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Trend Analysis

A Renko Trading Strategy with Multiple Indicators (update 1)This will serve as an update to the previous discussion specifically to some of the chart settings and the approach. Going into the open on 25-March-2024, I was looking for price to move lower to test the monthly and yearly Camarilla R3. My reasoning was that neither seemed to have been tested yet and that these two together would provide a good level for support. My long term view on crude oil is bullish and I believed this type of action would provide a good entry point. However, this plan did not come through so I stood aside to let the market playout to determine another entry strategy. While watching the market in the charts I had published earlier, I decided to make some adjustments to see if I would have detected the market’s plan sooner providing an entry point. The following are the changes that I’ve made: Changed the timeframe of the Renko chart from 15 minutes to 1 minute. Without paying for a higher subscription in TV, 1 minute is as low of a timeframe as you can go with Renko. This alone changed the dynamics of the chart with a different view on the DMI and Stoch. Changed the slower Stoch from 25,3,3 to 50,3,3 (which is a setting I’ve experimented with in the past. The DMI remained the same as did the levels of importance for the ADX of 35 and 20. Added the BPP (Bull Bear Power) indicator and set it to an interval of 50. I’ve not used this indicator before but was experimenting with some items yesterday and found this. I set the line to a step line and you can see the results here. Added a 2-hour candle chart next to the Renko and will use it in conjunction with the Renko chart to make entry/exit decisions. Removed the manual Linear Regression from the Renko chart and have added them to the 2hr chart. This is a more natural fit and have maintained the default settings. I have added two LR indicators with one at 1 STD and one at 2 STD. Removed the manual drawings of the Camarilla pivots and have added them as indicators to the 2hr chart. Removed the volume profile from the Renko chart and have added it to the 2hr chart with a week timeframe. All markup for volume area, opening range, etc. will be put on the 2hr chart and will be for a weekly view. The Renko chart will remain to work for timings of entry and exits. Considering the 1-minute chart, you can see that there was a buy signal across several of the setups. As noted earlier, the consolidation on the 1 minute/25 tick Renko chart provided a signal that a breakout was coming. The slower Stoch set to 50,3,3 provided some insight into the direction with the break of the %k up over the %d and lastly, the new BBP gave an indication that the down move was a correction and that higher prices could be coming. A long wick and breakout of consolidation would have been a trigger to enter a trade of buying a Call option (see green arrow on Renko). Looking at the 2hr candle chart with the 2 linear regressions (1 and 2 STD respectively), then you can see where the support was formed then then where resistance was hit. The monthly and the weekly R4 provided resistance and now support is at the median of the current LR. Because the break of the weekly R3 was with a force with no test, my plan now is to find an entry long (an August Call) along this line which is also the same proximity of the weekly Pivot and the top of the week’s opening range (where the opening range for the week is defined as the first 5 2hr candles of the week. With a red brick in place on the 1 minute/25 tick chart, a green brick now would be a buying opportunity. I’ve added a consolidation channel across levels of what could be support for any pullback and could see another 25-tick brick in place before the green brick to the upside.
NYMEX:CL1!Education
by mxb1961
High Probability Trading Environments Part 2: Liquidity RunsIn this educational video, we'll explore the distinction between High Resistance Liquidity Runs and Low Resistance Liquidity Runs, crucial for identifying High Probability Trading Environments. Our analysis will focus on NAS100USD, providing insights into potential trading opportunities for the week ahead. By understanding these concepts, you'll gain valuable insights into positioning yourself effectively in the market. Be sure to watch to gain a comprehensive understanding of the key confluences that contribute to successful trading strategies. Understanding Trend Analysis, SMT and ICT Concepts Mastering High Probability Trading Environments Part 1 Kind Regards, The_Architect
OANDA:NAS100USDEducation
by The_Archi-tect
Gaps and How Markets Move In Contraction and ExpansionThere are several ways to trade gaps but first, there should be a solid understanding of what Gaps are and how they show up. Markets aren't that hard to read if we have some simple ways to see them that adhere to the principles of movement. All markets move in contraction and expansion. A Gap is the sudden supply/demand imbalance that comes out of the contraction and shows up as the expansion. These expansions can even be used to measure how far the next expansion will go. Start with a simple bar chart and erase everything else off the chart. Look and simply see the dense areas of contraction (Range). Then see the expansion (Gap), followed by another contraction. Look for same-size contractions and expansion and you will start to see how organized price flow can be. It's no different than swings in that minor contractions and expansions make up the major contractions and expansions. Shane
Editors' picks
NASDAQ:KTOSEducation
by ShaneBlankenship
19
The Sunday Pump day TheoryWhy Crypto Markets Sometimes Pump on Sundays: A Global Market in Motion The idea that Sundays are boom days for crypto prices is a persistent one. While there can be occasional weekend surges, it's not a guaranteed bonanza. Here's a deeper look at the reasons behind the Sunday pump theory, including the role of global time zones, and why it's important to consider a broader picture: The Sunday Pump Theory: A Multi-Faceted Story Reduced Weekend Activity: Traditional financial markets operate weekdays, leading to a general decrease in trading activity for cryptocurrencies (which are 24/7) over the weekends. This can sometimes lead to lower trading volume, which in theory could be influenced more significantly by larger purchases on Sundays. Institutional Investor Hibernation (…Maybe): Some believe that institutional investors, who tend to trade during regular business hours, are less active on weekends. This could leave the market more susceptible to retail investor influence, potentially causing price swings. Retail Investor Activity on Their Time: Retail investors, with more free time on weekends, might be more likely to trade cryptocurrencies. If a large number of these investors, particularly in Asia with a significant time zone difference, buy at the same time, it could cause a temporary price increase. Global Time Zones and the Crypto Market: The cryptocurrency market operates 24/7, constantly influenced by activity across different time zones. While weekends in some regions might see a dip in traditional market participation, Asia's booming markets could be entering their prime trading window on a Sunday evening (GMT+8). This overlap between a potential slowdown in Western markets and a potential ramp-up in Asian markets could contribute to price fluctuations.
CRYPTOCAP:TOTALEducation
by ParabolicP
8
6 More Trading Time WastersWith trading, time is money. And every wasted moment is a missed opportunity. Every day you skip. Every high probability trade you miss on whatever market you’re trading. Even every loss you take according to your strategy, is one step closer you’re missing to success. I wrote about time wasting in the previous article. And I can’t stress enough how important it is to get yourself into gear. It’s time to take control of your time and trading actions. Here are 6 more trading time wasters. #1. Chasing the News Turn on Bloomberg, CNN or BBC. Flicking lights. Loud sounds. Entertaining drama, drama, drama. It’s like watching Netflix. And if you become obsessed, it’s easy to fall into the trap of chasing the latest news headlines. Breaking news is inevitable. And staying informed is great. But it’s NOT necessary to adapt the news into your trading strategy. In fact, the hyped up news will lead to impulsive and emotional decisions. Don’t fall for the news mania. Save that for AFTER your trading. And watch it for entertainment and education. Nothing else. #2. Checking the Portfolio Often Ahhh! The Perils of perpetual monitoring. Listen… Your portfolio is not a ticking time bomb that requires constant supervision. As a young trader I get that it’s tempting to check your gains and losses every few minutes. But this is a long term game. So if you adopt this checking bad habit, you’ll see it can breed anxiety and cloud your judgment. Maybe check your portfolios once a day. Or even every few days. But lose the obsession please. You’re wasting precious time and energy on unnecessary stuff. #3. Analysis Paralysis Another mistake is drowning yourself in data. Too much analysis can lead to paralysis. Endless charts, intricate patterns, and an abundance of indicators might make you feel like a trading virtuoso. But you’ll quickly learn that, it won’t necessarily translate to profits. Rather stick to the K.I.S.S – Keep It Simple Stupid. Simplify your approach, focus on key factors. And please make decisions based on a clear understanding rather than drowning in a sea of data. #4. Procrastination Procrastination is the silent killer of trading success. To leave it to tomorrow. As they say. Tomorrow never comes. All you have is NOW. So, if you want to trade – Get a coffee and sit down and take action. Delaying decisions can mean missing out on lucrative opportunities. Set clear goals, establish a solid plan, and execute it without succumbing to the siren call of procrastination. Time wasted is money lost in the dynamic world of trading. #5. Overcomplicating – Don’t be a trading jack of all trades! Trading doesn’t need to be a convoluted puzzle. It doesn’t take a rocket scientist to trade well. You don’t need a degree or even a complicated strategy. In fact, if you overcomplicate your trading, it will lead to more confusion and poor decision-making. Be a master of a few effective markets, time frames, strategies, money management and techniques. #6. Fear of Taking Action This my friend is the stagnation trap. Inaction out of fear is a formidable enemy for traders. You need to remember that fortune favors the bold in the world of trading. Those who: Deposit money. Learn all about trading well. Practice with a demo account. Adapt a winning trading strategy. Keep persistent with their trading. Are the ones that will win…’ FINAL WORDS: So stop wasting time and start doing more to achieve your trading dreams. Let’s sum up the 6 trading time wasters. #1. Chasing the News #2. Checking the Portfolio Often #3. Analysis Paralysis #4. Procrastination #5. Overcomplicating – Don’t be a trading jack of all trades! #6. Fear of Taking Action
TVC:SA40Education
by Timonrosso
All-Time Low and All-Time High Trading StrategiesAll-Time Low and All-Time High Trading Strategies In the volatile world of trading, mastering all-time high trading strategies and understanding how to navigate all-time lows are key. This FXOpen article delves into the nuanced tactics and insights that may help you navigate the peaks and troughs of market conditions, offering comprehensive insights if you are looking to leverage these critical areas for trading opportunities. Understanding All-Time High and All-Time Low Market Conditions Understanding the dynamics of all-time high and all-time low market conditions is crucial for traders aiming to navigate these pivotal points effectively. All-time low trading refers to the scenario where an asset has reached its lowest price level in history, often triggering a heightened interest among investors looking for undervalued opportunities or signalling a potential reversal point. Conversely, all-time high trading occurs when assets are trading at their highest historical prices, indicating strong market optimism or potentially overvalued conditions ripe for a correction. These extremes in market conditions represent significant psychological thresholds for the market participants, as they may lead to increased volatility and liquidity. Traders scrutinise trading at all-time lows to identify the potential for recovery, while those at all-time highs are monitored for signs of sustained momentum or impending pullbacks. Below, we cover three all-time high and low trading strategies. Consider applying them to live charts in FXOpen’s free TickTrader platform. Breakout and Consolidation Strategy When engaging with the market, traders often explore the dynamics of stocks trading at all-time highs or nearing all-time lows. This approach is anchored in the principle that these assets can exhibit significant momentum, potentially setting the stage for trading opportunities. In learning how to trade all-time-high stocks, one strategy stands out: the Breakout and Consolidation strategy. Its essence lies in monitoring assets that are not only at their all-time high or low but also exhibit a distinct consolidation pattern post-reaching these levels. Traders typically look for the price to close beyond the all-time high or low, usually on timeframes ranging from 1 hour to daily charts. A subsequent period of sideways movement just beyond the high or low signals a consolidation phase. This phase is crucial as it suggests a potential accumulation or distribution, with traders able to potentially capitalise on a further breakout or upcoming reversal. Entry Traders may place a buy-stop order just above the high of the consolidation range if anticipating a continuation of the uptrend. Alternatively, a sell-stop order can be set just below the low of the range for those expecting a downtrend. Stop Loss A stop loss is typically positioned on the opposite side of the consolidation range to manage risk effectively. Take Profit Given the absence of a predefined exit point, traders often rely on a specific risk/reward ratio to determine when to exit the position. Others may prefer using technical analysis tools, such as Fibonacci extensions or momentum-based indicators, to identify potential exit points. Breakout Retest Strategy The Breakout Retest strategy offers a nuanced approach for traders looking to understand how to trade all-time high forex pairs. This method is favoured by traders who seek to capitalise on the momentum immediately following the breach of an all-time high or low without waiting for a consolidation phase to confirm the breakout. In this strategy, the initial step involves identifying a decisive break of the all-time high or low. Unlike the Breakout and Consolidation strategy, which requires a period of sideways movement for confirmation, the Breakout Retest strategy allows traders to act swiftly. Upon witnessing the break, traders can place an order directly at the level of the broken high or low. This newly established level is now expected to serve as a foundation of support or resistance, guiding future price actions. Entry An order may be set at the broken high or low, anticipating it to now act as support (in case of a high break) or resistance (in case of a low break). Stop Loss A stop loss may be strategically placed beyond a nearby swing point, offering enough leeway for the price to fluctuate slightly before potentially moving in the anticipated direction. Take Profit Profit-taking may be based on a predetermined risk/reward ratio that aligns with the trader's objectives. Alternatively, traders may employ technical indicators as a signal for exiting the trade. Candlestick Pattern Reversal Strategy A Candlestick Pattern Reversal may be particularly effective as part of an all-time low trading strategy. This technique hinges on the premise that a significant price level, such as an all-time low, may mark a turning point where selling pressure exhausts and buying interest begins to dominate. By focusing on candlestick patterns that signal a reversal, traders can identify moments when the market sentiment shifts from bearish to bullish. The theory states that it’s best to use higher timeframes here, like the daily or weekly chart. Traders watch for specific candlestick formations that indicate a potential reversal. The hammer or morning star patterns are key figures in this analysis, suggesting that sellers have capitulated and buyers are starting to take control. Once such a candle closes, traders have the option to enter the trade at the closing price or at the opening of the next. Another approach is to wait for a breakout beyond the high or low of the identifying candlestick for confirmation. Entry Traders may initiate a position at the close of the reversal candle or upon a breakout of the candle's high or low. Stop Loss Setting a stop loss just beyond the extremities of the reversal candle may help in managing risk. Traders consider the risk/reward ratio as they trade on high timeframes, so price fluctuations may be significant. Take Profit As this is a reversal strategy aimed at capitalising on a shift in market dynamics, identifying notable support or resistance levels may provide logical targets for exiting the trade. Evaluating Fundamentals Around All-Time Highs and Lows Navigating the terrain of all-time highs and lows in both forex and stock markets demands a keen understanding of fundamental analysis. This approach enables traders to assess an asset's intrinsic value and anticipate future movements. Economic Indicators: For forex, interest rates, inflation, and employment data can help set a bias. In stocks, understanding earnings reports, industry health, and economic conditions can be valuable in analysing direction. Market Sentiment: Investor sentiment and market trends can significantly impact prices at extreme levels. Global Events: Political events, economic policies, and global crises can influence market movements, especially at pivotal highs and lows. Financial News: It may be a good idea to stay updated with financial news and reports that can affect asset valuations and investor behaviour. The Bottom Line Mastering how to trade all-time lows and highs is essential for any trader looking to navigate market extremes effectively. By applying the strategies outlined, traders can potentially capitalise on the opportunities these highs and lows present. For those ready to apply these insights in real-world trading scenarios, opening an FXOpen account offers a gateway to the markets, providing the tools and platforms necessary for engaging with all-time high and low trading strategies. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
2
Options Blueprint Series: Perfecting the Butterfly SpreadIntroduction to the Butterfly Spread Strategy A Butterfly Spread is an options strategy combining bull and bear spreads (calls or puts), with a fixed risk and capped profit potential. This strategy involves three strike prices, typically employed when little market movement is expected. It's an excellent fit for the highly liquid energy sector, particularly CL WTI Crude Oil Futures Options, where traders seek to capitalize on stability or minor price fluctuations. Understanding CL WTI Crude Oil Futures Options WTI (West Texas Intermediate) Crude Oil Futures are one of the world's most traded energy products. These futures are traded on the NYMEX and are highly regarded for their liquidity and transparency. The introduction of Micro WTI Crude Oil Futures has further democratized access to oil markets, allowing for more granular position management and lower capital requirements. Key Contract Specifications for Crude Oil Futures: Standard Crude Oil Futures (CL) Contract Size: Each contract represents 1,000 barrels of crude oil. Price Quotation: Dollars and cents per barrel. Trading Hours: 24 hours a day, Sunday-Friday, with a 60-minute break each day. Tick Size: $0.01 per barrel, equivalent to a $10.00 move per contract. Product Code: CL Micro Crude Oil Futures (MCL): Contract Size: Each contract represents 100 barrels of crude oil, 1/10th the size of the standard contract. Price Quotation: Dollars and cents per barrel. Trading Hours: Mirrors the standard CL futures for seamless market access. Tick Size: $0.01 per barrel, equivalent to a $1.00 move per contract. Product Code: MCL Options on Crude Oil Futures : Options on WTI Crude Oil Futures offer traders the ability to hedge price risk or speculate on the price movements. These options provide the flexibility of exercising into futures positions upon expiration. Constructing a Butterfly Spread The essence of a Butterfly Spread lies in its construction: It involves buying one in-the-money (ITM) option, selling two at-the-money (ATM) options, and buying one out-of-the-money (OTM) option. For CL WTI Crude Oil Futures Options, this could translate into buying an ITM call or put, selling two ATM calls or puts, and buying an OTM call or put, all with the same expiration date. The goal is to profit from the premium decay of the ATM options faster than the ITM and OTM options, especially as the futures price gravitates towards the middle strike price. Using call options would typically generate positive delta making the strategy slightly bullish. Using put options would typically generate negative delta making the strategy slightly bearish. Selection of Strike Prices: Identify suitable ITM, ATM, and OTM strike prices based on current crude oil futures prices and expected market movement. (The below chart example uses Support and Resistance UFO price levels to determine the optimal Strike Selection.) Determine Expiration: Choose an expiration date that balances time decay with your market outlook. Manage Premiums: The premiums paid and received for these options should result in a net debit, establishing your maximum risk. Advantages and Risks Advantages: Defined Risk: The maximum potential loss is known at the trade's outset, limited to the net debit of establishing the spread. Profit Potential: Profits are maximized if the futures price is at the middle strike at expiration. Flexibility: Suitable for various market conditions, especially in a range-bound market. Risks: Limited Profit: The strategy caps the maximum profit, which is achieved under very specific conditions. Commission Costs: Multiple legs mean higher transaction costs, which can erode profits. Complexity: Requires careful planning and monitoring, making it less suitable for novice traders. The construction of a Butterfly Spread in the context of CL WTI Crude Oil Futures Options highlights the strategic depth required to navigate the volatile energy market. Meanwhile, understanding its advantages and inherent risks equips traders with the knowledge to apply this strategy effectively, balancing the potential for profit against the complexity and costs involved. Market Scenarios and Butterfly Spread Performance The performance of a Butterfly Spread in CL WTI Crude Oil Futures Options is highly contingent on market stability and slight fluctuations. Given crude oil's propensity for volatility, identifying periods of consolidation or mild trend is crucial for this strategy's success. Neutral Market Conditions: Ideal for a Butterfly Spread, where prices oscillate within a narrow range around the ATM strike price. Volatility Impact: Sudden spikes or drops in crude oil prices can move the market away from the strategy's profitable zone, reducing its effectiveness. Understanding these scenarios helps in planning entry and exit strategies, aligning them with expected market movements and historical price behavior within the crude oil market. Executing the Strategy Executing a Butterfly Spread involves precise timing and adherence to a pre-defined risk management plan. The entry point is critical, often timed with expected market stagnation or minor fluctuations. Entry Criteria: Initiate the spread when volatility is expected to decrease, or ahead of market events predicted to have a muted impact. Adjustments: If the market moves unfavorably, adjustments can be made, such as rolling out the spread to a further expiration or adjusting strike prices. Exit Strategy: The ideal exit is at expiration, with the futures price at the ATM option's strike. However, taking early profits or cutting losses based on predefined criteria can optimize outcomes. Case Study: Applying Butterfly Spread to Crude Oil Market Let's explore a hypothetical scenario where a trader employs a Butterfly Spread in anticipation of a stable WTI Crude Oil market. The futures are trading at $80.63 per barrel. The trader expects the price to move down slowly due to mixed market signals even though key support and resistance (UFOs) price levels would indicate a potential fall. As seen on the below screenshot, we are using the CME Group Options Calculator in order to generate fair value prices and Greeks for any options on futures contracts. Underlying Asset: WTI Crude Oil Futures or Micro WTI Crude Oil Futures (Symbol: CL1! or MCL1!) Strategy Setup: Buy 1 ITM put option with a strike price of $82.5 (Cost: $3.00 per barrel) Sell 2 ATM put options with a strike price of $78 (Credit: $0.92 per barrel each) Buy 1 OTM put option with a strike price of $73.5 (Cost: $0.24 per barrel) Net Debit: $1.40 per barrel ($3.00 - $0.92 - $0.92 + $0.24) Maximum Profit: Achieved if crude oil prices are at $78 at expiration. Maximum Risk: Limited to the net debit of $1.40 per barrel. Over the following days/weeks, crude oil prices could fluctuate mildly due to competing factors in the market but ultimately close at $78 at the options' expiration. The trader's maximum profit scenario is realized, demonstrating the strategy's effectiveness in a stable market. Risk Management Considerations Executing a Butterfly Spread or any options strategy without a robust risk management plan is perilous. The following considerations are essential for traders: Use of Stop Loss Orders: To mitigate losses in unexpected market moves. Hedging: Employing alternative positions to protect against adverse price movements. Defined Risk Exposure: Always know the maximum potential loss before entering any trade. Market Analysis: Continuous monitoring and analysis of the crude oil market for signs that may necessitate strategy adjustment. Conclusion The Butterfly Spread is a nuanced strategy that, when applied carefully, can offer traders of CL WTI Crude Oil Futures Options a means to capitalize on relatively slow market moves. While the potential for profit is capped, so is the risk, making it an attractive option for those with a precise market outlook. It exemplifies the strategic depth available to options traders, allowing for profit in less volatile market conditions. When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. General Disclaimer: The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
NYMEX:CL1!Education
by traddictiv
Powerful Fibonacci Trading Strategy For Beginners I am going to reveal a powerful fibonacci trading strategy that I learned many years ago. It combines structure analysis, fibonacci retracement and extension levels and candlestick analysis. Step 1 Find a trending market - the market that is trading in a bullish or in a bearish trend on a daily time frame. AUDUSD is trading in a bullish trend on a daily. Step 2 Execute structure analysis - identify key horizontal and vertical structures on a daily time frame. Take a look at key structures that I spotted on AUDUSD. Step 3 Draw fibonacci retracement levels. Here are the important ratios you should look for: 382, 50, 618, 786. In a bearish trend, draw fibonacci retracement levels from the high of the trend to current low based on wicks. In a bullish trend, You should apply fibonacci retracement from the low of the trend to a current high based on wicks. Take a look how I draw the retracement levels, I took the low of the trend and the high of the trend. Step 4 Find confluence. Look for fibonacci numbers that match - lie within key structures that you identified. Support 1 matches with 382 retracement. Support 2 matches with 786 retracement. Remove other ratios from the chart. Step 5 Wait for a test of one of the fibonacci levels that match with key structure The price perfectly tested 382 retracement level. Step 6 Wait for a confirmation on a 4h time frame. Our confirmation will be a formation of an engulfing candle - a strong candle that completely engulfs the entire range of a previous candle with its body. In a bearish trend, we will look for a formation of a bearish engulfing candle. Bearish engulfing candle indicates a strong selling pressure and the strength of the sellers. In a bullish trend, we will look for a bullish engulfing candle. It indicates a strong buying reaction and imbalance. Have a look at a bullish engulfing candle that was formed on AUDUSD on a 4H time frame after a test of 382 retracement. Step 7 Open a trading position, set stop loss and choose the target. After you spotted an engulfing candle, open a trading position. Open short after a formation of a bearish engulfing candle and open long after a formation of a bullish engulfing candle. If you sell, your safest stop loss will be 1.272 extension of the last bullish impulse on a 4H. If you buy, your stop loss will be 1.272 extension of the last bearish impulse on a 4H. In our example, our stop loss will be 1.272 extension of a bearish impulse leg on a 4H time frame. The extension is based on high and low of the impulse. If you short, your take profit will be the closest key structure support on a daily. If you buy, your take profit will be the closes key structure resistance on a daily. Here is our take profit level. Being applied properly, the strategy should generate 60%+ winning rate. Always remember to check your reward to risk ratio before you open the trade. It should be at least 1.1/1. Also, before you place a trade, always make sure that you trade WITH the trend and take only trend-following trades. The strategy works perfectly on Forex, Gold, Silver, Oil, Indexes. Good luck in your trading. ❤️Please, support my work with like, thank you!❤️
Editors' picks
OANDA:XAUUSDEducation
by VasilyTrader
31
FAKE BREAKOUTS IN CRYPTO MARKETSHello traders! 👋 How often has it happened to you that you watch a certain level and wait for its breakout, and when the price breaks this significant level, the price does not tend in the direction of the breakout? After a while, it goes back down, putting your balance at risk of heavy losses. Now let's talk about what a fake breakout is in the crypto market in particular.. Definition And Types 📝 A fake breakout is a breakout of some horizontal or sloping level, after which the price immediately or gradually moves away in the opposite direction of the breakout. The candlestick that broke the level is called a breakout candlestick. The most common fake breakouts in trading: A fake breakout of a trendline. A fake breakout of support or resistance. A fake breakout of the borders of a technical pattern. Now that we have a complete layout of possible breakouts, let's take a closer look at them. In the description of the breakout, I will immediately describe the trading principle of this pattern. Fake Trend Breakout 📊 On the chart of BINANCE:ETHUSD I managed to find a great fake trend breakout during a bull run. The point was that the price started a great growth, then a trend line was formed, from which most traders bought the asset until all the buyers were dropped off the train. But for the others, who understood the principle of fake breakouts, it was, on the contrary, a great opportunity to enter the market. We see an excellent trend breakout, a well-defined breakout candle. Here any trader has two options: 1. Enter in the direction of the trend. And since we have broken the trend line, the trend has changed to a downtrend. 2. Wait for a possible rebound and return above the trend line. Let's start with the fact that it is not profitable to enter trades immediately after the trend breakout, as there is a high chance of such confusing cases. Therefore, it is advised to wait for a strong rebound and the continuation of the movement in the direction of the breakout. And what to do if the market has a situation as shown in the picture, i.e., the price breaks through and returns back above the trend line? Everything is even simpler here: You wait for the return above the trend line. As soon as it happens, you place a limit order on the upper or lower boundary (depends on the trend direction) of the breakout candle. You wait for the market to fill up your order. You place a stop-loss under or over the trend line (depending on the trend direction). A Fake Breakout of Support or Resistance 📈📉 This type of breakout is the most popular, but it has its own interesting trick. As a rule, in such situations, the price chart hints that it wants to break some significant level and all traders freeze waiting for the breakout. The breakout happens, but there is no profit. This is a classic in the current realities, at least in the cryptocurrency markets. The principle of trade entry is exactly the same. Only the nature of the breakout differs. By the way, as you can see from the post, and if you look at the charts of coins, the largest and strongest movements are usually accompanied by fake breakouts before them. This is due to the fact that thanks to a fake breakout, most panic traders or those who have extremely short stop loses are dropped off. Fake Breakout of A Pattern 🔎 This fake breakout is the most rare, but it still occurs. Its essence is that when you see one of the technical analysis figures and, according to its own rules, understand in which direction this figure is most likely to break, it breaks in the opposite direction. On the BINANCE:SOLUSDT chart, I managed to find a good example of this algorithm. A descending triangle with a flat bottom was clearly drawn on the chart, which, according to the classic technical analysis, should break towards the flat side, but they decided to give us a "haircut". The algorithm of entering the trade is exactly the same as in the other two cases. But here you can resort to one more variant of entry, in addition to overcoming the top or bottom of the breakout candle. Also, if it is pattern from the classic technical analysis, you can simply enter the trade on the crossing of the pattern. In cryptocurrency markets, the following picture often occurs: • An important level is formed. • The price breaks it and fixes itself above or below it. • There is a pullback to the previous zone with a small continuation of the reverse movement (fake breakout). • The price returns to this zone again and starts to consolidate. • A true breakout occurs. As a result, the stops of both those who did not earn on shorting and those who did not earn on the long position were accumulated. There is only one recommendation to avoid this case, just tighten the stops and do not be greedy. Remember the main rule, the more tests of the level, the more likely it is to break through. And here is another simple truth: levels are created in order to break them. In conclusion , fake breakouts are a common phenomenon in trading, particularly in the cryptocurrency markets. They can occur in various forms, such as fake trend breakouts, fake breakouts of support or resistance, and fake breakouts of technical patterns. Understanding these scenarios and adapting appropriate trading strategies can help potentially capitalize on market opportunities. Recognizing and managing fake breakouts can contribute to more successful trading experiences. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
10
A Comprehensive Guide to Fibonacci Retracements (Updated)Hello traders, in this post, we will be going over one of the most commonly used tools in all asset classes - the "Fibonacci Retracement" (or Fib for short). For a better viewing experience, please view this on your desktop/PC, as the mobile and tablet versions of the charts are harder to read. Although I have briefly touched on how to use the Fibonacci Retracement tool in my previous Elliott Waves series, we are now going to go over it in depth, and talk about how this tool can help you find entries and exits within an existing trend with or without the use of the Elliott Wave Theory, which also helps identify whether you are in a bullish or bearish trend. The Fibonacci Retracement tool, although widely used by many traders, is almost always not correctly used by new traders. Most traders will often connect the wrong points, indicating the wrong Fibonacci retracement levels. Here, I will be explaining the proper way to use the Fibonacci Retracement tool in a very simple translated friendly guide in one post. ------- What Is the Fibonacci Retracement? Fibonacci Retracements (Fib(s) for short), are a set of 'ratios', defined by mathematically important Fibonacci sequence. This allows traders to identify key levels of support and resistances for price action. Unlike other indicators, Fibonacci retracements are FIXED, making them very easy to interpret. When combined with additional indicators, Fibs can be used to identify potential entry and exit points with high probability to trade on trending movements. Fibonacci retracements are used to indicate levels of support and resistance for a stock’s price. Although they are similar to moving averages in this respect, Fibonacci retracements are set by the extent of the previous bullish or bearish run and do not change each day in the current trend as moving averages do. Therefore, it can be significantly easier to identify and anticipate support and resistance levels from Fibonacci sequences. How Is the Fibonacci Retracement Calculated? (You don't need to calculate it yourself - It's already done for you!) Fibonacci retracements are based on what is known as the 'Fibonacci sequence', where each number in the sequence can be added to the previous number to produce the following number within the sequence. Now, you might be confused here, but don't! - I am just explaining the concept on how it's calculated. You do not need to personally calculate the actual sequence of the Fibonacci Retracement, as everything is already pre-determined and calculated within the tool itself on TradingView. To put it simply, dividing any number in the sequence by the following number yields 1.6180 – known as the "Golden Ratio" – while dividing any number by its predecessor yields 0.6180. Dividing any number in the sequence by two positions in advance yields 0.382, while dividing any number by a number three positions in advance yields 0.236. These ratios originated from the Fibonacci sequence are found throughout nature, mathematics, and architecture - such as flowers, buildings, and so forth. Yes, if you search for Fibonacci sequence examples, you can find these within daily uses, not only in trading. ------ Retracement levels for an asset are drawn based on the prior bearish or bullish movement. Don't forget this - you need to know whether you are in a bullish or bearish trend. Is the stock or coin going up? or down? To plot the retracements, draw a trendline from the low to the high (also known as the swing low to the swing high), or vice versa, high to low, within a continuous price movement trend – Fibonacci retracement levels should be placed at 61.80%, 38.20%, and 23.60% of the height of the line for you by the tool itself. Again, these numbers are already calculated for you within the tool itself. In a bullish trend, the retracement lines start from the top of the movement (i.e. the 23.60% line is closest to the top of the movement), whereas in a bearish movement the retracements are calculated from the bottom of the movement (i.e. the 23.60% line is closest to the bottom of the movement). ------ How to Trade Using the Fibonacci Retracement Once you have drawn a set of Fibonacci retracements on a chart of your liking, it is possible to anticipate potential reversal points where support or resistance will be encountered. If the retracements are based on a bullish trend, the retracements should indicate potential support levels where a downtrend will reverse bullishly. So to put it simply, the pre-determined Fibonacci levels, should in theory and practicality, act as support if in a bullish trend, and resistance in a bearish trend. There will always be some form of price reaction at each Fibonacci level just based on Market Psychology. If the retracements are based on a bearish movement, the retracements should indicate potential resistance levels where a rebound will be reversed bearishly, which is vice-versa for the bullish movement trend. The most common reversals based on Fibonacci retracement levels occur at the 38.20%, 50%, and 61.80% levels (50% comes not from the Fibonacci sequence, but from the theory that on average, stocks retrace half of their prior movements - so this is considered a 'psychological level'). Although retracements do occur at the 23.60% line, these are less frequent and require close attention since they occur relatively quickly after the start of a reversal. In general, retracement lines can be considered stronger support and resistance levels when they coincide with the overall trend, meaning, that if you know that you are in an established bullish or bearish trend, you will most certainly get some form of reaction at the most common reversal levels within the Fibonacci level, which is shown in the image below. Whenever applying Fibonacci retracements, keep in mind that retracement lines represent only potential support and resistance levels, they are NOT 100% set in stone – they represent price levels at which to be alert, rather than hard buy and sell signals; however, they have HIGH PROBABILITY. It is important to use additional indicators, in particular MACD, to identify when support or resistance is actually being encountered and a reversal is likely. The more that additional indicators are pointing towards a reversal, the more likely one is to occur. Also note that failed reversals, especially at the 38.20% and 50% retracement levels, are common.
Editors' picks
COINBASE:BTCUSDEducation
by XForceGlobal
36
Bitcoin's Boom-Bust Cycles ## Navigating the Rollercoaster: Bitcoin's Boom-Bust Cycles and Investment Strategies Bitcoin's journey, from a niche internet currency to a globally recognized asset class, has been marked by periods of explosive growth punctuated by sharp corrections. These downturns often trigger fear and uncertainty (FUD) in the market, leading many to question their investments. However, a historical analysis reveals that strategic purchases during these "bottoms" could have yielded significant returns. This article explores the potential benefits of such an approach and emphasizes the importance of a long-term perspective in navigating the ever-volatile cryptocurrency landscape. **The Power of Buying the Dip:** Imagine acquiring Bitcoin at a fraction of its current price. This is precisely the opportunity that arose during Bitcoin's historical corrections. Here's why buying at these lower entry points can be advantageous: * **Amplified Potential Returns:** By acquiring Bitcoin at a lower price point, investors stand to gain a considerably higher percentage return if the price rebounds. * **Long-Term Growth Trajectory:** Despite volatility, Bitcoin has exhibited a long-term upward trend. Buying during a dip allows investors to focus on this potential for long-term appreciation. * **Limited Supply:** Unlike fiat currencies, Bitcoin has a finite supply of 21 million coins. This scarcity could contribute to its value appreciation in the long run. **Avoiding the Noise: Media FUD and the Importance of Research** During Bitcoin's downturns, negative media coverage intensifies. This FUD often focuses on hacks, scams, and price volatility, potentially leading investors to make impulsive decisions based on short-term fear rather than long-term strategy. Here's why it's crucial to avoid this noise and conduct thorough research: * **Shifting Media Narratives:** Historically, media outlets have portrayed Bitcoin in a negative light. For example, in 2018, a major news publication ran the headline "Bitcoin: Bubble About to Burst?". However, the narrative began to shift in 2021 with news of institutional investment in Bitcoin, such as Tesla's purchase. This highlights the ever-changing media landscape surrounding cryptocurrency. * **Focus on Fundamentals:** Before investing, understand the underlying blockchain technology and the unique value proposition of Bitcoin. * **Diversification is Key:** Don't concentrate your entire portfolio on a single asset class. Diversify your holdings across various asset classes, including cryptocurrencies, to mitigate risk. **Developing a Long-Term Perspective:** The cryptocurrency market is inherently volatile. Short-term price fluctuations shouldn't dictate your investment decisions. Here are some tips for developing a long-term perspective: * **Invest Responsibly:** Only invest what you can afford to lose, as the market can be unpredictable. * **Dollar-Cost Averaging (DCA):** Regularly invest fixed amounts at specific intervals. This strategy helps average out the price per Bitcoin over time, reducing the impact of volatility. * **Stay Informed:** Keep up-to-date with relevant news and developments within the blockchain and cryptocurrency space. **As of March 22, 2024, the price of Bitcoin has fluctuated significantly. The lowest price point since its last major peak in November 2021 is around $15,300.** This represents a considerable drop from its all-time high of nearly $73,000, but still significantly higher than its launch price of mere cents in 2009. **Conclusion:** While buying Bitcoin at its absolute bottom might seem like a missed opportunity, the core idea remains relevant. By focusing on long-term fundamentals, ignoring fear-mongering narratives, and developing a disciplined investment strategy, investors can navigate the ups and downs of the cryptocurrency market with greater confidence.
BITSTAMP:BTCUSDEducation
by ParabolicP
WHAT IS SMART MONEY TECHNIQUE DIVERGENCE?✴️ WHAT DOES SMART MONEY DOING: ACCUMULATING OR DISTRIBUTING? SMT (Smart Money Technique) Divergence is the divergence of prices of correlated assets or the relationship to inversely correlated assets. Analyzing the SMT Divergence allows you to determine the institutional structure of the market to determine what the smart money is doing accumulating or distributing. Currency pairs are easy to analyze using the DXY US Dollar Index. Every price fluctuation must be confirmed by market symmetry. The occurrence of price asymmetry signals the formation of an SMT Divergence and a likely trend reversal. SMT DIVERGENCE IN ACCUMULATION SMT DIVERGENCE IN DISTRIBUTION ✴️ WHICH PAIR TO CHOOSE FOR TRADING? As traders, we need activity in the markets, volatility is what makes trading easier. The news background is the driver that drives this, which is why the trading day starts with a look at the economic calendar. If GBP news is scheduled to be released, it does not mean that, for example, GBPUSD will be preferred over EURUSD. The logic is that closely correlated pairs are likely to move symmetrically. But when SMT divergences are formed, one of the pairs will show strength or weakness, which signals the approaching high volatility on such a pair. GBPUSD updated the high, while EURUSD failed (showed weakness) which results in opening short positions on EURUSD. As a result, despite the important news on the GBP, EURUSD showed a higher amplitude of movement (volatility). In the following example, EURUSD updated the high, while GBPUSD failed (showed weakness) that as a result we open short positions on GBPUSD.
Education
by DeGRAM
2
A Renko Trading Strategy with Multiple IndicatorsThis study will walk through several concepts in analyzing crude oil. The primary chart type will be a Renko chart with the block size (ticks) set to 25 (0.25 in TV) and with a timeframe set to 15 minutes. The significance of timeframe is that in TV, it will take this amount of time for the price to maintain a full block change (25 cents) in order for it to be ‘printed’. In times of high volatility, a 15-minute window can allow for more than one block to print at the same time. While this may be a disadvantage in trading CL futures either day or swing trading, it helps filter out noise in the type of trading I do. The basic strategy I’m wanting to establish using this setup is the buying of options, either puts or calls, that are as near to the market as possible and to limit risk to a % of the value of the purchase price of the option. So, for example, if I pay $2,500.00 USD for a CLQ24 85 Call, I will limit my loss to 10% of that price should the market go against what I had expected. The chart setups and scenarios in this study will be based on Renko charts along with various indicators that will be discussed (for the most part individually). A view of 2024 based on the Renko setup. I will start with this basic view that has the Renko chart configured as outlined above with two linear regression drawings manually drawn on it. There is an indicator for LR which will follow each block change and change accordingly based on the lookback configuration. With the drawing tool, you can start and end the LR based on your strategy. In mine, I want to base the LR on price from a major low to a major high and then adjust based on if a new high or low is obtained. In this chart, I picked the low as that of late December (the first long black arrow). As an exercise, you can hit the new highs from this point to see how the LR adjusted and how future price flowed within it. There are two LR drawings on this chart; one with an upper and lower deviation set to 2/-2 and the second with a upper and lower deviation set to 1/-1 (these are the ones with dots for a boundary). In this specific chart, I’ve started with the latest high to be that on 01-March and with the LRs both extended to the right, you can see the price movement against these LR into the future. As price broke through the top of the LR recently, a new high was put in on 24-March and the adjustment of the LR will be shown next. With this new high confirmed, the LRs are both move to end at this high while keeping the original starting point the same. In this view, price pulled back to the top of the LR 1std and close here. With the LR extended, you can see where the mean is and a potential price target if just considering the LR itself. An expanded view of above: Next, I’ll introduce the DEMA and simple MA on the chart. There are two DEMAs added to the chart with one set to a period of 12 and one set to a period of 20. The significance of the two is that when the 12 (black on this chart) is above the 20 (red on this chart), then the trend is bullish and when the opposite, the trend is bearish. I use these two more for confirmation than for timing. If you study these, you’ll see that they lag for the most part but there are key times that they will provide insight to the direction of a market during times of consolidation. The next two indicators that I’ll introduce are the Stochastic and Directional Movement Index (DMI with the ADX). The experience of using these indicators on a Renko chart is like that on a candle chart except that the period is not for time but the number of bars that have been printed or committed. There are two Stochs used (5,3,3 and 25,3,3). The intent of the 5,3,3 is to provide a fast-moving change in momentum while the 25,3,3 is designed to provide insight to the momentum of the longer trend. Insight as to timing the entry and exit of trades may be possible with an in-depth understanding of the crossover of the 25,3,3 between the %k and the %d. The DMI can be used like it is against a candle chart but with settings at 5,5. This provides a faster moving indicator and, with some study, can determine the importance of the interactions between the 3 lines. There is one key aspect of this indicator with the Renko that works similar to the candle and that is of identifying pending consolidation of the market. In a traditional setup of the DMI on a candle chart, the settings are 14,14 and the line of 20 in the indicator is traditionally the line of strength. Meaning that when the ADX falling at or below the 20 line, then the trends are weak and the market is entering consolidation. During this time, the guidance from various sources is to look for patterns on the market and signs of a breakout. For the Renko charts, the are to watch for trend strength and consolidation is between the 35 and 20 area based on the analysis I’ve done. On the following chart, I’ve highlighted some of these areas of consolidation. Additionally, there is a notion of a high-swap of the +/-Dis which is when price has started moving strongly in one direction and then pivots to change direction and build into a strong trend from this. While in hindsight these look compelling, they can be difficult to trade in real-time, it’s difficult to differentiate between a high-swap and a future degradation of the trend that leads to consolidation. I think that the more reliable setup is finding the longer points of consolidation and prepare to trade in the breakout direction. As you can see on the close Friday, price has moved off of a new recent high and could now be trending down into a period of consolidation (if one were to use just the combination of the DMI and ADX). If you’ve not read “Secrets of a Pivot Boss” by Franklin O. Ochoa, I would encourage you to do so as it has many extremely valuable and innovative ideas in trading off volume, value, and pivots. The following discussions will be based on concepts from this book. The first covered will be that of volume area. I will not dig into the specifics of this but to just show one of the many indicators available in TradingView for these concepts. The volume indicators will work with Renko charts and the specific one I’m using allows me to set the increment of volume based on rows or ticks. I’ve chosen ticks and set the number to 5. With a 25 tick Renko chart, this will allow for a granularity of 5 rows per block for displaying the volume profile. In the chart below, I’ve highlighted a concept outlined in the book of the volume area that is extended out to the next trading day and is what forms the basis for 2-day volume area analysis. There are 6 scenarios that go with this analysis and the pink channels on the chart are intended to enable this view. The volume profile I’ve picked in the indicator is for the week so the analysis I do is for the week and not daily. One of the key setups from the book is an ‘inside day’ which you can see at the black arrow. An inside day is a day to watch for breakout (in this case it would be an inside week) and, after support was found, the price went higher. The last set of indicators that I’ll cover is the Camarilla Pivots. These too are covered in depth in the book referenced above as well as a wealth of details on the web. These pivots do not work on Renko charts so I will create a candle chart with an 8hr setting and then set up the monthly and yearly pivots on it. From this chart, I’ll copy key lines over to the Renko chart. This first chart is a view of the 25 tick, 15 minute chart going back to the beginning of 2024. I’ve labeled some of the key lines on this chart for both the year 2024 and the month of March. This is zoomed into the month of March. I believe a key concept that makes these pivots on the Renko with the timeframe powerful is the ability to see the tests that happen around the various pivots for both support and resistance. There is an entire trading strategy that is outlined in the book referenced above. The current price action seems to imply that price should come back to either the March R3 or the 2024 R3 (which is also the top of the value area for 2023). If price action does come back to these lines, careful attention should be paid to how support plays out and if a buying or selling opportunity arises from it. Next, I’ll provide a view with all of the reviewed items in one view. I’m standing aside on trading this for now until the current price action plays out and a cleaning view of potential trade comes into focus. Some observations considering what’s been discussed individually in this study: The DEMA is currently swapped to the bearish trend. The -DI is over the +DI which is a bearish trend. However, The ADX has been dropping to the 35 line but has not dropped in the 35 to 20 range to indicate a consolidation phase. The Stoch has not completely bottomed out long term and could see more downward movement. While price is at the top of the 1std of the LR, it could drop further. A drop and hold of the 2024 R3, March R3, top of the 2023 volume area, and the median of the current LR (all would be within proximity of each other) could be a strong buy setup. A break below these lines with an ensuing test from the bottom could be a strong sell setup. The relationship of the past two weeks’ volume area is bullish.
NYMEX:CL1!Education
by mxb1961
💰The #1 Commodity Market Watch📉🎢-- What you will hear in this video: -- 1-Learning how to trade commodities 2-Trend analysis 3-Support levels 4-Resistance levels 5-Market psychology -- And more... Watch this video to learn more -- **Disclaimer:** The information provided above or below is for educational and informational purposes only. -- It does not constitute financial advice, and trading always involves -- a risk of substantial losses, regardless of the margin levels -- used. Before engaging in any trading activities, it is crucial to -- conduct thorough research, consider your financial situation, -- and, if necessary, consult with a qualified financial advisor. Past -- performance is not indicative of future results, and market -- conditions can change rapidly. Trading decisions should be made -- based on careful analysis and consideration of individual -- circumstances. The user is solely responsible for any decisions made -- and should be aware of the inherent risks associated with trading in -- financial markets.
ICEUS:CC1!Education
by lubosi
2
Tweezer Candlestick Patterns for Trend TradingTweezer Candlestick Patterns for Trend Trading There are numerous patterns and indicators that can help traders determine the formation of a new trend. One valuable tool in a trader's arsenal is the Tweezer candlestick pattern. In this FXOpen article, we will discuss the definition of Tweezers, elucidate the importance of these patterns in trading, and emphasise their role in potentially achieving precision in trend trading. What Is a Tweezer? Tweezers are candlestick patterns that signify potential reversals in market trends. These patterns occur when two consecutive candlesticks share similar highs or lows, forming a "tweezer" shape on the price chart. Tweezers can be either bullish or bearish, each conveying distinct market sentiment. Candlestick patterns, such as Tweezers, provide traders with visual cues about market sentiment. They offer insights into the balance between buying and selling pressure over a specific time frame. Understanding candlestick patterns may enhance a trader's ability to make informed decisions. Tweezer Top A Tweezer Top is a candlestick pattern that can hold valuable insights for traders. Traders often interpret it as a cautionary signal. It might be a prudent time to consider taking profits from long positions or even contemplating short positions. The pattern is identified by the following distinctive features: Twin Peaks: A Tweezer Top formation consists of a bullish and a bearish candlestick, where the highs of both candles are remarkably close or identical. This formation creates the visual impression of twin peaks or pincers, hence the name "Tweezer." Bearish Reversal: Tweezer Tops are predominantly considered bearish reversal patterns. They typically appear at the end of an uptrend and signify a potential shift in market sentiment from bullish to bearish. You can trade a Tweezer Top in two ways, meaning you can either open a sell trade or close buy trades. Short Upper Shadows: Both candlesticks forming Tweezer Tops usually exhibit short upper shadows. This implies that the price attempts to move higher but encounters resistance, indicating a potential trend reversal. How to Trade Tweezer Tops You can find a Tweezer Top in forex, stock, commodity, and crypto* markets. When it comes to trading Tweezer Tops, traders may follow these rules: Identification: The first step is to correctly identify Tweezer Tops on price charts. Focus on spotting the twin peaks with nearly identical highs. Entry Strategies: Depending on your trading style, you may consider initiating short positions or closing long positions when Tweezer Tops are confirmed. The proximity to resistance levels can influence your entry decisions. Stop Loss and Take Profit: The pattern doesn’t provide precise stop-loss and take-profit targets. Traders usually set them based on their own risk-reward ratios and the current market conditions. Tweezer Bottom A Tweezer Bottom is a reversal candlestick pattern, forming at the end of a downtrend. It possesses distinct characteristics that make it easily recognisable: Dual Troughs: Tweezer Bottoms form with a bearish and a bullish candlestick, both featuring nearly identical or equal lows. This creates the visual impression of a pair of tweezers. Bullish Reversal: Tweezer Bottoms are primarily viewed as bullish reversal patterns. They typically appear at the end of a downtrend and signal a potential shift in market sentiment from bearish to bullish. Traders typically trade with Tweezer Bottoms in two ways, meaning they consider entering long positions or closing short positions. Short Lower Shadows: Both candlesticks forming Tweezer Bottoms usually have short lower shadows. This suggests that the price attempted to move lower but encountered support, indicating a potential trend reversal. How to Trade Tweezer Bottoms When trading Tweezer Bottoms, traders may follow these steps: Identification: Start by correctly identifying Tweezer Bottoms on price charts. Focus on recognising the twin troughs with nearly identical lows. Entry Strategies: Depending on your trading style, consider initiating long positions or closing short positions when Tweezer Bottoms are confirmed. Pay attention to proximity to support levels, as they can add validity to a trend reversal. Stop-Loss and Take-Profit: The pattern lacks specific stop-loss and take-profit targets. Typically, traders establish these levels by considering their individual risk-reward ratios and the prevailing market conditions. Confirming Tweezer Signals Confirming Tweezer patterns is essential to increase the reliability of your trading decisions. Here are several methods you may use to confirm Tweezer patterns: Candlestick Confirmation: Pay attention to the subsequent candlestick(s) after the Tweezer pattern. If the next candlestick confirms the reversal direction, it adds credibility to the Tweezer pattern. For example, if you have a Tweezer Top and the following candle(s) is bearish, it reinforces the bearish reversal signal. Trend Analysis: Consider the prevailing trend. Tweezer patterns carry more weight when they appear at key support or resistance levels. If a Tweezer Bottom forms at a strong support level during a downtrend, it suggests a potential reversal to an uptrend. Confirmation from Oscillators: You may use technical oscillators like the Relative Strength Index (RSI) or the Stochastic Oscillator to confirm Tweezer patterns. If these oscillators show overbought or oversold conditions in conjunction with a Tweezer pattern, it strengthens the signal. For example, if the RSI leaves the overbought area after the Tweezer Top is formed, it may confirm a trend reversal. Divergence in Momentum Indicators: Check for divergence in momentum indicators like the Moving Average Convergence Divergence (MACD) or the Commodity Channel Index (CCI). Divergence occurring with a Tweezer pattern may provide a strong confirmation. On the chart above, the price formed a Tweezer Bottom formation. A stop-loss order is just below the Tweezer Bottom pattern, and a take-profit target is at the subsequent resistance level. Limitations and Considerations While Tweezers can be valuable tools, it's essential to acknowledge their limitations and consider various market conditions where they may not be as effective. Additionally, combining Tweezers with other analysis methods may enhance the overall reliability of trading decisions. Limitations Tweezers as One Piece of the Puzzle: It's crucial to recognise that Tweezers are just one component of technical analysis. Relying solely on Tweezers can be limiting, as they may not always provide complete or accurate signals. Traders should avoid making decisions based solely on Tweezers and consider them within a broader context. False Signals: Tweezers, like any other candlestick pattern, can produce false signals. Not every Tweezer formation leads to a significant price reversal. Traders should exercise caution and use additional confirmation techniques. Lack of Precise Rules: Unlike chart patterns, candlesticks don’t provide precise entry and exit points. Therefore, it may be challenging to build a trading strategy. When Tweezers May Not Be as Effective Low Volatility Markets: In low volatility markets, Tweezers may have less significance. The absence of strong price movements can make it challenging to rely on Tweezers alone for trading decisions. Trend Continuation: Tweezers are primarily reversal patterns, so they may not be as effective during strong trending periods. Traders should be cautious when using Tweezers in situations where the trend is likely to continue. Takeaway While Tweezers can be a valuable part of technical analysis, traders should be aware of their limitations, consider market conditions, and use them in conjunction with other analysis methods for more informed and reliable trading decisions. If you want to trade Tweezer patterns in multiple markets, consider opening an FXOpen account and enjoy numerous technical analysis tools on the TickTrader platform. *At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules, respectively. They are not available for trading by Retail clients. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
BITSTAMP:BTCUSDEducation
by FXOpen
2
Trend Trading Strategy for the Heiken Ashi Algo v6Knowing when the RSI and price are in a ranging phase even in the short term can be a difficult process. You are either #Ranging #bullish or #bearish. At least in the Algo v6 you can get a clear vision of exactly whats happening. In this video im going to give you a VERY simple strategy on: 1. How to know if the RSI and price are ranging 2. When do i break away from Ranges 3. Am I trending 4. Im trending but whats my confluence to take a long or short 5. Is my range getting bigger or smaller Enjoy this quick vid and ask questions below. Thanks everyone.
Education
by CoffeeshopCrypto
4