurrencies, as they provide traders with a directional bias for their trades. By identifying the trend of a cryptocurrency, traders can make more informed decisions about which crypto positions to take. 7. Trading Commodities with Price Action Technical Analysis Commodities, such as gold, oil, and agricultural products, are another popular market for traders who want to utilize price action technical analysis. By analyzing the price movements of commodities, traders can identify potential trading opportunities and make more informed decisions about when to enter or exit positions. Understanding Commodities Commodities are basic goods that are either grown, mined, or otherwise produced, and are used as inputs in the production of other goods or services. Commodity markets allow traders and investors to speculate on the future price movements of these goods, as well as hedge against potential price fluctuations. Analyzing Commodities with Price Action Technical Analysis When trading commodities, price action technical analysis can be used to identify potential entry and exit points, as well as to manage risk. By analyzing the price movements of commodities, traders can gain insights into the market dynamics and make more informed decisions about when to enter or exit commodity positions. Identifying Support and Resistance Levels As with other financial instruments, support and resistance levels are critical concepts in price action technical analysis for commodities. By identifying these levels, traders can determine potential entry and exit points for their commodity trades, as well as manage risk. Identifying Trends Trends are also essential when trading commodities, as they provide traders with a directional bias for their trades. By identifying the trend of a commodity, traders can make more informed decisions about which commodity positions to take. 8. Risk Management in Price Action Technical Analysis Risk management is a crucial aspect of successful trading, regardless of the financial instrument being traded. By employing effective risk management strategies, traders can minimize potential losses and maximize their chances of success. Setting Stop Losses One of the most important risk management tools in price action technical analysis is the use of stop losses. A stop loss is an order to close a trade at a predetermined level if the market moves against the trader's position. By setting a stop loss, traders can limit their potential losses and prevent large drawdowns in their trading accounts. Position Sizing Another critical aspect of risk management is position sizing, which involves determining the appropriate size of a trade based on the trader's account size and risk tolerance. By using proper position sizing techniques, traders can avoid overexposure to any single trade and maintain a balanced portfolio. 9. Developing a Trading Plan A successful trading strategy requires a solid trading plan, which outlines the trader's goals, risk tolerance, and specific trading rules. By developing a comprehensive trading plan, traders can maintain discipline and consistency in their trading decisions, leading to improved results over time. Establishing Trading Goals The first step in developing a trading plan is to establish clear trading goals, which can include both short-term and long-term objectives. These goals should be realistic, achievable, and aligned with the trader's overall financial objectives. Defining Risk Tolerance Another essential aspect of a trading plan is defining the trader's risk tolerance, which involves determining the level of risk the trader is willing to accept in pursuit of their trading goals. By clearly defining their risk tolerance, traders can make more informed decisions about their trading strategies and ensure that they are not taking on excessive risk. Creating Trading Rules Finally, a well-developed trading plan should include specific trading rules that govern the trader's actions in the market. These rules should be based on the trader's analysis of price action and other relevant factors and should be consistently followed to ensure discipline and consistency in the trader's decision-making process. 10. Continuous Improvement and Education Successful trading requires continuous learning and improvement, as the financial markets are constantly evolving and presenting new challenges and opportunities. By staying informed about market developments and continually refining their trading skills, traders can adapt to changing conditions and enhance their overall trading performance. Reviewing and Analyzing Trades One of the most effective ways to improve as a trader is to regularly review and analyze past trades. By examining the trades that were successful, as well as those that resulted in losses, traders can identify areas for improvement and make adjustments to their trading strategies as needed. Seeking Educational Resources There are many educational resources available to traders from ChartPros, including eBooks, online courses, and webinars. By actively seeking out these resources and continuing to expand their knowledge of the markets and trading techniques, traders can stay ahead of the curve and improve their chances of success. In conclusion... Navigating the markets with price action technical analysis is a powerful approach to trading various financial instruments, including stocks, options, futures, Forex, Crypto, and Commodity trading. By mastering the key concepts of price action technical analysis, such as support, resistance, trends, and Fibonacci levels, traders can improve their trading skills and potentially achieve greater profitability. Continuous education and improvement are essential to staying ahead in the ever-changing financial markets.
CME_MINI:ES1!Education
by ChartPros
Cup and Handle Trading Guide ☕️ The cup and handle pattern is a continuation chart pattern that looks like cup and handle with a defined resistance level at the top of the cup. It forms from a strong drive up that pulled back and consolidated over a period of time creating the cup before making another push to the resistance where it pulls back again but not as far creating the handle and then makes it final push past the resistance level and continuing on the trend. How To Trade A Cup and Handle Pattern To trade using a cup and handle strategy, place your stop buy order a little higher than the handle’s upper trend line. Your order will only execute if the price breaks through the pattern’s resistance. As an alternative you can wait for the price to close higher than the handle’s upper trend line, and then place a limit buy order a little bit lower than the breakout level for the pattern, which will execute if the price retraces. However, you will face the risk of missing the trade if the price fails to pullback and continues to advance uninterrupted. 💫Useful tips: The ideal cup pattern should not be too deep. Avoid patterns with handles that are too deep as well, since the handles should be forming somewhere in the cup pattern’s top half. The volume should be decreasing as the price declines, and then stay lower than the average seen in the base of the cup. The price should increase as the security starts to move higher toward the previous high. The retest at the end of the cup pattern does not need to directly reach the previous high, but the further the top of the handle is from the old high, the less significant the breakout from the handle’s bottom may be. Hey traders, let me know what subject do you want to dive in in the next post?
OANDA:XAUUSDEducation
by TopTradingSignals
5
My A+ Trade Set Up when trading XAUUSD (Educational)Whats up gold gang! .. thought id drop in to show you how i enter my trades when they enter my zones. I set alerts here on trading view, then when price is approaching my zone, i get to the computer and lock in Im looking for a clean break into the zone with a strong candle on the 15/30/1h That candle must close Next candle to open and do a small pull back to create a wick. This says to me no buying pressure is present. Entry on the flip of the candle and break of previous candle Target is placed. Stop loss above previous candle high. Anything above that is invalid. Of course i do things to manage risk and increase reward as the trade is moving, but they are personal to me. You will all have your own risk parameters im sure. Thats it gang .. very simple, but as you can see .. very effective. My zones work on any strategy, you could us smart money concepts, fibs, support resistance etc .. they will all work with my directional bias. Hope this was helpful .. leave a like if it was and follow along for more XAUUSD updates tommyXAU
OANDA:XAUUSDEducation
by tommyXAU
2
🔋Candlestick Power📍Candlestick patterns are powerful tools used in technical analysis to analyze and predict price movements in financial markets, particularly in trading. They provide valuable insights into market sentiment and help traders make informed decisions. The open, close, and various components of a candlestick, such as the body and shadows, are crucial in determining whether it is bullish or bearish. 🔷A candlestick consists of a body and two shadows, also known as wicks or tails. The body represents the price range between the open and close of a trading period, while the shadows represent the high and low points reached during that period. 🔷A bullish candlestick occurs when the closing price is higher than the opening price, indicating buying pressure and market optimism. The body is typically filled or colored, indicating a bullish trend. The longer the body, the stronger the bullish sentiment. Shadows may exist above or below the body, and they represent the price range outside of the open and close. Long shadows indicate higher volatility during the trading period. 🔷A bearish candlestick forms when the closing price is lower than the opening price, reflecting selling pressure and market pessimism. The body is often empty or colored differently to indicate a bearish trend. Again, the length of the body provides information about the strength of the bearish sentiment. Shadows can be found above or below the body, representing the price range outside the open and close. Similar to bullish candles, long shadows suggest increased volatility. Traders use different candlestick patterns and combinations to identify potential trend reversals, continuation patterns, or price consolidations. For example, a doji candlestick, where the open and close are very close or equal, signals indecision in the market and may precede a reversal. Engulfing patterns occur when one candle fully engulfs the body of the preceding candle, indicating a potential trend reversal. However, it is important to note that candlestick patterns should be used in conjunction with other technical indicators and fundamental analysis to confirm the validity of a potential trade signal. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
3
❗️USE STOP LOSS AND BECOME A BETTER TRADER❗️ 🟩STOP LOSS IS:A stop-loss order is an order that automatically closes a losing position once the price hits the pre-specified level. We usually calculate SL in pips, but there can be many ways to set it. It can be time based, percentage based or volatility based. For some investors SL is some piece of critical news, which alters their perception of the value of the asset. Regular stop losses can be many and varied too, for example trailing stop. Also, we sometimes move SL to entry after the half close to protect the gains and make our position risk free.However, all situations I listed above have one thing in common and it is the fact that the SL was used! 🟥Honestly, I am amused by the massive number of people who send me screenshots of their MT4 with several open trades on the same pair all of them without SL and with 90% of account lost. And they ask me what should they do? A great illustration of what is would take to recover from such a loss, is on the drawing above. With the 90% loss, you have only one tenth of the original account left. That means you need to make ten times more money than you have left just to recover your losses. 999% gain needs to be made just to have your old account back. It took you a day to blow it, and might take months to recover the losses. This is the brutality of the trading. The market is unforgiving and will punish you if you treat is without respect. If you are careless or if you make mistakes. The market always comes back to collect, waiting for the moment you drop your guard and relax for a second. Please always use Stop Loss, because, as it happens, it stops you from losing too much! I Hope you guys learned something new today✅ Wish you all Best Of Luck👍 😇And may the odds be always in your favor😇 Dear followers, let me know, what topic interests you for new educational posts?
BITSTAMP:BTCUSDEducation
by SignalProvider
7
What is the difference between a pro-trader and a beginner? The difference between pro traders and new traders is how they approach trading. Pros commit to trading. They do not see it as an opportunity, they see trading as a form of work. They are not looking for the best trade every time, instead, pros are looking for many trades because they see loss and gain as a fundamental part of how trading works. It would not be too absurd to think of pros as survivors. Pros have realized losses and gains over time, injecting capital only to lose some more, yet they have accepted that that is the nature of trading. There are both good and bad trades that range in how profitable or unprofitable they may be. Pros respect the markets, they are not trying to prove that they are right -they just follow the flow of the market. Lastly, pros understand that a lot of things cost money in the day trading world; however, they are willing to spend it because they like to have the tools that will lead them to success. New traders differ from pros in plenty of ways. For starters, they are looking for that original piece of validation to continue their day trading ventures. This is why new traders tend to look for only the best trades in the markets they are monitoring. They instinctively want to make money right away and gain some working capital to buffer any future loss. Furthermore, new traders suffer a lot when they fail because they take it personally and naturally reject their losses. This behavior eventually leads to them quitting altogether which ties into their commitment to trading as a whole. New traders (unlike pro traders) do not like to commit; for them trading is an opportunity to get as much money as possible from their trades. Furthermore, they are looking to minimize their costs by acquiring tips, shortcuts and various other content for free. As a result, new traders often sprinting to make a quick buck while if they simply took the time to slow down and educate themselves they will make more successful trades in the long run. Hey traders, let me know what subject do you want to dive in in the next post?
OANDA:XAUUSDEducation
by TopTradingSignals
9
What is Higher High, Higher Low, Lower Low, Lower High In this educational article, we will discuss the foundation of price action analysis: the concepts of highs and lows. In order to grasp that concept, you should learn to perceive the price chart as the sequence of zigzags. Depending on the direction of the market and the shape of these zigzags, its peaks will be called differently. There are 6 types of them that you should learn to recognize. 1️⃣ Equal Highs (EH). The peaks of bullish moves will be called equal highs, if they perfectly respect the same level (resistance), retracing from that and not managing to break above. 2️⃣ Equal Lows (EL). The peaks of bearish moves will be called equal lows, if they perfectly respect the same level (support), bouncing from that and not managing to break below. 3️⃣ Higher High (HH). The peak of a bullish move will be called Higher High, if the price manages to violate the previous high after a retracement. 4️⃣ Lower Low (LL). The peak of a bearish move will be called Lower Low, if the price manages to violate the previous low after a pullback. 5️⃣ Higher Low (HL). The peak of a bearish move will be called Higher Low if, after a retracement from the high, the price manages to set a low that is higher than the previous low. 6️⃣ Lower High (LH). The peak of a bullish movement will be called Lower High if, after a pullback from the low, the price sets a high that is lower than the previous high. Why these terms are so important? Because, firstly, you can apply them to objectively identify the market trend. Secondly, all the price action patterns are based on a combination of these highs and lows. You should learn these terms by heart, and you should learn to perceive the price chart as the sequence of zigzags, with a strict designation of each peak. ❤️Please, support my work with like, thank you!❤️
FOREXCOM:XAUUSDEducation
by VasilyTrader
6
Mastering Trading Psychology: Overcoming Emotional BiasesWelcome to another edition of our educational articles that should help the TradingView newbies find an edge over the market and help strengthen the existing mentality for already successful traders. Trading is not just about having a winning strategy and implementing it correctly. Trading psychology plays a crucial role in trading performance. Emotional biases, such as fear, greed, and overconfidence, can lead to impulsive decisions that can hurt trading results. In this article, we will explore the most common emotional biases that traders face and provide strategies to overcome them (of course, we’ll do it step by step, so it is easier to follow). Step 1: Understanding Forex Trading Psychology Trading can be an emotional roller coaster ride, with traders experiencing a wide range of emotions, from elation to despair, in the course of a single trading day. In this section, we will take a closer look at the impact of emotions on trading performance, as well as the most common emotional biases that traders face. Now, I know some of you might be thinking, "Emotions? In trading? Ha! I'm a robot, I don't feel anything." Well, I hate to break it to you, but even the coldest and calculating traders out there have emotions. Unless you're literally a robot, in which case, congratulations on achieving self-awareness! But in all seriousness, emotions can have a significant impact on trading performance. Fear can cause traders to hesitate and miss out on profitable opportunities, while greed can lead to impulsive and reckless trades. And let's not forget about good old-fashioned FOMO (fear of missing out), which can drive traders to chase after trades that have already run their course. So, what are some of the most common emotional biases that traders face? Let's take a look: 1. Confirmation bias - the tendency to seek out information that confirms our preconceived notions, while ignoring evidence that contradicts them. This can lead to overconfidence and blind spots in our trading analysis. 2. Loss aversion - the fear of losing money, which can cause traders to hold onto losing positions for too long or exit profitable trades too early. 3. Anchoring bias - the tendency to rely too heavily on the first piece of information we receive, even if it's not the most accurate or relevant. This can lead to inaccurate price predictions and poor trading decisions. Now, don't worry if you see yourself in some of these biases. We all have them to some extent. The important thing is to recognize them and develop strategies to overcome them. In the next section, we'll explore some techniques for managing emotions and developing a strong trading mindset. But first, let's take a moment to appreciate the fact that even in the world of finance, emotions play a big role. Who knew we traders had feelings too? Step 2: Overcoming Emotional Biases Now that we've explored the impact of emotions on trading performance, it's time to look at some strategies for managing those emotions and overcoming the biases that come with them. Because let's face it, we traders may be good with numbers, but we're not always the most emotionally stable bunch. One effective way to overcome emotional biases is to develop a solid trading plan. Now, I know what you're thinking, "A plan? That's it? Where's the magic bullet? The secret sauce?" Sorry to disappoint, folks, but there's no magic formula for success in trading. It's all about good old-fashioned discipline and consistency. Another technique for managing emotions is mindfulness. Now, before you roll your eyes and start chanting "Om," hear me out. Mindfulness is simply the practice of being present and aware of your thoughts and feelings without judgment. By practicing mindfulness, we can become more self-aware and better able to recognize and manage our emotional biases. Of course, sometimes it's not just a matter of managing our emotions but overcoming them altogether. For example, fear can be a powerful emotion that can cause us to miss out on profitable trades. One strategy for managing fear is to set up a stop loss order. This will automatically exit a trade if it reaches a certain price point, helping to limit our losses and alleviate our fears. Finally, building discipline and consistency in our trading decisions is essential for overcoming emotional biases. As the saying goes, "Plan your trade, and trade your plan." Stick to your trading plan and strategy, even in the face of strong emotions like fear or greed. And remember, discipline is not just about making good trading decisions, it's also about being disciplined in other areas of your life, like getting enough sleep and exercise. Now, I know it's not always easy to overcome emotional biases, especially when there's money on the line. But with a little practice and discipline, we can become more effective traders and achieve better trading results. And hey, if all else fails, there's always therapy, right? Just kidding...kind of. Step 3: Staying Mentally Fit for Trading Success In this section, we'll take a closer look at developing a strong trading mindset, which is essential for long-term success in the forex market. One key aspect of developing a strong trading mindset is to approach trading as a business, rather than a hobby or a game. This means setting clear goals and objectives, developing a trading plan and strategy, and keeping detailed records of your trades and performance. And if you're serious about trading, it also means investing in the right tools and resources, like a reliable trading platform and access to up-to-date market news and analysis. Another important aspect of a strong trading mindset is the ability to stay disciplined and patient in the face of adversity. As traders, we all face losing trades and setbacks from time to time. But it's how we respond to those challenges that makes all the difference. It's important to stay focused on the long-term goals, rather than getting caught up in short-term fluctuations and emotions. Of course, maintaining a strong trading mindset is easier said than done. It's easy to get caught up in the excitement of the market and make impulsive trading decisions. That's why it's important to take breaks, practice self-care, and maintain a healthy work-life balance. As the saying goes, "All work and no play makes Jack a dull boy." And let's be honest, no one wants to be a dull trader. If you have any particular exercise you find useful for yourself, make sure to drop them in the comments below, so we can all try them out! Have an awesome weekend, family!
BITSTAMP:BTCUSDEducation
by Investroy
24
Supply and Demand 101 📚 OKXIDEAS📌 1- Introduction To understand trading supply and demand, let's consider a simplified example. Imagine I typically purchase a specific brand of rice for $ 5 per bag. However, one day, while shopping, I discover that the price of this rice bag has increased to $ 7. While I could afford the extra $ 2, I'm accustomed to paying $ 5 and prefer not to pay more if possible. So, I begin to search for an alternative brand of rice that costs $ 5. This behavior is common among consumers, and many others would likely do the same thing in this situation. As time passes, the rice company notices that sales are decreasing, prompting them to reduce prices to move their inventory. Eventually, the bag of rice is back to HKEX:5 , and consumers begin purchasing it again. In this example, HKEX:5 represents demand. The same principle applies to supply and is relevant in trading, where instruments such as BTC, APPL, USD are involved. 📌 2- Supply and Demand Supply and demand is a trading and price action concept that analyses how financial markets move and how buyers and sellers drive the price. On every price chart, there are certain price points where you can observe a sudden shift between the buyers and the sellers. Those areas are usually characterized by strong and immediate turning points, or an explosive breakout. We as traders call those areas supply and demand zones. The fundamental concept is to identify points on a chart where the price has experienced a significant increase or decrease. A demand zone is marked when the price experiences a strong advance, and a supply zone is marked when the market has undergone a sharp decline. This principle is based on the mass psychology behind supply and demand, as exemplified by the bag of rice analogy. For instance, a trader may observe a significant bullish candle, but they may have missed out on the big move, causing them distress. Consequently, they are unlikely to buy now, believing the price is too high. Instead, they may wait for the price to retest the area where the aggressive upward movement began to identify buying opportunities where they perceive the price to be reasonable. As a result, this area becomes a demand zone as many traders are awaiting its retest to purchase. 📌 3- There are four key areas of interest on the charts to look for: The drop base rally, or ‘DBR’. The rally base drop, or ‘RBD’. The rally base rally, or ‘RBR’. The drop base drop, or ‘DBD’. A 'DBR' demand zone is typically indicative of a market bottom. Initially, the price is trending downwards until it begins to bottom out or base, then reverses its course to the upside. Similarly, an 'RBD' supply zone is formed in the same way as the 'DBR' formation, but instead of a market bottom, this pattern creates a market top before reversing to the downside. A 'RBR' demand zone typically emerges during an uptrend. The price starts with an upward movement, followed by a consolidation phase or base, and finally, a continuation move to the upside. On the other hand, a 'DBD' supply zone is essentially the same formation as a 'RBR' area but occurs within a downtrend. The price begins with a decline, enters into a consolidation phase, and is followed by a continuation move to the downside. Identifying these demand and supply zones can help traders in determining potential trading opportunities. Now that we have a basic idea of what to look for, here’s how the noted zones above look on a live chart. OKX:ETHUSDT OKXIDEAS 📌 4- Characteristics Of a Strong Zone a- Momentum from the zone OKX:OKBUSDT OKXIDEAS One of the fundamental rules to trading supply and demand is “The stronger the move away from a zone the higher the chance the market has of having a strong move away when it eventually returns” b- Time Spent Away From Zone OKX:OKBUSDT OKXIDEAS It doesn't seem logical that an old zone still contains orders to buy or sell within it. Let's consider a supply zone that is four years old and the market has not returned to it yet. Is it plausible that traders still have a pending order to sell around it? The strength of a supply or demand zone is defined by the amount of time the market has spent away from it. The more quickly the market returns to a supply or demand zone, the higher the probability of a successful trade. Usually, older zones do not work out frequently. Therefore, it is better to concentrate only on the recently created zones. In the above example, the last demand zone is still fresh, the more time passes, the weaker it becomes. 📌 5- Difference Between Supply & Demand and Support & Resistance OKX:XRPUSDT OKXIDEAS The concept of support and resistance is based on the idea that a line or area that has been tested multiple times in the past and prevented the price from moving beyond it is considered significant. On the other hand, when it comes to supply and demand, we are interested in finding areas with a strong, recent, and untested movement, rather than areas that have been repeatedly tested and held strong. Sometimes, just like the above XRP example, it happens that we have got a demand zone (blue) around a support zone (red) but it doesn't mean that they are the same. 📌 6- How to trade Supply and Demand There are plenty of methods one can use to enhance the probability of a zone holding firm. Each individual is different and will, therefore, rarely look at the charts the same way. Some traders, like myself, prefer to confirm these zones using other technical tools, while others prefer to simply trade the zones naked. OKX:XRPUSDT OKXIDEAS As per my trading style, I only locate supply/demand zones on higher timeframes. And as price approaches the supply/demand, I zoom in to lower timeframes to look for sell/buy setups for extra confirmation. 7- Conclusion Traders, especially amateurs, are usually fascinated by supply and demand because they want to catch the exact price tops or bottoms. However, supply and demand is not foolproof and definitely not the Holy Grail. Supply and demand zones are not a stand-alone strategy but act as extra confluence for an existing potential setup. Remember: Higher-timeframe areas are more reliable. Trading the first time back to a zone is the highest probability trading setup. I have shared my personal thoughts about Supply and Demand, however it is your job as a trader to find what works for you. Let me know if you find this post useful, and what which topic would you like me to cover next 🙏 📚 Always follow your trading plan regarding entry, risk management, and trade management. Good luck! All Strategies Are Good; If Managed Properly! ~Richard Disclaimer: The information provided is for educational and informational purposes only and should not be considered as financial advice. It is important to do your own research and make informed decisions before entering any trades. Past performance is not indicative of future results. Always be aware of the potential for losses, and never risk more than you can afford to lose.
Education
by TheSignalyst
78
Learn 4 Classic Trade Confirmations "Look for a confirmation!" "Wait for a confirmation!" When I was learning how to trade and when I was watching and reading different trading educators, these words naturally pissed me off. What the hell are you talking about? What confirmation? It was a full-blown mystery...🤯 Then, once I started to mature in trading and trade full-time, I became an author on TradingView. Posting my forecasts and trading setups, I frequently mentioned the confirmation. And now the newbies that are reading me and learning from me are pissed off...🤬 That is so funny I guess. But the truth is that the confirmation must become a fundamental part of your trading strategy. It is your key to successful trading. What exactly is the confirmation? It depends on many many different things, in this article I will discuss with you the 4 main types of confirmation and give you detailed examples. 1️⃣ - PRICE ACTION CONFIRMATION That is actually what I prefer. Analyzing different markets and searching for decent trading opportunities often times we find some peculiar instruments to watch. Identifying the market trend and key levels we find the potential spots to trade from. But do we just open the trade once the "ZONE" is spotted? I wish it could be that simple... Trading just the zone, without additional clues brings very negative figures. We definitely need something else. Price action & candlestick patterns can be those clues. Accurate reflection of the current local market sentiment makes the patterns a very reliable confirmation. Dodji's, pin bars, double tops/bottoms ... Proven by history, the skill of identification & reading the patterns will pay off quickly. Being in some sense the language of the market, the patterns are the fundamental part of my trading strategy. 2️⃣ - FIBONACCI LEVELS Fibonacci levels are a very popular technical tool. Being applied properly it helps the trader to confirm or, alternatively, disqualify the identified "ZONE". With multiple different methods like confluence trading, fibs are applied in hedge funds and various banking institutions. The main problem with the fibs, however, is complexity and a high degree of subjectivity. Meeting different traders and watching different posts on TradingView I noticed that all traders tend to have their own vision. There is no universal system to apply here, a proper fib.confirmation technique can be built only with long-lasting backtesting and practicing. 3️⃣ - FUNDAMENTAL NEWS The figures in the economic calendar, news, tweets. Actual fundamental news can become your best confirmation tool. However, the main obstacle right here is the promptness, validity and reliability of the data that you get. The information shouldn't be delayed and it must be objectively true. The search for such a source is by itself is a very time-consuming and labor-intensive business not even mentioning its potential costs. And that is not all. Knowing how to make sense of that data, its proper perception, and understanding requires a solid economical and financial background and experience. At the end of the day, becoming an expert in fundamental analysis , the trader can easily sort the trading zones and trade only the ones that are confirmed by a decent fundamental trigger. 4️⃣ - TECHNICAL INDICATORS I believe all the traders apply some indicators. From a simple moving average to some complex composite algorithms, indicators play a very important role in trading. Being 100% objective and providing up-to-date real numbers and figures, they are our allies in a battle against subjectivity. For many traders, the various signals from indicators are considered to be accurate and reliable confirmations. Many algotrading solutions are operating simply relying on such signals and being able to bring consistent profits proves the power of technical indicators. What confirmation type should you rely on?🧐 I guess the main rule right here is that the confirmation must MAKE SENSE to you. You should feel the logic behind that. It must make you confident in your action, even in case of the occasional losses, it must keep you calm and humble. Let me know in a comment section what confirmation do you prefer! 💝Please, support my work with like and comment! Thank you for reading. Let me know, traders, what do you want to learn in the next educational post?
OANDA:XAUUSDEducation
by VasilyTrader
7