Tag: Bearish

Categories
Forex Signals

EUR/GBP Continues its Bearish Move

 

EUR/GBP had a bearish day yesterday. The H1 chart shows that the pair made a bearish move to start its trading day and found its support at 0.89420. It produced a bullish inside bar and headed towards the North in search of its resistance. The level of 0.89560 worked as a level of resistance and produced a bearish candle with a tiny lower shadow. However, the candle closed with a long bearish body producing at the 61.8% Fibo level. Thus, the price may continue its bearish move towards support. If it makes a breakout at today’s low, then the sellers may go short and drive the price towards the downside. We have triggered a Sell Stop order at 0.89375.

Trade Summary:

Entry: 0.89375

Stop Loss: 0.89555

Take Profit: 0.89195

The risk for the trade per standard lot is $ 197.94, Mini lot $ 19.79 and Micro lot $1.97. The risk-reward is 1:1. Thus, the reward for per standard lot is $ 197.94, Mini lot $ 19.79 and Micro lot $1.97.

Categories
Forex Course

175. Understanding ‘Market Sentiment’ In The Forex Market

Introduction

Introduction

Introduction

By now, you have come across terms like bear markets, bull markets, and neutral markets. At their core, these terms represent market sentiment. In this lesson, we will learn about market sentiment in forex and what brings it about.

What Is Market Sentiment?

Forex traders execute their trades based on how they think the market will move. If you are a forex trader, for whatever your reasons, you must have thought at some point, “…I think the price for the GBP/USD will rise, let me go long on the pair.” This decision was your sentiment about that particular currency pair. By making that trade, you have expressed your sentiment about the currency pair.

However, not every other forex trader would have agreed with you that the price for the GBP/USD would rise. Some forex traders thought the pair would fall and go short. Hence, at any given moment, some traders will hold the assertion that a given currency pair will rise while others claim that the pair will drop. Therefore, at any given moment, there will always be traders favoring going either long or short. Those who are in the majority form the market sentiment.

Therefore, market sentiment is the overall belief of the majority of traders. In the forex market, the market sentiment is the dominant consensus by active traders about a particular currency.

Types of Forex Market Sentiment

Bullish market sentiment occurs when most traders believe that the price for a particular currency pair will rise, and they go long.

Bearish market sentiment occurs when more forex traders short a currency pair because they believe that the price will fall.

Neutral market sentiment occurs when an equal number of traders are going long and short on the same currency pair.

What brings about market sentiment in forex?

In the forex market, sentiments express the outlook of traders about a particular currency or currency pair. Thus, the two main drivers of market sentiment in the forex markets are geopolitical developments and fundamental economic indicators.

Geopolitics

Unexpected political events may impact the future of a country’s economic prospects. In the current climate, some of the significant geopolitical developments that affect market sentiment in forex include; Brexit, the Sino-American trade war, and the 2020 US presidential elections.

Let’s look at Brexit, for instance. In September 2020, there has been increased pessimism about Brexit negotiations with the UK threatening not to honor an earlier agreement with the EU. To forex traders, this increases the chance that the UK will not secure favorable trade deals and also ruin its reputation globally. Since this poses a risk for the UK economy, market sentiment was bearish on the GBP.

Fundamental Economic Indicators

These indicators show how the economy has fared. They show if the economic condition of a country has been growing, stagnating, or worsening. Forex traders base their market sentiments by making their judgments about the economy’s future, depending on how they interpret the publication of these indicators.

If an economic indicator, say unemployment rate, is better than what analysts predicted, it shows that the economy is expanding hence better prospects. When the fundamental indicators are positive, forex traders will adopt a bullish stance on that country’s currency. Conversely, negative fundamental data leads to a bearish sentiment on the currency.

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Categories
Forex Daily Topic Forex Price Action

How to Professionally Deal with Fake Breakouts!

In today’s lesson, we are going to demonstrate an example of an H4 breakout at the weekly low. The price consolidates after the breakout and produces a bearish reversal candle right at the breakout level. It is a matter of time for the sellers to go short and drives the price towards the South. Let us find out what actually happens.

In today’s lesson, we are going to demonstrate an example of an H4 breakout at the weekly low. The price consolidates after the breakout and produces a bearish reversal candle right at the breakout level. It is a matter of time for the sellers to go short and drives the price towards the South. Let us find out what actually happens.

In today’s lesson, we are going to demonstrate an example of an H4 breakout at the weekly low. The price consolidates after the breakout and produces a bearish reversal candle right at the breakout level. It is a matter of time for the sellers to go short and drives the price towards the South. Let us find out what actually happens.

The chart shows that the price makes a good bearish move. It finds its support where the pair is traded for a while. The pair closes its week by producing a bearish candle. By looking at the chart, it looks that the sellers are going to keep their eyes on the chart next week.

The pair produces a bullish engulfing candle to start its trading week. The buyers on the minor charts may push the price towards the North. However, the H4 chart is still bearish biased.

The chart shows that the price may have found its resistance. The price has been in consolidation for a while. The last candle comes out as a bearish engulfing candle. The price may make its move towards the South now.

The chart produces consecutive bearish candles and makes a breakout at the last week’s low. The pair is traded below the breakout level for two more candles as well. The sellers are to wait for the price to consolidate and produce a bearish reversal candle followed by a breakout at the consolidation support to go short in the pair.

The chart produces a bullish engulfing candle closing within the breakout level. The next candle comes out as a bearish inside bar. The sellers would love to get a bearish engulfing candle closing below the bullish candle’s low. However, a breakout at the consolidation support would signal the sellers to go short in the pair. By drawing Fibonacci levels on the chart with Fibonacci extension, we see that the price finds its support at the level of 38.2% and finds its resistance at the level of 23.6%. In a word, the stage is getting ready for the Bear to make a move.

The chart produces a bullish candle. It is not a good sign, but the sellers still have hope. If the chart produces a bearish reversal candle again followed by a breakout at the level of 38.2%, the game is on for the sellers.

Now, the chart produces another bullish candle and heads towards the North. The sellers must be very disappointed since it seemed such a nice trade setup for them. The reality is it often happens to all traders. No point in being disappointed, but it must be dealt with professionalism.

Categories
Forex Price Action

Weekly High/Low Breakout Trading: Importance of Candles’ Body before Making a Breakout

In today’s lesson, we are going to demonstrate an example of an H4 chart that seems promising to make a breakout at the last week’s low. It produces a strong bearish candle as well at last, but the price does not head towards the South. We try to find out the possible reason behind that. […]

In today’s lesson, we are going to demonstrate an example of an H4 chart that seems promising to make a breakout at the last week’s low. It produces a strong bearish candle as well at last, but the price does not head towards the South. We try to find out the possible reason behind that. […]

In today’s lesson, we are going to demonstrate an example of an H4 chart that seems promising to make a breakout at the last week’s low. It produces a strong bearish candle as well at last, but the price does not head towards the South. We try to find out the possible reason behind that.

It is an H4 chart. The chart shows that the price heads towards the South with good bearish momentum. The price bounces twice at a level of support. The pair closes its trading week by producing a bearish candle.

The pair starts its next week by producing a bullish engulfing candle. It means the breakout length gets bigger, which attracts the sellers more. The sellers are to wait for the price to make a bearish reversal candle followed by a breakout at the weekly low.

The price finds its resistance and produces two consecutive bearish candles. The sellers are to keep their eyes on the chart closely. It seems that the Bear is going to make a breakout soon. Let us proceed to the next chart to see what happens next.

The chart continues to produce bearish candles. However, it has not made a breakout at the weekly low yet. The last candle comes out as a spinning top closing within the weekly low.

The chart produces a spinning top followed by a bullish engulfing candle. The price then consolidates within the last week’s low and a new resistance. The last candle comes out as a bearish engulfing candle closing just below the weekly low. The question is whether it should be considered as a breakout. It is a breakout, but the H4 traders should skip taking entry on this chart based on a weekly high/low breakout. The reason behind that is the chart takes too long to make the breakout. Once the price starts trending, it must make a breakout without producing any reversal candle. It means if the chart produced the last candle right after the first spinning top; it would be a hunting ground for the sellers. Since it produces four bullish reversal candles before making the breakout, the chart does not belong to the H4 traders based on the weekly low anymore. We must not forget that it must consolidate after a breakout, though. It means it must produce bullish reversal candle/candles in case of a bearish breakout, but it must make a breakout only by producing bearish candles and vice versa.

Categories
Forex Price Action

Disobeying the Breakout

In today’s lesson, we will demonstrate an example of a chart that makes a breakout, consolidates, and produces a reversal candle. However, it does not make a breakout at consolidation support. Thus, it does not offer an entry. Nevertheless, it makes a move towards the breakout direction later. We try to find out whether breakout traders find an entry from that move or not.

In today’s lesson, we will demonstrate an example of a chart that makes a breakout, consolidates, and produces a reversal candle. However, it does not make a breakout at consolidation support. Thus, it does not offer an entry. Nevertheless, it makes a move towards the breakout direction later. We try to find out whether breakout traders find an entry from that move or not.

In today’s lesson, we will demonstrate an example of a chart that makes a breakout, consolidates, and produces a reversal candle. However, it does not make a breakout at consolidation support. Thus, it does not offer an entry. Nevertheless, it makes a move towards the breakout direction later. We try to find out whether breakout traders find an entry from that move or not.

The chart shows that the price makes a long bearish move. It finds its support where it bounces twice. The chart ends its trading week by producing a Doji candle. The next week should be interesting.

The chart produces a bullish engulfing candle. The buyers may wait for the price to make a breakout at the last swing high. On the other hand, the sellers are to wait for the price to make a breakout at the last week’s low.

The chart produces a spinning top, and the price heads towards the South. It makes a breakout at the last week’s low. Thus, the sellers may keep an eye on this chart for the price to consolidate and produces a bearish reversal candle to offer them a short entry.

It produces a bullish engulfing candle. It is a strong bullish candle. However, the breakout level is still intact. If the level produces a bearish reversal candle followed by a breakout at consolidation support, the Bear may keep dominating in the pair.

The chart produces a Doji candle followed by a spinning top right at the breakout level. The sellers may go short below consolidation support. It looks it is a matter of time for the Bear to make a long move towards the South.

The chart produces a bullish candle breaching the breakout level. It spoils the sellers’ party. The weekly low is disobeyed by the H4 chart. Thus, the H4 sellers may skip taking entry on this chart. The chart becomes no hunting zone for both the buyers and the sellers as far as the H4 chart is concerned. Let us proceed and find out what happens next.

The price makes a bearish move. The pair is trading below the last week’s low. Look at the momentum. The price has been rather sluggish to head towards the South. It is because the pair is traded on other minor charts. As mentioned, if the price disobeys breakout on a chart, it is better not to trade based on that chart. The price may go either way, which makes things difficult for the traders to trade.

Categories
Forex Daily Topic Forex Price Action

Fibonacci Extension: How It Helps Traders

In today’s lesson, we will demonstrate an example of an H4 chart that makes a breakout heading towards the North. However, the chart does not offer entry. We try to find out the reason behind it.

In today’s lesson, we will demonstrate an example of an H4 chart that makes a breakout heading towards the North. However, the chart does not offer entry. We try to find out the reason behind it.

In today’s lesson, we will demonstrate an example of an H4 chart that makes a breakout heading towards the North. However, the chart does not offer entry. We try to find out the reason behind it.

It is an H4 chart. The chart shows that the price makes a good bullish move. Thus, the weekly candle ends up being a bullish candle. Let us proceed to the next chart to see how the price starts next week.

The first candle comes out as a bearish engulfing candle. However, the support level where the price had a bounce and headed towards the North is intact. The buyers may eye on the chart for the price to have a bounce and make a bullish breakout at the weekly high.

The chart produces a bullish inside bar. The candle is produced right at the level of support. It is not a strong bullish reversal candle, but things look good for the buyers.

The chart produces three more bullish candles breaching the level of resistance. The buyers are to wait for the price to consolidate and produce a bullish reversal candle to offer them a long entry.

The price keeps heading towards the North without having consolidation. In naked eyes, it seems that the price has traveled a long way. If it consolidates now, should the buyers go long?

The chart produces a bearish candle. It means the price may consolidate now. The breakout level is far away. If the price makes a bearish correction up to the breakout level, it will come out as a long bearish wave. This often changes the trend or makes the price get choppy, at least. Let us draw a Fibonacci Extension and explain it with the Fibonacci levels.

We know when the price makes a breakout; Fibonacci Extension can be used to determine the wave’s length. The breakout length is measured at 23.6%. The best level for the price to consolidate within 23.6% to 38.2% or 38.2% to 50.0%. Over here, the price consolidates within 61.8% to 78.6%. It means the price does not have much space to travel. Thus, the buyers may skip taking entry on this chart as far as the risk-reward ratio is concerned. The price may go up to the level of 100.0%, but it often ends up being choppy or makes a reversal in such cases. This is when Fibonacci Extension comes out as a handy tool with what traders can determine the trend’s potential length and calculate whether they should take an entry or not.

Categories
Forex Price Action

Do Not Be Biased, Take Decisions According to the Chart

In today’s lesson, we are going to demonstrate an example of a chart that makes a good bullish move but ends up having a rejection at a double top resistance. The price then shows the potential to make a bullish breakout. However, it has another rejection around the last week’s high and makes a bearish breakout. It looks good for the sellers at the time. We find out what happens afterward.

In today’s lesson, we are going to demonstrate an example of a chart that makes a good bullish move but ends up having a rejection at a double top resistance. The price then shows the potential to make a bullish breakout. However, it has another rejection around the last week’s high and makes a bearish breakout. It looks good for the sellers at the time. We find out what happens afterward.

In today’s lesson, we are going to demonstrate an example of a chart that makes a good bullish move but ends up having a rejection at a double top resistance. The price then shows the potential to make a bullish breakout. However, it has another rejection around the last week’s high and makes a bearish breakout. It looks good for the sellers at the time. We find out what happens afterward.

This is the H4 chart. The price makes a long bullish move. It ranges for a while and then continues its bullish journey again. Look at the last candle on the chart. It comes out as a bearish inside bar. Do not miss the point that the candle is produced right at the resistance, where the price has had a rejection.

The chart produces a bullish candle to start the next week. It then ranges for a while and produces two bullish candles. It seems that the price may head towards the North and makes a bullish breakout at the last weekly high.

It does not. It rather finds its resistance around the same level. Moreover, it produces a bearish engulfing candle. To be more precise, the chart produces an evening star. It is a strong bearish reversal candle. Let us wait and see what the price does next.

The chart produces a long bearish candle breaching the last swing low. The breakout is significant since the price trends from the last weekly low. The sellers may keep their eyes in the pair to go short. Before going short on this chart, the sellers shall wait for the price to make a bullish retracement since the price is within the last weekly range. Keep that in mind that the price is to make a bullish correction to offer a short entry.

The price does not make a bullish correction. It rather consolidates and produces a bearish reversal candle. Since the price is within the last weekly range, so it is not a short signal.

Here it goes. The price gets choppy. This chart becomes a risky chart to trade. Thus, traders might as well skip eyeing on the chart to trade at. At first, it looks good for the buyers. Then, it shows potential for the Bear to dominate since the price has several rejections at the same level. However, it ends up being an extremely choppy chart.  Thus, do not be biased with your initial assumption. Wait for the breakout, confirmation, and then trade.

Categories
Forex Price Action

Some Moves do not Belong to the Chart that You Follow

In today’s lesson, we will demonstrate an example of a chart that makes a breakout at the last weekly low. The price then goes back within the last weekly range and makes an interesting move. We will find out what that interesting move is all about in a minute. Let us get started.

In today’s lesson, we will demonstrate an example of a chart that makes a breakout at the last weekly low. The price then goes back within the last weekly range and makes an interesting move. We will find out what that interesting move is all about in a minute. Let us get started.

In today’s lesson, we will demonstrate an example of a chart that makes a breakout at the last weekly low. The price then goes back within the last weekly range and makes an interesting move. We will find out what that interesting move is all about in a minute. Let us get started.

It is the H4 chart. The chart shows that the price makes a bearish move. It finds its support and trades around it for a while. The last candle of the week comes out as a Doji candle. The sellers may keep their eyes on the chart to get a bearish breakout and find short opportunities.

The first candle of the week comes out as a bearish candle. The price heads towards the level of support, and it produces a hammer. The price may roam around the level of support before making its next move. Let us proceed to find out what happens next.

The chart produces two bearish candles. One of the candles closes well below the level of support. The sellers may keep the chart on their watch list closely. They may wait for the price to consolidate and produce a bearish reversal candle to go short in the pair.

The chart produces four candles with a bullish body. The last candle comes out as a commanding bullish candle closing above the breakout level. If the chart still produces a bearish engulfing candle closing below the last swing low, the sellers may still go short in the pair. However, it does not look that good for the sellers.

As expected, the price heads towards the North further. One of the candles closes above the weekly opening as well. It means the H4 sellers may skip eyeing on the chart to go short. The chart does not belong to the H4 sellers anymore. The buyers may go long on the pair upon bearish retracement followed by a bullish reversal candle at the key level of support though. That is another ball game. Let us find out what the price does afterward.

What a strong bearish move that is! The price does not produce a bullish reversal candle. It makes a strong bearish move and makes a new swing low instead. However, the H4 sellers upon weekly high/low breakout may not be able to catch the move. The move belongs to other chart traders. Most probably, the sellers on the daily chart can catch such a move.

We often find such a move that may not offer entry on the chart that we follow. Do not get disappointed. Stick to your chart and trading strategies. Something must be round the corner for you.

Categories
Forex Daily Topic Forex Price Action

Weekly High/Low Breakout Trading: Count the Breakout Candle’s Attributes

In today’s lesson, we are going to demonstrate an example of an H4 breakout at the last week’s high. However, the price does not head towards the North as it usually does. Let’s find out why that happens.

In today’s lesson, we are going to demonstrate an example of an H4 breakout at the last week’s high. However, the price does not head towards the North as it usually does. Let’s find out why that happens.

In today’s lesson, we are going to demonstrate an example of an H4 breakout at the last week’s high. However, the price does not head towards the North as it usually does. Let’s find out why that happens.

The chart shows that the price after making a strong bearish move gets choppy. The H4 traders may wait for the price to make a breakout at either side. A bullish breakout may attract the buyers to go long in the pair. On the other hand, the sellers may wait for the price to make a bearish breakout.

The price produces a bearish candle to start the next week. The price finds its support, and it heads towards the North. However, the last weekly high is still intact. The buyers must wait for the breakout at the level to go long.

The price finds its intraweek resistance. It comes down. Intraweek support holds the price and produces a bullish inside bar. It is not a strong bullish reversal candle. However, it is produced at double bottom support. Let us wait and see whether it makes a breakout at the neckline or not.

The price heads towards the North and makes a breakout at the neckline. The candle closes within the last week’s high and consolidates. It then produces a bullish candle closing above the last week’s high. However, the candle has a long upper shadow. Considering its upper shadow, traders do not usually get attracted to trade upon such a breakout candle.

As anticipated, the chart produces some bullish candles with long upper shadow after the breakout. The price heads towards the North with a sluggish pace. It then produces a bearish Pin Bar and drives the price towards the breakout level again. A bullish reversal candle closing above consolidation resistance may attract the buyers to go long in the chart again. Let us find out what happens next.

The chart produces a long bearish candle with long lower shadow. The pair is trading within the last week’s range again. The H4 buyers have lost their hope. They may skip eying on the chart to concentrate on somewhere else.

If we look back, a double bottom, along with a breakout at the last week’s high, do not push the price towards the North. Most probably, this is because of the breakout candle’s attributes. We may still keep an eye on such a chart, but it would be wise to concentrate more on those charts, which makes a breakout with a commanding candle.

 

Categories
Forex Daily Topic Forex Price Action

Breakout at Weekly High/Low, Wait for Consolidation

In today’s lesson, we are going to demonstrate an example of an H4 breakout at the weekly low. The chart produces a strong bearish candle to make the breakout. The Bear looks good to make a strong move towards the South. However, the price does not head towards the downside. It rather gets choppy. Let us find out the reason behind it.

In today’s lesson, we are going to demonstrate an example of an H4 breakout at the weekly low. The chart produces a strong bearish candle to make the breakout. The Bear looks good to make a strong move towards the South. However, the price does not head towards the downside. It rather gets choppy. Let us find out the reason behind it.

In today’s lesson, we are going to demonstrate an example of an H4 breakout at the weekly low. The chart produces a strong bearish candle to make the breakout. The Bear looks good to make a strong move towards the South. However, the price does not head towards the downside. It rather gets choppy. Let us find out the reason behind it.

It is an H4 chart. The chart shows that the price makes a strong bearish move. It has a bounce at a level of support twice. If the price makes a breakout at the neckline, the buyers may look to go long in the pair upon bearish correction. On the other hand, the sellers may wait for the price to make a breakout at the week’s low to go short upon consolidation and getting a bearish reversal candle.

The chart produces a strong bearish candle breaching through the last week’s low. The breakout length is good as well. It means that the sellers may wait for the price to consolidate and to get a bearish reversal candle to go short in the pair. It seems that the sellers may dominate in the pair in this week as well.

The chart produces another bearish candle followed by a bullish engulfing candle. Producing a bullish engulfing candle to consolidate is not a good sign for the sellers. However, if the next candle comes out as a bearish engulfing candle closing below consolidation support, the sellers will be right on the track.

The chart does not produce a bearish engulfing candle. It rather produces another bullish candle. It seems that the price is having a bullish correction. When the H4 chart makes a breakout at the weekly low/high, the price is supposed to consolidate and produce a reversal candle to offer entry. If it makes a long bullish/bearish correction, it is assumed that the traders are not confident to take the price towards the trend. The chart shows that the price is obeying the level of support, where it has its first bounce.

The choppy price action continues. The H4 traders may wait for the price to make a breakout in the next week. The level of support becomes daily support now. Thus, weekly-H4 traders must wait to find the next direction.

We must remember when a pair trades within last week’s high and low, the price usually makes a correction. When it makes a breakout, it consolidates. If it takes too long or too many candles to make a breakout, traders may skip taking entry on that chart.

Categories
Forex Daily Topic Forex Price Action

Weekly High/Low Offers a Better Reward in the H4 Chart Trading

We are going to demonstrate an example of a trade setup on the H4 chart. The price, after breaches the last week’s low; it consolidates and produces a strong bearish reversal candle. It then heads towards the South with extreme bearish momentum. Let us find out how that happens.

We are going to demonstrate an example of a trade setup on the H4 chart. The price, after breaches the last week’s low; it consolidates and produces a strong bearish reversal candle. It then heads towards the South with extreme bearish momentum. Let us find out how that happens.

We are going to demonstrate an example of a trade setup on the H4 chart. The price, after breaches the last week’s low; it consolidates and produces a strong bearish reversal candle. It then heads towards the South with extreme bearish momentum. Let us find out how that happens.

It is an H4 chart. Look at the vertical line on the left. It is the beginning of the week. The chart shows that the price gets trapped within two horizontal levels. The pair is about to finish its trading week. The chart suggests that both the sellers and the buyers are going to keep their eyes on the chart next week to get the breakout and trade.

The pair produces two bullish candles consecutively to start its trading week. However, it produces a bearish engulfing candle and drives the price towards the South. Do you see anything here? Yes, the pair makes a breakout at the last week’s low. It means that the Bear may dominate on the H4 chart. Ideally, traders are to wait for the price to consolidate or make a bullish correction followed by a bearish breakout to go short in the pair.

The price consolidates. It produces some bearish reversal candles such as spinning top, hammer, Doji candle. However, it does not make a breakout at the last swing low. The sellers must wait for an H4 candle to close below consolidation support. Let us wait for more and see what the price does.

The chart produces a bearish engulfing candle closing well below consolidation support. The sellers may trigger a short entry right after the last candle closes. They may set their stop loss above consolidation resistance and set their take profit with 2R. This is the beauty of using weekly high/low and the H4 chart. It offers an excellent reward. Let us now proceed and find out how the entry goes.

The price heads towards the South with good bearish momentum. It produces three bullish inside bars in this move. The last candle comes out as a bullish engulfing candle. The sellers may consider closing their entry and come out with the profit. If we count, we find that the entry offers more than 2R reward. This is what usually happens when the price makes an H4 breakout at the last week’s high/low. Deep consolidation and a strong reversal candle add more fuel to its journey as usual. In our fore coming lessons, we will learn to integrate Fibonacci levels in this strategy to determine our target with better accuracy. Stay tuned.

Categories
Forex Daily Topic Forex Price Action

Double Top and Evening Star Drive the Price Far Down to Consolidate

In today’s lesson, we are going to demonstrate an example of a double top offering an entry, not right after the breakout. It rather offers an entry upon finding its resistance, which is well below the neckline level. Let us find out how that happens.

In today’s lesson, we are going to demonstrate an example of a double top offering an entry, not right after the breakout. It rather offers an entry upon finding its resistance, which is well below the neckline level. Let us find out how that happens.

In today’s lesson, we are going to demonstrate an example of a double top offering an entry, not right after the breakout. It rather offers an entry upon finding its resistance, which is well below the neckline level. Let us find out how that happens.

The chart shows that the price gets trapped within two horizontal levels. It produces a bearish engulfing candle but heads towards the North upon having a bounce at the level of support. The last candle comes out as a Doji candle around the resistance zone. Let us find out what happens next.

The chart produces a bearish engulfing candle closing well below the neckline. The chart produces an evening star to make the breakout. It suggests that the price may head towards the South with good bearish momentum.

The price heads towards the South with three more candles. However, the price does not consolidate around the neckline. Thus the sellers in the chart may find it difficult to go short in the pair. Let us wait and see whether it consolidates or not.

The chart produces two bullish corrective candles. If the price finds its resistance and produces a bearish reversal candle, the sellers may go short below the last swing low.

The chart produces a bearish engulfing candle closing well below the last swing low. The sellers may trigger a short entry right after the last candle closes by setting stop-loss above the candle’s highest high and by setting take profit with 1R.

The price travels a long way towards the South. The last candle comes out as a bullish inside bar. It is a weak bullish reversal candle. However, the way the price has been heading towards the South; it suggests that the price may continue its bearish move. However, many sellers may want to close their entries and come out with the profit after the last candle.

Usually, traders wait for the price to consolidate and produce a reversal candle at the breakout level. However, when a trend starts with a strong reversal pattern, such as the morning star/evening star, the price may not consolidate around the neckline level. Nevertheless, if the chart allows the price space to travel, traders may wait for the price to consolidate and to get a reversal candle to trade. This is what happens here. The price finds its resistance, not at the neckline but somewhere else, and produces a strong bearish engulfing candle offering an entry.

Categories
Forex Daily Topic Forex Price Action

Trendline Trading: A Trendline forming with a Tiny Slope

In today’s lesson, we are going to demonstrate the formation of a down-trending Trendline. A trendline can be formed with a double top or double bottom as well. However, double top’s resistance or double bottom’s support may not be horizontal. Let us find out how they may look in the chart.

In today’s lesson, we are going to demonstrate the formation of a down-trending Trendline. A trendline can be formed with a double top or double bottom as well. However, double top’s resistance or double bottom’s support may not be horizontal. Let us find out how they may look in the chart.

In today’s lesson, we are going to demonstrate the formation of a down-trending Trendline. A trendline can be formed with a double top or double bottom as well. However, double top’s resistance or double bottom’s support may not be horizontal. Let us find out how they may look in the chart.

The chart shows that the price heads towards the South with moderate bearish pressure. The last candle comes out as a bearish engulfing candle closing well below the last swing low. The sellers may wait for the price to consolidate or make a bullish correction to go short.

The chart produces two bullish candles. The price has a rejection from the zone where it had a rejection earlier. The last rejection does not come from horizontal support, but it looks adjacent to that. Thus, it can be considered as a double top’s resistance zone.

The price heads towards the South by making a breakout at the last swing low. It produces a bullish inside bar. If the chart produces a bearish reversal candle, the sellers may go short below the last swing low. Let us proceed to find out what happens next.

The price gets bearish by making a breakout at the last swing low. Look at the last three candles. The combination of these three candles is called Morning Star. It seems that the price may make a long bullish correction. Can you guess where the price may find its next resistance?

We can draw a down-trending trendline here by using those points of the double top. Look at the price action around the trendline’s resistance. The last candle comes out as a bullish candle with an upper shadow. A bearish reversal candle at the trendline’s resistance may drive the price towards the South again.

The trendline’s resistance produces a bearish engulfing candle. It has a long lower shadow, though. The sellers may go short below the last candle’s lowest low. Let us find out what the price does.

As expected, the price makes a strong bearish move and makes a new lower low. Thus, the sellers may wait again for the price to go towards the trendline’s resistance and get a bearish reversal candle to go short in the pair. In a word, a very valid trendline is in play in this chart. Do you remember how it has started? It has started from a point that does not seem to form a trendline. The slope has been tiny, making it difficult to spot out. However, the market often produces such a trendline with a tiny slope, which shall be taken into account by the trendline traders.

Categories
Forex Market Analysis

CAD/JPY: A massive round number holding the key

CAD/JPY produced a bullish inside bar yesterday. The price had a bounce at the same level earlier and made a bullish move. The daily chart suggests that the price has some space to travel towards the North. However, if a bullish inside bar is followed by a bearish engulfing candle, it ends up being prolific for the sellers. The H4 chart looks bullish. On the other hand, the H1 chart looks a bit bearish biased. Thus, traders are to be very watchful to trade in the pair. Let us now have a look at three vital charts.

CAD/JPY produced a bullish inside bar yesterday. The price had a bounce at the same level earlier and made a bullish move. The daily chart suggests that the price has some space to travel towards the North. However, if a bullish inside bar is followed by a bearish engulfing candle, it ends up being prolific for the sellers. The H4 chart looks bullish. On the other hand, the H1 chart looks a bit bearish biased. Thus, traders are to be very watchful to trade in the pair. Let us now have a look at three vital charts.

CAD/JPY produced a bullish inside bar yesterday. The price had a bounce at the same level earlier and made a bullish move. The daily chart suggests that the price has some space to travel towards the North. However, if a bullish inside bar is followed by a bearish engulfing candle, it ends up being prolific for the sellers. The H4 chart looks bullish. On the other hand, the H1 chart looks a bit bearish biased. Thus, traders are to be very watchful to trade in the pair. Let us now have a look at three vital charts.

Chart 1 CAD/JPY Daily Chart

The chart shows that it had a bounce at the level of 80.000 earlier. It is a massive round number. It pushed the price towards the North, and the price made a bearish move, closing within the level. Yesterday’s candle came out as a bullish inside bar. As far as the round numbered support is concerned, the price may make a bullish move. However, if the price gets bearish and ends up producing a bearish engulfing candle closing below 80.000, the sellers may go short in the pair aggressively and drive the price towards the level of 78.300. On the other hand, if the price gets bullish, it may find its next resistance around 81.400.

Chart 2 CAD/JPY H4 Chart

The chart shows that the price upon having a bounce at the level of 80.800 produced a spinning top and headed towards the North. It made a bullish breakout at the level of 80.600. The pair had a rejection at 80.800. It has been in a bearish correction. The level of 80.600 may work as a level of support. If the level ends up producing a bullish reversal candle, the buyers may go long above the level of 80.800. The price may find its next resistance around 81.400.

Chart 3 CAD/JPY H1 Chart

The price had a rejection at the level of 80.800 twice. It produced a bearish engulfing candle. The pair is trading around the neckline at 80.640. A bearish reversal candle may attract the sellers to go short in the pair and drive the price towards the South. The price may find its next support around 80.150. On the other hand, the buyers are to wait to go long above the level of 80.800.

The H1 chart looks bearish biased. However, the daily and the H4 chart look bullish. Considering these three charts, it seems that the pair may end up having another bullish day.

Categories
Forex Daily Topic Forex Price Action

Trendline Trading: How a Trend upon a Trendline Run Longer

In today’s lesson, we are going to demonstrate an example of a chart that made a long bearish move obeying a bearish trendline. The price after forming a bearish trendline does not offer entry to the sellers. It makes a breakout at the first trendline and then produces another bearish trendline ending up offering short entries. Let us now have a look at the chart and find out how it happens.

In today’s lesson, we are going to demonstrate an example of a chart that made a long bearish move obeying a bearish trendline. The price after forming a bearish trendline does not offer entry to the sellers. It makes a breakout at the first trendline and then produces another bearish trendline ending up offering short entries. Let us now have a look at the chart and find out how it happens.

In today’s lesson, we are going to demonstrate an example of a chart that made a long bearish move obeying a bearish trendline. The price after forming a bearish trendline does not offer entry to the sellers. It makes a breakout at the first trendline and then produces another bearish trendline ending up offering short entries. Let us now have a look at the chart and find out how it happens.

The chart shows that it makes two swing lows trending from two swing highs. By joining those points, we can draw a trendline shown in the above chart. The sellers may wait for the price to go back at the trendline’s resistance and produce a bearish reversal candle to go short in the pair. However, the price action has been choppy around the trendline’s resistance. The last candle comes out as a bullish engulfing candle. It does not look good for the sellers.

The price makes a breakout at the trendline’s resistance. It heads towards the North and then makes a strong bearish move. Such price action may puzzle traders. Do you notice something interesting here? Have a look at the next chart.

The sellers may draw another bearish trendline by joining two swing lows. As long as the price makes new lower lows, we can draw a bearish trend line by joining two higher highs. We know what sellers are to do here. Yes, they are to wait for the price to go back to the trendline’s resistance and produce a bearish reversal candle to go short in the pair.

The chart produces a bearish inside bar. It is not a strong reversal candle. However, it is produced at a trendline’s resistance. The sellers may keep their eyes in the pair to go short according to their trading strategies. The price may find its next support at the last swing low. The chart shows that the price has enough space to travel towards the South.

The price heads towards the South at a moderate pace. It makes a long bearish wave, though, by making a breakout at the horizontal support. In the end, it comes out as an excellent trade for the sellers.

If we recap, the first drawn trendline is disobeyed by the price. It is breached, and the chart looks slightly bullish biased. It does not make any more bullish breakout but makes a long bearish move by making a breakout at the last swing low. It gives the sellers an opportunity to draw another bearish trendline, and that ends up offering an excellent entry.

Categories
Forex Price Action

Equidistant Channel: An Excellent Price Action Trading Tool

In today’s lesson, we are going to demonstrate a trade setup with Equidistant Channel. Price action traders rely on Equidistant Channel a lot. It is one of the best price action trading tools. However, Forex traders’ life is not as easy as it seems. Like other trading tools, Equidistant Channel needs adjustment. To be able to do that traders need enough knowledge and experience. Let us now proceed to find out what a trader may need to do to make it work for him.

In today’s lesson, we are going to demonstrate a trade setup with Equidistant Channel. Price action traders rely on Equidistant Channel a lot. It is one of the best price action trading tools. However, Forex traders’ life is not as easy as it seems. Like other trading tools, Equidistant Channel needs adjustment. To be able to do that traders need enough knowledge and experience. Let us now proceed to find out what a trader may need to do to make it work for him.

In today’s lesson, we are going to demonstrate a trade setup with Equidistant Channel. Price action traders rely on Equidistant Channel a lot. It is one of the best price action trading tools. However, Forex traders’ life is not as easy as it seems. Like other trading tools, Equidistant Channel needs adjustment. To be able to do that traders need enough knowledge and experience. Let us now proceed to find out what a trader may need to do to make it work for him.

To draw the equidistant channel, we need to find out at least four points. Two swing highs and two swing lows are the best combinations. It works with three swing highs and one swing low or vice versa. In the chart above, we have two swing highs and two swing lows. In naked eyes, it seems that we will be able to draw an equidistant channel here.

We have drawn an equidistant channel. The price is now at the resistance. Some traders go long from here. Ideally, to get a good risk-reward, traders should wait for the price to go at the level of resistance and produce a bearish reversal candle to go short in the pair. Let us find out what happens next.

The chart does not produce a bearish reversal candle. It breaches the level instead. It means this is not a valid equidistant channel anymore. The sellers must be disappointed. What do you think is there any twist in the tail?

The chart makes the new lowest low. It gives three swing highs and one swing low. It means we can draw another equidistant channel. Look at the above chart where the price getting a bounce at the level of support. The price again heads towards the North. Traders may wait for the price to get a rejection at the level of resistance and produce a bearish reversal candle to go short in the pair again.

Here it comes. The level of resistance produces a bearish engulfing candle right at the level of resistance. Traders may trigger a short entry right after the last candle closes. To set take profit, they may use the level of equidistant support. The price often keeps going down with a down-trending equidistant channel. However, the best practice is closing down the trade at the first bounce in case of down-trending equidistant channel trading. Let us find out how the trade goes.

The price hits take profit level like a rocket. Some may regret that they should hold the position and close it manually. Do not forget the rule of sticking with the rule in forex trading. We have seen that the chart does not produce a signal on the first occasion. It rather breaches and lets traders draw another equidistant channel. Yes, it does offer an excellent entry for the sellers too.

Categories
Forex Daily Topic Forex Fibonacci

Intraday Trading: How Fibonacci Levels Help You Determine Entry and Take-Profit Levels

In today’s lesson, we are going to learn an intraday trading strategy using the previous day’s highest high or lowest low. When the price makes a breakout at yesterday’s highest high or lowest low, the price usually trends towards the breakout direction. In today’s lesson, we are going to demonstrate an example of a bearish breakout. After making a bearish breakout at the previous day’s lowest low, the price consolidates and produces a bearish engulfing candle at a significant Fibonacci level. Then, it heads towards the South with good bearish momentum. We try to find out the Fibonacci level where the price trends from as well as the take profit level where the price may make a reversal. Let us proceed.

In today’s lesson, we are going to learn an intraday trading strategy using the previous day’s highest high or lowest low. When the price makes a breakout at yesterday’s highest high or lowest low, the price usually trends towards the breakout direction. In today’s lesson, we are going to demonstrate an example of a bearish breakout. After making a bearish breakout at the previous day’s lowest low, the price consolidates and produces a bearish engulfing candle at a significant Fibonacci level. Then, it heads towards the South with good bearish momentum. We try to find out the Fibonacci level where the price trends from as well as the take profit level where the price may make a reversal. Let us proceed.

In today’s lesson, we are going to learn an intraday trading strategy using the previous day’s highest high or lowest low. When the price makes a breakout at yesterday’s highest high or lowest low, the price usually trends towards the breakout direction. In today’s lesson, we are going to demonstrate an example of a bearish breakout. After making a bearish breakout at the previous day’s lowest low, the price consolidates and produces a bearish engulfing candle at a significant Fibonacci level. Then, it heads towards the South with good bearish momentum. We try to find out the Fibonacci level where the price trends from as well as the take profit level where the price may make a reversal. Let us proceed.

This is an H1 chart. The chart shows that the price makes a bearish move by producing an ABC pattern. The last candle closes the trading session at the lowest low of the day. The next chart shows that the price consolidates around the lowest low of the previous trading day and makes a good bearish move.

The chart suggests that it becomes intraday sellers’ territory. The sellers may look to go short in the pair. The question is how and when. Let us find these two answers.

The last candle comes out as a bullish candle. Since the chart has been bearish, the sellers may wait for the chart to produce a bearish reversal candle to go short below consolidation support. Here is another equation that they must consider. We will find that out in a minute.

The chart produces a bearish engulfing candle. The sellers may trigger a short entry right after the last candle closes. A question may be raised here that the chart produces a bearish engulfing candle earlier right at the breakout level. We have not concentrated on that to go short from there. However, we have planned to go short right after the last candle closes. What are the reasons behind this? Let us find out how the price reacts after the last candle is produced.

The price heads towards the South with good bearish momentum. The chart produces a bullish reversal candle. It may change its trend or make a bullish correction, at least. For intraday traders, they cannot afford to wait as many pips by waiting to get a bullish reversal candle. They are to close the trade right after the last bearish candle. The question is, how would they know that they should set their take profit at that level?

The answer is Fibonacci levels. Do you remember I was talking about the level for the price to resume its bearish move, we find that out by Fibonacci levels as well. See, the chart produces a bearish engulfing candle at the level of 61.8%, and it hits 161.8%. These are two levels intraday traders must count when a pair trades below the previous day’s lowest low or vice versa. Stay tuned for more lessons for intraday trading with Fibonacci levels.

Categories
Forex Daily Topic Forex Price Action

It Often Makes You Wait Longer Than You Want

In today’s lesson, we are going to demonstrate an example of a daily-H4 chart combination entry. The daily char produces a bearish engulfing candle at a significant level of resistance. It makes the daily-H4 chart combination traders flip over to the H4 chart to look for a potential entry. The H4 chart shows that the chart creates a double top. Simply, an ideal combination for the traders to go short on that chart. However, things do not go as smoothly as traders expect it to go in the Forex market. Let us find out what happens.

In today’s lesson, we are going to demonstrate an example of a daily-H4 chart combination entry. The daily char produces a bearish engulfing candle at a significant level of resistance. It makes the daily-H4 chart combination traders flip over to the H4 chart to look for a potential entry. The H4 chart shows that the chart creates a double top. Simply, an ideal combination for the traders to go short on that chart. However, things do not go as smoothly as traders expect it to go in the Forex market. Let us find out what happens.

In today’s lesson, we are going to demonstrate an example of a daily-H4 chart combination entry. The daily char produces a bearish engulfing candle at a significant level of resistance. It makes the daily-H4 chart combination traders flip over to the H4 chart to look for a potential entry. The H4 chart shows that the chart creates a double top. Simply, an ideal combination for the traders to go short on that chart. However, things do not go as smoothly as traders expect it to go in the Forex market. Let us find out what happens.

This is the daily chart. The chart shows that the price, after being bullish, has a rejection at the level of resistance marked with the red line. The price comes down and makes a bullish move again. If it makes a breakout, the buyers may push the price further up. On the other hand, sellers are to wait for the price to produce a bearish reversal candle to consider short opportunities. Let us find out what happens next.

The chart produces a bearish engulfing candle. Since it shows in the daily chart, the combination traders may flip over to the H4 chart to look for a short opportunity. A double top resistance and a bearish engulfing candle suggest the sellers may jump in here to drive the price towards the South further.

It is the H4 chart. The chart produces a double top and makes a breakout at the neckline. The combination traders are to wait for the price to consolidate and produce a bearish reversal candle to go short below consolidation support. The price consolidates here. However, considering consolidation length, it is better to skip such entry.

The price heads towards the South with extreme bearish pressure. It travels a long way to produce a bullish reversal candle. The sellers would love to get the reversal candle earlier though. Anyway, it is better late than never.

The chart produces a bearish engulfing candle closing well below consolidation support. The sellers may trigger a short entry right after the last candle closes by setting stop-loss above consolidation resistance with 1R.

The price heads towards the South with good bearish momentum and hits the target. It seems that the price may travel towards the South further. The point to be noticed here is that the chart consolidates after traveling a long way. It would give a better reward if it consolidated and produced the signal candle earlier. It makes the sellers wait for more as well. In the end, the sellers make a profit out of it but think how hard they are to concentrate on it to make it work for them.Traders’ life is not as easy as some people may think.

Categories
Forex Daily Topic Forex Price Action

Even a Fragile Breakout Makes the Price Move

In today’s lesson, we are going to demonstrate an example of a chart producing a double top and offering entry. The breakout does not look that promising though. However, the price heads towards the breakout direction and makes a long bearish move. Let us get started.

In today’s lesson, we are going to demonstrate an example of a chart producing a double top and offering entry. The breakout does not look that promising though. However, the price heads towards the breakout direction and makes a long bearish move. Let us get started.

In today’s lesson, we are going to demonstrate an example of a chart producing a double top and offering entry. The breakout does not look that promising though. However, the price heads towards the breakout direction and makes a long bearish move. Let us get started.

The chart shows that the price has a rejection at a level and makes a bearish move. Upon finding its support, it produces a bullish engulfing candle and heads towards the North. The chart produces a bearish inside bar around the level of double top resistance. It may attract the sellers to keep their eyes on the chart to go short upon a neckline breakout.

The price heads towards the South with good bearish momentum. The last candle comes out as a bullish inside bar. It is a sign that the chart may get choppy instead of making a breakout at the neckline. However, we never know. The sellers may keep patience and wait for a bearish breakout.

The price consolidates for a while and makes a bearish move. The last candle closes below the neckline. It is a kind of breakout that the sellers are waiting for, but it is a breakout. Let us wait and see what the price does here.

The chart produces a spinning top. The candle closes within the breakout level. Thus, it is a valid breakout. The sellers may wait for the chart to produce a bearish engulfing candle closing well below the last swing low. Let us proceed to the next chart.

Look at the last candle. The candle comes out as a bearish engulfing candle closing well below the last swing low. The sellers may trigger a short entry right after the last candle closes by setting stop-loss above the breakout level and take profit with 1R.

The price heads towards the South with excellent bearish momentum. It hits the target of 1R in a hurry too. This means the trade setup has worked for the sellers nicely. Considering the breakout factor, the trade setup is not an A+ trade setup. However, we may consider two important factors here.

  1. Double Top
  2. The signal candle.

These two factors are significant to make the price move. Yes, when an A+ momentum breakout goes with two of them, it gives us more chances to make a profit out of the trade. Today’s example shows that as long as it’s a breakout, upon the breakout confirmation, the price may head towards the trend direction with good momentum if the mentioned two factors meet all the requirements.

 

Categories
Forex Fibonacci

Fibonacci Levels: How Much Does 50% Level Influence the Market?

In today’s lesson, we are going to demonstrate an example of a chart, in which the price makes a reversal from 50% Fibonacci level. We know if the price makes a reversal from 61.8%, it usually goes up to 161.8%; if it makes a reversal from 38.2%, it goes up to 138.2%. In both cases, traders get good risk-reward. Do you ever wonder what happens if the price makes a reversal from 50%? Let us find this out through an example.

In today’s lesson, we are going to demonstrate an example of a chart, in which the price makes a reversal from 50% Fibonacci level. We know if the price makes a reversal from 61.8%, it usually goes up to 161.8%; if it makes a reversal from 38.2%, it goes up to 138.2%. In both cases, traders get good risk-reward. Do you ever wonder what happens if the price makes a reversal from 50%? Let us find this out through an example.

In today’s lesson, we are going to demonstrate an example of a chart, in which the price makes a reversal from 50% Fibonacci level. We know if the price makes a reversal from 61.8%, it usually goes up to 161.8%; if it makes a reversal from 38.2%, it goes up to 138.2%. In both cases, traders get good risk-reward. Do you ever wonder what happens if the price makes a reversal from 50%? Let us find this out through an example.

The chart shows that the price heads towards the South with good bearish momentum. It produces two bullish candles and heads towards the South. Look at the last candle. It comes out as a bullish inside bar. It makes a bullish correction. However, the sellers may wait for a bearish engulfing candle to go short in the pair.

The price has been in a bullish correction. It produces some bearish reversal candles, but it does not create any bearish momentum. The last candle comes out with a little bullish body having a long upper shadow. Let us proceed to the next chart to find out what happens next.

The last candle comes out as a bearish engulfing candle. It is a strong sign that the price may head towards the South again. The sellers may flip over to the minor chart to trigger entry.

The price heads towards the South with extreme bearish pressure. The last candle comes out as a bearish Marubozu candle. It seems that the price may continue its bearish journey towards the South further. Let us find out what actually happens.

It does not continue its bearish journey. It finds its support. Upon producing a hammer, it heads towards the North with one more bullish candle. It seems that it may continue its bearish journey considering bearish engulfing candle as a reversal candle. Next, two candles come out as strong bearish candles too. What may be the reason that the price makes a bullish reversal here? Let us find this out with Fibonacci levels.

If we calculate, we find that the price makes a bearish reversal from Fibonacci 50% level. It then heads towards the South with extreme bearish momentum. However, it finds its support at the Fibonacci 100.00 level. Usually, this is what happens when the price trends from the 50% level. A question may be raised here whether we should take entry if the price trends from the 50% Fibo level. It depends on risk-reward. If it offers a good reward, then we may take an entry. In most cases, it does not offer a good reward; thus, we may skip taking those entries.

 

Categories
Forex Price Action

Price Action Trading: Factors that you should Remember

In today’s lesson, we are going to demonstrate an example of a chart offering an entry upon producing a bullish reversal candle followed by a breakout. The chart produces a bullish reversal candle earlier too, but that did not make the price move towards the North. We’ll try to find out why it does not head towards the North at its first attempt. Let us get started.

In today’s lesson, we are going to demonstrate an example of a chart offering an entry upon producing a bullish reversal candle followed by a breakout. The chart produces a bullish reversal candle earlier too, but that did not make the price move towards the North. We’ll try to find out why it does not head towards the North at its first attempt. Let us get started.

In today’s lesson, we are going to demonstrate an example of a chart offering an entry upon producing a bullish reversal candle followed by a breakout. The chart produces a bullish reversal candle earlier too, but that did not make the price move towards the North. We’ll try to find out why it does not head towards the North at its first attempt. Let us get started.

The chart shows that the price heads towards the North upon producing an ABC pattern. We may notice that we have four significant points here, such A, B, C, and D. The price most likely reacts at these levels again. Let us proceed to the next chart.

The price heads towards the South at a moderate pace. The last candle comes out as a bearish Marubozu candle. It seems that the price may remain bearish for a while. Let us proceed to the next chart to find out what happens next.

The chart produces an inverted hammer. It is a sign of a bullish reversal. However, considering point B, the price makes a bearish breakout at the level. Thus, the pair may continue its bearish move. The sellers may look for short opportunities in the minor chart.

The next candle does not make a bearish breakout. It comes out as a bullish candle. The last candle comes out as a Doji candle. Ideally, neither the bull nor the bear dominates in the pair. The sellers are to wait for the price to make a breakout at the last swing low. The buyers are to wait for the price to make a bullish reversal candle closing above consolidation resistance. Let us see what the price does.

The price comes down. It produces a bullish engulfing candle. Some sellers may have to encounter a loss here. Upon creating the bullish engulfing candle, the price heads towards the North with good bullish momentum. Now a few questions may be raised here.

  1. Why does the price not head towards the North but comes down?
  2. Why does the price not continue its bearish move but produces a bullish engulfing candle?
  3. Why does not price head towards the North at its second attempt?

 

Have a look at the chart below with some drawings in it.

At its first attempt, the price does not make a breakout at the level of resistance drawn. The price reacts at this level several times. Thus, this is a crucial level, which is to be counted by the buyers before taking long entries. The price finds its resistance here and makes a bearish move. It finds its support at the drawn line, where the price reacts to it earlier as well. The reversal candle comes out as a Doji candle, and the chart takes four candles to make the breakout. This is one of the reasons that the price does not continue its bearish move.

At its last attempt, it produces a bullish engulfing candle, the candle is produced at a key level, the price makes a breakout at the last swing low, and the breakout candle comes out as a strong bullish candle. These factors attract more buyers and make the price move towards the North with good bullish momentum. We need to remember such factors every time we take entries as far as price action trading is concerned.

Categories
Forex Chart Basics

How to Guess Support/Resistance Level Well Ahead?

In today’s example, we are going to demonstrate an example of a fundamental character of support/resistance. We know the importance of support/resistance in trading. Thus, if we get a clue about spotting support/resistance well ahead, it comes out handy. Let us find out whether it is possible or not.

In today’s example, we are going to demonstrate an example of a fundamental character of support/resistance. We know the importance of support/resistance in trading. Thus, if we get a clue about spotting support/resistance well ahead, it comes out handy. Let us find out whether it is possible or not.

In today’s example, we are going to demonstrate an example of a fundamental character of support/resistance. We know the importance of support/resistance in trading. Thus, if we get a clue about spotting support/resistance well ahead, it comes out handy. Let us find out whether it is possible or not.

This is a daily chart. The chart shows that the price heads towards the North with good bullish momentum. It makes bearish correction and keeps resuming its bullish journey. With naked eyes, we see that the price finds its support at three points. Let us investigate the chart with some drawings on it.

We have spotted out three points where the price gets rejection twice. When the price makes a bullish move, at its second wave, it finds its support at the third arrowed point. It works with a simple equation. Can you guess what that is?

Let us draw a line. We see that the price gets rejection at the same level twice. It means it is a level of resistance when the price is bearish. The price breaches the level later and finds its support at the same level. It produces a bullish reversal candle and heads towards the North. Once the price makes a bullish breakout, the buyers shall wait for the price to make a bearish correction. If the level produces a bullish reversal candle, the pair may head towards the North by offering a long entry. This is what happens here. Let us see the same chart by zooming out.

This is the same chart. We have spotted out two significant points and spotted them with two arrows. I assume this time you guess what I am going to say. Yes, the price makes a bullish breakout and finds its support at the breakout level. This is the level, which is a level of resistance in this chart. Since it gets broken and the chart produces a bullish reversal candle, the buyers may go long in the pair again. Let us draw a line here.

See how the price reacts here. Upon producing a Morning Star, the price heads towards the North with good bullish momentum. The price makes even a stronger move this time.

The plan of a buyer should be eyeing on the level to get a bullish reversal candle where the price finds its resistance when it is bearish and vice versa. This makes traders’ life easy, and in the end, it helps them make a better trading decision.

Categories
Forex Price Action

Do Not Abandon a Chart with Choppy Price Action

In today’s lesson, we are going to demonstrate an example of a chart where the price gets caught within two horizontal levels and makes a bullish breakout. We try to find out what it has to offer and how the price action goes. Let us get started.

In today’s lesson, we are going to demonstrate an example of a chart where the price gets caught within two horizontal levels and makes a bullish breakout. We try to find out what it has to offer and how the price action goes. Let us get started.

In today’s lesson, we are going to demonstrate an example of a chart where the price gets caught within two horizontal levels and makes a bullish breakout. We try to find out what it has to offer and how the price action goes. Let us get started.

The price makes a strong bullish move. Upon finding its resistance, it is in a bearish correction. The buyers may eagerly wait to go long in a chart like this if the chart makes a breakout at the last highest high. The last two candles come out as bullish candles. It seems that the price may have found its support.

The chart shows that two lines may be drawn by using significant levels, where the price reacts several times. The buyers may eye on the price and hope that the chart makes a breakout at the level of resistance to offer them a long entry.

The chart shows that it does not make a breakout at the highest high. However, it gets rejection and makes another bearish move towards the level of support. Here is an interesting thing. The sellers may wait for the chart to make a breakout and offer them a short entry here since the level is a double top resistance.

The chart does not make a breakout, but it produces a long bullish engulfing candle. It gets rejected again and heads towards the South. Upon having a bounce, it heads towards the North. Two horizontal levels may be drawn, which is called horizontal channel or box channel. The price may go either way. Now, the buyers are to wait for a bullish breakout and go long in the pair.

After a long while, the chart makes a bullish breakout. The buyers may wait for the price to make a correction/consolidate and produce a bullish reversal candle to offer them a long entry.

The price makes a bearish correction and seems to have found its support. It produces a doji candle. The buyers may get ready to trigger a long entry. Some buyers may flip over to the smaller chart to trigger a long entry, and some may go long above the last highest high. Some may wait for a bullish engulfing candle closing above resistance. It depends on their trading strategy.

The chart produces a bullish engulfing candle closing above consolidation resistance. The price may head towards the North with good bullish momentum as far as the last candle’s attributes are concerned.

The price heads towards the North and hits 1R within the next candle. The last candle comes out as a bearish inside bar. It suggests that the price may consolidate and make a bearish correction. In the end, the buyers have made some green pips.

The market ranges most of the time. When it makes a breakout, it does not take too long to offer an entry. In today’s lesson, we have seen that the price makes us wait for a long. It takes a long time to make a breakout. Traders must keep their eyes on such charts and wait for the price to take a direction. In the end, even a choppy chart may end up offering a good entry too.

Categories
Forex Daily Topic Forex Price Action

Evaluate Whether the Chart Belongs to Your Strategy or Not?

In today’s lesson, we are going to demonstrate an example of an H1 chart, where the price makes a bearish breakout and produces a bearish reversal candle upon making a bullish correction. However, things do not go as the sellers would like. Let us find out what happens and what the reason may imply.

In today’s lesson, we are going to demonstrate an example of an H1 chart, where the price makes a bearish breakout and produces a bearish reversal candle upon making a bullish correction. However, things do not go as the sellers would like. Let us find out what happens and what the reason may imply.

In today’s lesson, we are going to demonstrate an example of an H1 chart, where the price makes a bearish breakout and produces a bearish reversal candle upon making a bullish correction. However, things do not go as the sellers would like. Let us find out what happens and what the reason may imply.

The chart shows that the price produces two bearish candles consecutively. The level of support seems to be a strong one. It may produce a bullish reversal candle and push the price towards the North. However, the sellers may wait for the price to make a bearish breakout at the level of support.

Here it comes. The next candle breaches the level of support closing well below the level. This is one good-looking breakout candle. The sellers are to wait for the price to consolidate or make a bullish correction to produce a short signal.

The price makes a bullish correction. The last candle closes within the breakout level. Please pay attention to the number of candles the chart uses to make the bullish correction. The chart takes five candles to complete the correction. It means the level of support has become H4 support. Let us proceed to the next chart.

The chart produces a bearish inside bar. This is a bearish reversal candle, of course. However, the question may be raised here whether the sellers take a short entry depending on the H1 chart or not? Let us assume that a seller triggers a short entry by setting stop-loss above the breakout level.

The next candle comes out as a bearish candle. However, the last candle comes out as a bullish engulfing candle. The level is H4 support now. Thus, the buyers may look to go long in the pair and drive the price towards the North. It does not look good for the seller. The price may hit stop loss.

The next candle comes out as a strong bullish candle closing well above the breakout level. The short entry has been wiped off. If we consider the sequence bearish breakout, bullish correction, bearish reversal candle at the breakout level, it seems perfect to go short in the pair. What goes wrong here? In the Forex market, any entry may go wrong. However, over here, the H1 sellers may miss the point that the support is not H1 support anymore. It is H4 support since the level of support holds five candles. This is why the H1 traders may skip taking the short entry in this chart. It often happens in combination trading that traders forget to calculate or synchronize the chart that they are trading at. However, to be successful in trading, traders must not miss this point.

Categories
Forex Daily Topic Forex Price Action

The H1-15M Charts Combination Trading: Watch Out for Signal Candle’s Attributes

Reversal candle’s attributes play a significant role in driving the price towards the trend. An Inside Bar is considered to be the weakest reversal candlestick. However, in combination trading, even an Inside Bar may create good momentum as a reversal candle. In today’s lesson, we are going to demonstrate an example of that.

Reversal candle’s attributes play a significant role in driving the price towards the trend. An Inside Bar is considered to be the weakest reversal candlestick. However, in combination trading, even an Inside Bar may create good momentum as a reversal candle. In today’s lesson, we are going to demonstrate an example of that.

Reversal candle’s attributes play a significant role in driving the price towards the trend. An Inside Bar is considered to be the weakest reversal candlestick. However, in combination trading, even an Inside Bar may create good momentum as a reversal candle. In today’s lesson, we are going to demonstrate an example of that.

This is an H1 chart. The chart shows that the price heads towards the South with good bearish momentum. The price has a bounce at a level of support and makes a bullish correction. The sellers are to wait for a bearish breakout at the lowest low of the wave.

The chart produces a bearish reversal candle that comes out as a bearish engulfing candle. The last candle comes out as a bearish candle as well. However, it has a long lower shadow.

The chart makes a breakout at the lowest low of the wave. The last candle comes out as a bullish engulfing candle, which is a strong bullish reversal candle. However, the sellers may still keep their hope. If the breakout level produces a bearish reversal candle, they are right on the track.

This is what the H1-15M combination traders are waiting for. It produces a bearish reversal candle. Now they have to wait for a 15 M bearish candle to go short in the pair. It is time for the combination traders to flip over to the 15M chart.

This is how the 15M chart looks. The sellers are to wait for the price to produce a bearish candle closing below the last 15M candle. Let us wait and see what the price does. Let us proceed to the next chart.

The last candle comes out as a bearish candle without having any lower shadow.

The sellers would love to see a candle like this every time as a signal candle.  The combination traders may trigger a short entry right after the last candle closes. Let us find out how the entry goes.

This is the H1 chart again. The price heads towards the South with extreme bearish momentum. The last candle comes out as a doji candle. The price hits 1R within two candles. Those who love letting their winners run, they may close their entry right after the last candle closes.

If we notice, the bearish reversal candle at the breakout level comes out as an Inside Bar. However, it creates a strong bearish momentum. It is because the 15M signal candle comes out as a strong bearish continuation candle. Thus, combination traders may focus more on the signal candle. Signal candle’s attributes are more important than the reversal candle’s attributes as far as chart combination trading is concerned.

 

Categories
Forex Price Action

One Minute Down, Next Minute Up

The Double Bottom is one of the strongest bullish reversal patterns. When the price gets its second bounce at the same level and makes a breakout at the last swing high, the pattern it produces is called the double bottom. In today’s lesson, we are going to demonstrate an example of a double bottom in the H1 chart. At the end of the wave, an interesting thing happens. Let us proceed and find out how the double bottom offers entry and what that interesting thing is.

The Double Bottom is one of the strongest bullish reversal patterns. When the price gets its second bounce at the same level and makes a breakout at the last swing high, the pattern it produces is called the double bottom. In today’s lesson, we are going to demonstrate an example of a double bottom in the H1 chart. At the end of the wave, an interesting thing happens. Let us proceed and find out how the double bottom offers entry and what that interesting thing is.

The Double Bottom is one of the strongest bullish reversal patterns. When the price gets its second bounce at the same level and makes a breakout at the last swing high, the pattern it produces is called the double bottom. In today’s lesson, we are going to demonstrate an example of a double bottom in the H1 chart. At the end of the wave, an interesting thing happens. Let us proceed and find out how the double bottom offers entry and what that interesting thing is.

This is an H1 chart. The chart shows that the price has its second bounce and produces a bullish engulfing candle. Since the same level of support produces a bullish engulfing candle at the second bounce, it is going to have a strong impact on the market if it makes a breakout at the last swing high.

Here is the level of resistance, which the buyers are going to wait for a breakout to go long in the pair upon breakout confirmation. The price reacted at the drawn level earlier as well. Thus, this has been a significant level. The last rejection signifies it more.

Look at the next candle. The candle comes out as a bullish Marubozu candle. The candle closes well above the level where the price had a rejection earlier. Some buyers may want to trigger a long entry right after the last candle closes. Some buyers may wait for the breakout confirmation to go long in the pair.

The next candle comes out as a spinning top with a tiny bullish body. The price closes above the last candle’s highest high. It confirms the breakout. The buyers may trigger a long entry right after the last candle closes since they have the breakout confirmation.

See how the price heads towards the North with good bullish momentum. The price hits 1R within one candle. The last candle suggests that the price may continue its move towards the North. Let us see what happens next.

The chart produces a bearish inside bar. It suggests that the price is still bullish. If the next candle comes out as a bullish engulfing candle, the price may resume its journey towards the North with good bullish momentum. However, many buyers may come out with their profit and wait for the next bullish reversal candle to go long.

The price gets choppy within two horizontal levels. The last candle comes out as a bearish engulfing candle. Do you notice anything interesting here? Yes, the chart produces a Double Top this time, and it produces a bearish engulfing candle at the second rejection. The sellers may want to go short if the price makes a breakout at the last lowest low. This is how things change in the Forex market. It is interesting, is not it?

Categories
Forex Course

134. Knowing the State of the Market

Introduction

Introduction

Introduction

Many newcomers and novice traders believe that the market moves in a random direction. They think it is all about the fundamental factors that keep the market going. In reality, the market does move based on fundamental factors, but it doesn’t imply that the prices move in random directions. The prices on the charts move in a specific direction as they are nothing but the past transactions of the big institutional players.

Charts tell a lot about the market environment. It clearly determines who is in control of the market – the buyer or the sellers. Based on this, there are three states of the market:

  • Trend
  • Range
  • Channel

Broadly speaking, in any market, be it Stock, commodity, currency, or cryptocurrency, the prices move only these three states. Let us understand each of them.

Of course, there are several types of chart patterns, but they all fall in one of the types on a bigger picture. All technical traders must have an understanding of the market environment. Whatever be the strategy, it will work applied in the right state of the market. Also, every type of market has its own concepts to trade.

Trend

The most evident type of market is a trending market. At the same time, it is one of the most confusing states to understand. A trending market is a type where the prices make Higher High & Higher Low sequences or Lower Low & Lower High sequences. In other words, in a trending market, the prices make a Higher High / Lower Low, retrace to the Support & Resistance, and continue with the same pattern.

A trending market is a type that can be found in any type of market. That is, even in ranges and channels, trends can be spotted (in a miniature picture).

Based on the direction of the market, we can divide trends into two types –

Uptrend (Bullish) – A market that faces upwards is an uptrend. The price makes Higher Highs and Higher Lows. It is a market where the buyers (bulls) are in control of the market. Note that a Higher High alone cannot be regarded as an uptrend.

Downtrend (Bearish) – A market whose trajectory is downwards is referred to as a downtrend. The price moves by making Lower Lows and Lower Highs. In this market, the sellers (bears) dominate the market.

Range

A ranging market is a type where the price does not create Higher Highs of Lower Lows. Thus, it moves sideways. There is a certain price shoots up and a price where it drops. It moves within these two prices. In this market, both buyers and sellers are strong. For example, if we say the market is ranging between 0.1200 and 0.2400, it means that the buyers are pushing up the market to 0.2400 from 0.1200, while the sellers are hitting it right back down to 0.1200.

Channel

A channel is basically a tilted channel. In other sense, a channel is a trend that is quite weak. In a channel, the price does try to make a Higher Highs or Lower Lows but retraces deeply before going for the next set. In a trend, the market respects the Support & Resistance, but the channel does not.

We hope you were able to get a gist on the states of the market. In the coming article, we shall elaborate on each of the types and understand how to trade them.

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Categories
Forex Price Action

Make Full Use of a Strong Reversal Candle

An engulfing candle makes a strong statement about the price reversal. The longer the body, the stronger the statement is. In today’s article, we are going to demonstrate an example of the daily-H4 chart combination trading, where the daily chart produces a bearish engulfing candle with a long bearish body. We find out what it has to offer to the sellers in the end.

An engulfing candle makes a strong statement about the price reversal. The longer the body, the stronger the statement is. In today’s article, we are going to demonstrate an example of the daily-H4 chart combination trading, where the daily chart produces a bearish engulfing candle with a long bearish body. We find out what it has to offer to the sellers in the end.

An engulfing candle makes a strong statement about the price reversal. The longer the body, the stronger the statement is. In today’s article, we are going to demonstrate an example of the daily-H4 chart combination trading, where the daily chart produces a bearish engulfing candle with a long bearish body. We find out what it has to offer to the sellers in the end.

The chart shows that the price produces a bearish engulfing candle having a tiny lower spike. The body of the candle is a long one closing well below the last bullish candle. This is one good-looking bearish engulfing candle. Since it is the daily chart, the daily-H4 chart combination traders may flip over to the H4 chart to look for short entries.

The above figure shows the H4 chart. We can see that the last candle comes out as a bullish inside bar. It means the price in the H4 chart may consolidate. The sellers are going to wait to get a bearish reversal candle to go short in the pair.

The last candle comes out as a bearish engulfing candle closing well below consolidation support. The sellers may trigger a short entry right after the last candle closes by setting stop-loss above consolidation resistance and by setting take profit with 1R. Let us now find out how the entry goes.

The next two candles come out as bearish candles. However, the price does not head towards the South as expected. Moreover, the last candle comes out as a doji candle having a long upper shadow. The sellers are to wait for the price to hit the target. The last candle does not convey a good message to the sellers.

Here it comes. The last candle hits the target of 1R. The reversal candle in the daily chart is a very strong one. Do the sellers get anything extra out of it? Let us proceed to the next chart to see what the price does in the chart.

The price makes a long bearish move. It heads towards the South upon having consolidation. The sellers can make a handful of pips by eying in the chart. One of the reasons may be the bearish reversal candle in the daily chart. As far as a candlestick pattern is concerned, an engulfing candle is the most reliable reversal pattern. When you get an engulfing candle like the one we have seen here, it does have a lot to offer. Okay, here is a question. What do you see in the H4 chart here? Yes, the last candle comes out as a strong bullish engulfing candle. This has a lot to offer to the H4-H1 chart combination traders. Therefore, if you are an H4-H1 combination trader, flip over to the H1 chart and make full use of it.

Categories
Forex Price Action

H1-15M Chart Combination Trading: Mind the Weekend

In today’s lesson, we are going to demonstrate an example of H1-15M chart combination trading. Usually, the H1-15M chart combination trading offers 1:2 risk-reward. However, in this example, the buyers may need to come out with their profit with 1:1 risk-reward. We find out why they shall do that so.

In today’s lesson, we are going to demonstrate an example of H1-15M chart combination trading. Usually, the H1-15M chart combination trading offers 1:2 risk-reward. However, in this example, the buyers may need to come out with their profit with 1:1 risk-reward. We find out why they shall do that so.

In today’s lesson, we are going to demonstrate an example of H1-15M chart combination trading. Usually, the H1-15M chart combination trading offers 1:2 risk-reward. However, in this example, the buyers may need to come out with their profit with 1:1 risk-reward. We find out why they shall do that so.

This is the H1 chart. The price heads towards the North with good bullish momentum. The price breaches the last swing high and continues its journey towards the North upon confirming the breakout. Look at the last candle. It comes out as a strong bearish candle. The buyers are to keep their eyes on the pair to get a bullish reversal candle to go long.

The price makes a long bearish correction. Look at the last candle in the chart. It comes out as a bullish candle. The combination of the previous three candles is not a morning star since the last candle does not close above the bearish candle. Nevertheless, the last candle comes out as a bullish engulfing candle. It is a strong bullish reversal candle. It is time for the buyers to flip over to the 15M chart.

This is how the 15M chart looks like. A bullish candle closing above the last candle’s body would be a good signal to go long in the pair. The buyers must keep their eyes in the chart. Let us proceed to the next chart to find out how it comes out.

Look at the last candle. This is one beautiful bullish engulfing candle closing well above the last candle’s wick. A signal candle like this attracts more buyers and usually brings good liquidity. The H1-15 chart combination traders may trigger a long entry right after the last candle closes by setting stop loss below the support level and by setting take profit with 2R. Let us now flip over to the H1 chart again to see how the trade goes.

The price heads towards the North with good bullish momentum. It hits 1R in a hurry. The last candle comes out as an inside bar, which is the weakest bearish reversal candle. In most cases, H1-15 chart combination trading offers 1:2 risk-reward. The question is whether the buyers keep holding the trade or not. I may mention that it is Friday and only three/four hours to go to shut down the market. I think now you know what buyers should do here. Yes, they should close the trade and come out with the 1R profit. The H1-15M chart combination traders should not keep holding their trade during the weekend. In some cases, it may bring them some extra pips. However, in many cases, it may hurt them badly.

 

Categories
Forex Price Action

Chart Combination Trading: Even an Inside Bar Has a Lot to Offer

An Inside Bar is considered the weakest reversal candle as far as candlestick trading is concerned. However, in today’s article, we find out the significance of a daily Inside Bar in the daily-H4 chart combination trading. Let us get started.

An Inside Bar is considered the weakest reversal candle as far as candlestick trading is concerned. However, in today’s article, we find out the significance of a daily Inside Bar in the daily-H4 chart combination trading. Let us get started.

An Inside Bar is considered the weakest reversal candle as far as candlestick trading is concerned. However, in today’s article, we find out the significance of a daily Inside Bar in the daily-H4 chart combination trading. Let us get started.

This is the daily chart. The chart shows that the last candle comes out as a bearish Inside Bar. The daily chart traders may still think that the chart is bullish biased. However, the daily-H4 chart combination traders are to flip over to the H4 chart and look for short entries since it is a bearish reversal candle after all.

The H4 chart looks to be tailor-made for the sellers. The chart produces a double top, and the price breaches the neckline. The last candle comes out as a doji candle. The price may consolidate now.

The chart produces another bearish candle closing within the same resistance. Then, it creates a bullish engulfing candle. Let us draw two lines here. The level of support looks very evident. However, the level of resistance still has a lot to prove.

The level of resistance produces a bearish reversal candle. To be precise, it creates a bearish engulfing candle, closing below the level of resistance. The sellers may trigger entry right after the last candle closes by setting stop-loss above the level of resistance and by setting take profit with 1R.

The price heads towards the South in the next candle as well. It seems that the sellers may not have to wait too long to achieve their target. Let us proceed to the following chart to find out how it goes.

As expected, the next candle comes out as another bearish candle. This time it has even a longer body. Look at the last candle. The candle comes out as a bullish inside bar. Technically, the chart is still bearish biased. Do not forget that for the H4-H1 chart combination trading, they may have to flip over to the H1 chart to go long in the pair. This is what we have just demonstrated in the daily-H4 chart combination trading.

To sum up the lesson, an Inside Bar may not be a strong reversal signal in the chart. For the chart combination traders, it is a bit different. As long as it is a reversal candle does not matter how weak it is. The combination traders may flip over to the counterpart and wait for consolidation and a signal candle to trigger entry.

Categories
Forex Daily Topic Forex Price Action

The Levels You Need to Pay Extra Attention

Support and Resistance are the two key factors of Forex trading. The good thing is in most cases time these levels can be guessed well earlier. By drawing support/resistance levels where the price reacts earlier,   we can spot those levels. This helps a trader set his stop loss, take profit and make a trading decision. […]

Support and Resistance are the two key factors of Forex trading. The good thing is in most cases time these levels can be guessed well earlier. By drawing support/resistance levels where the price reacts earlier,   we can spot those levels. This helps a trader set his stop loss, take profit and make a trading decision. […]

Support and Resistance are the two key factors of Forex trading. The good thing is in most cases time these levels can be guessed well earlier. By drawing support/resistance levels where the price reacts earlier,   we can spot those levels. This helps a trader set his stop loss, take profit and make a trading decision. In today’s lesson, we are going to demonstrate an example of how the previous levels where the price reacts earlier play a significant part as far as support/resistance is concerned.

Look at the chart carefully. The price makes a strong bearish move and makes an upside correction. The chart produces a spinning top followed by a bearish engulfing candle. If we consider the existent trend and candlestick pattern, it is a short signal. The question is whether it really is a short signal or not. Look at the next chart.

At the correction, one of the candles breaches through a level. This level was a level of support earlier. After being bearish, the level should work as a level of resistance. It does not. The price breaches through the level. In fact, it may work as a level of support again. If it produces a bullish reversal candle, the buyers are going to take control here.

The level seems to hold the price as a level of support. It produces two a bullish pin bar and a doji candle. If it produces a bullish engulfing candle here, the price may get bullish and head towards the North.

The chart produces a bullish engulfing candle closing well above the wave’s highest high. Let us calculate whether the buyers should go long here or not. The price makes a bullish move breaching a significant level. The price makes a bearish correction and the breakout level works as a level of support. As far as price action trading is concerned, traders may trigger a long entry right after the last candle closes.

As expected, the price heads towards the North with good bullish momentum. It gets the buyers 1R already. The last candle comes out as a bearish inside bar. The price may reverse now. However, there is still a 40% possibility that the price continues its bullish move. Let us assume that the buyers close the trade and cash in some profit.

If we consider the whole scenario, the market seems bearish in naked eyes. When we draw the significant level, it gives us a clearer picture of the breakout and correction. We, then realize that the market is actually bullish. A long entry at the pullback gets the buyers some green pips. This is what Support and Resistance (significant levels) do.

Categories
Forex Price Action

The H4-Daily Combination Strategy: Do not Get Carried Away

In today’s lesson, we are going to demonstrate an example of an H4-daily chart combination trading. The lesson has an important message to remember for the H4-Daily combination traders. Let us get started. The chart shows that the price produces a double top and heads towards the South with good bearish momentum. The daily candle […]

In today’s lesson, we are going to demonstrate an example of an H4-daily chart combination trading. The lesson has an important message to remember for the H4-Daily combination traders. Let us get started. The chart shows that the price produces a double top and heads towards the South with good bearish momentum. The daily candle […]

In today’s lesson, we are going to demonstrate an example of an H4-daily chart combination trading. The lesson has an important message to remember for the H4-Daily combination traders. Let us get started.

The chart shows that the price produces a double top and heads towards the South with good bearish momentum. The daily candle closes as a bearish Marubozu candle having no lower shadow at all. The next trading day starts with a Spinning Top. It seems that the H4 chart starts having consolidation. The last H4 candle comes out as a bullish engulfing candle. This looks good for the sellers that the price is having consolidation after making a good bearish move. However, the H4-Daily combination traders must not forget one thing that the signal is to be produced within the next two candles. Otherwise, it becomes daily support.

The fifth H4 candle of the day comes out as a bearish engulfing candle. The candle closes well below consolidation support. The sellers may trigger a short entry right after the last candle closes by setting stop-loss above consolidation resistance and by setting take profit with 1R.

The next candle comes out as a bullish inside bar after triggering the entry. The sellers would love to get a long bearish candle here. However, a bullish inside bar suggests that the bear still holds the key. Let us proceed to the next chart.

The next candle comes out as a bearish engulfing candle. This looks extremely good for the sellers now. The price finds another resistance. This attracts sellers to add more short positions. Anyway, the H4-Daily combination traders are to wait for the price to hit their 1R take profit.

The price takes two more candles to hit the target. I would say that the price hits the target at a moderate pace here. Anyway, the H4-Daily combination strategy offers entry, and the trade setup works well for the sellers.

The message this lesson has is that we must not get carried away with bullish or bearish move followed by consolidation. The H4 chart is to produce a trade signal within the next day. If it does not, that chart does not belong to the H4-Daily combination trading strategy.  If it does, then the H4-Daily combination traders may trigger an entry.

Categories
Forex Fibonacci

How to Use Fibonacci Levels in the H1-15M Combination Trading

In today’s lesson, we are going to demonstrate an example of an H1 chart offering an entry. We find out how Fibonacci levels and 15-min chart help us take the entry. Let us get started.

In today’s lesson, we are going to demonstrate an example of an H1 chart offering an entry. We find out how Fibonacci levels and 15-min chart help us take the entry. Let us get started.

In today’s lesson, we are going to demonstrate an example of an H1 chart offering an entry. We find out how Fibonacci levels and 15-min chart help us take the entry. Let us get started.

This is an H1 chart. The chart shows that the price after making a strong bearish move has been making an upward correction. The chart produces a Shooting Star and creates a bearish momentum. However, the sellers are to wait for the chart to make a breakout at the lowest low of the wave. Let us proceed to the next chart to find out what the price does next.

The price keeps driving towards the South and makes a breakout at the lowest low. The breakout candle has a long lower shadow, but it closes well below the level of support. The H1-15M combination traders may flip over to the 15M chart now.

This is how the 15M chart looks. The last candle comes out as a bullish candle. The sellers are to wait for a bearish reversal candle to go short in the pair. They must concentrate hard on the chart. It is waiting time for the sellers.

The 15M chart produces a bearish reversal candle. The candle has a long lower shadow but has a thick bearish body. Moreover, the H1 chart makes a breakout, so a 15M bearish reversal candle means a lot to the sellers. The sellers may trigger a short entry right after the last candle closes. There is another equation, which we will reveal in a minute. Let’s now find out how the trade goes.

The price heads towards the South with good bearish momentum. The 15M chart shows that it consolidates now and then. The H1 chart should look much more bearish than this. Ok, here is the equation we have pointed out a bit earlier. Let us draw Fibonacci levels and find out how it may help us set our stop-loss and take-profit levels.

The Fibonacci levels show that the price trends from the level of 61.8%. It makes a breakout at the level of 100.0 and heads towards the level of 161.8. When the price trends from 61.8%, it creates an extra momentum. This is what this example shows, as well. With Fibonacci, we know where to set the take-profit level. Yes, it is to be at 161.8%. With stop-loss, you may set it above 61.8% if you are too defensive a trader. If you want to be too tight with your stop loss, you may set it between 78.6% to 100.0%. The first one offers less risk-reward, but it has a higher winning percentage. On the other hand, the second one offers excellent risk-reward but has less winning percentage. The choice is yours.

Categories
Forex Daily Topic Forex Price Action

Double Top-Engulfing Combination and Trade Management

In today’s lesson, we are going to demonstrate an example of daily-H4-combination trading. The trade setup starts with a double top, and the trend-initiating candle comes out as a bearish engulfing candle. The price consolidates and produces another bearish engulfing candle closing below consolidation support. We find out what happens next and how we may manage the trade to get the best result out of it.

In today’s lesson, we are going to demonstrate an example of daily-H4-combination trading. The trade setup starts with a double top, and the trend-initiating candle comes out as a bearish engulfing candle. The price consolidates and produces another bearish engulfing candle closing below consolidation support. We find out what happens next and how we may manage the trade to get the best result out of it.

In today’s lesson, we are going to demonstrate an example of daily-H4-combination trading. The trade setup starts with a double top, and the trend-initiating candle comes out as a bearish engulfing candle. The price consolidates and produces another bearish engulfing candle closing below consolidation support. We find out what happens next and how we may manage the trade to get the best result out of it.

This is an H4 chart. The chart shows that the price produces a double top. At the second rejection, the reversal candle comes out as a bearish engulfing candle and drives the price towards the South with good bearish momentum. Upon finding its support, it consolidates for a while and produces another bearish engulfing candle. We know what the daily-H4 combination traders are to do here.

The daily-H4 combination traders may trigger a short entry right after the last candle closes by setting stop-loss above consolidation resistance and by setting take profit with 1R. Let us proceed to the next chart to find out what the price does after triggering the entry.

The next candle comes out as a bearish candle as well. It looks good for the sellers. It seems the price may not take too long to hit the target of 1R. Let us proceed to the next chart.

It does not look good for the sellers now. The last candle comes out as a bullish engulfing candle. It suggests that the price may get bullish and hit the stop loss. Since this is an H4 chart, traders are to manage their trades according to the candlestick. The entry is carrying a loss now. Traders have three options here.

  1. They may close the whole entry
  2. They may let the whole trade run
  3. They may close 50% of the entry

It depends on an individual trader how he likes to manage his trades. Some traders may want to keep the whole trade, and some may want to close the whole trade. There is a saying that cut your losses short and let your profit run. Thus, we may manage the trade by closing half of it and let the rest of it run. This is how we earn or lose 50% of the initial target. Let us see how it goes now.

The chart produces a spinning top and heads towards the downside. The last candle comes out a hammer, but it hits the target of 1R. This means the trade setup brings profit for the sellers. It may have gone another way round. Thus, in such a situation, taking out half of the trade offers us less profit but less loss as well in the end. It does not always happen. However, when it does, we may consider managing the trade by doing it so.

Categories
Forex Daily Topic Forex Price Action

The H1-15M Combination Trading in a Bearish Market

In today’s lesson, we are going to demonstrate an example of the H1-15M combination trading strategy offering a short entry. In one of our previous lessons, we demonstrated an example of a long entry. Let us see how it ends up offering us the entry.

In today’s lesson, we are going to demonstrate an example of the H1-15M combination trading strategy offering a short entry. In one of our previous lessons, we demonstrated an example of a long entry. Let us see how it ends up offering us the entry.

In today’s lesson, we are going to demonstrate an example of the H1-15M combination trading strategy offering a short entry. In one of our previous lessons, we demonstrated an example of a long entry. Let us see how it ends up offering us the entry.

This is an H1 chart. The chart shows that the price gets caught within two horizontal levels. The chart shows that the price after getting the last rejection has been heading towards the South. The sellers are to wait for a bearish breakout to go short in the pair.

Here it comes. The last candle breaches the level of support closing well below it. The H1-15M combination traders may flip over to the 15M chart to get a bearish reversal candle for triggering a short entry. Let us flip over to the 15M chart.

This is how the 15M chart looks. As expected, the last candle comes out as a bearish candle. If the next 15M candle comes out as a bearish candle closing below the last candle, the sellers may trigger a short entry. If the chart consolidates, the sellers are to wait for a 15M bearish reversal candle to take the entry. Let us find out what happens here.

The chart produces a bullish corrective candle. The sellers are to wait for a bearish reversal candle to go short in the pair. Usually, if the price makes a correction, it goes towards the breakout level and produces a reversal candle there. Let us find out where it produces a bearish reversal candle for the sellers.

The chart produces a bearish engulfing candle closing below consolidation support. The sellers may trigger a short entry right after the last candle closes. Stop Loss and Take Profit are to be set according to the H1 chart. Stop Loss is to be set above H1 horizontal resistance before the breakout, and Take Profit is to be set with 1R. Let us now find out how the entry goes.

This is the H1 chart. We see that the price heads towards the South with good bearish momentum and hits the target of 1R with ease. After producing the 15M bearish reversal candle, the price never looks back but goes towards the trend’s direction. This is what usually happens in the H1-15M combination trading. The price heads towards the trend’s direction without wasting time.

Do a lot of backtesting in your trading chart to find out some entries based on the H1-15M chart. Then, do some demo trading with the strategy before going live. It will help you be a better trader.

 

Categories
Forex Daily Topic Forex Price Action

When a Double Top and an Engulfing Candle Comes Together

In today’s lesson, we are going to demonstrate an example of a chart where the price heads towards the downside upon making a double top. At the second rejection, the chart produces a bearish engulfing candle. Usually, a combination of these two does not usually go wrong. The price does not make a deep consolidation afterward. However, it still heads towards the South with good bearish momentum. Let us have a look at how it happens.

In today’s lesson, we are going to demonstrate an example of a chart where the price heads towards the downside upon making a double top. At the second rejection, the chart produces a bearish engulfing candle. Usually, a combination of these two does not usually go wrong. The price does not make a deep consolidation afterward. However, it still heads towards the South with good bearish momentum. Let us have a look at how it happens.

In today’s lesson, we are going to demonstrate an example of a chart where the price heads towards the downside upon making a double top. At the second rejection, the chart produces a bearish engulfing candle. Usually, a combination of these two does not usually go wrong. The price does not make a deep consolidation afterward. However, it still heads towards the South with good bearish momentum. Let us have a look at how it happens.

This is a daily chart. The chart shows that the last candle comes out as a Shooting Star. The daily –H4 combination traders may consider it as a bearish reversal candle and flip over to the H4 chart.

The H4 chart shows that the price produces a double top. At the second bounce, the reversal candle comes out as a bearish engulfing candle. This combination may attract the sellers to look for short entries upon consolidation and getting bearish reversal candle.

The chart produces a bullish candle. It finds its resistance and produces a bearish engulfing candle closing below consolidation support. The sellers may trigger a short entry right after the last candle closes by setting stop-loss above consolidation resistance and take profit with 1R. Here is an equation that we may think about that. The price does not make a deep consolidation. Since the price is bearish upon a double top and an engulfing candle, most probably, it will make a strong bearish move. However, if you are in doubt, leave it out. Let us proceed to the next chart to find out what happens.

The next candle comes out as a doji candle. The price heads towards the Stop Loss, but it does not hit, though. It looks good for the sellers since the candle closes below the breakout level. Let us proceed to the next chart to find out what the price does.

The chart produces a long bearish candle and hits the target of 1R. Shallow consolidation may hold the price back a little to hit the target in a hurry. However, in the end, the sellers make some green pips with a combination of a Double Top and an Engulfing candle.

This trade setup does not meet all the requirements for combination breakout trading. The trend starts from a Double top resistance along with a bearish engulfing candle; it continues its bearish journey with more candles even after a shallow consolidation. This is what a combination of a Double Top/Bottom along with an engulfing candle can do. Thus, be keen on a chart if a trend starts with a combination of these two.

Categories
Forex Basic Strategies

Profiting From The Rounding Top & Rounding Bottom Forex Pattern.

Introduction

Introduction

Introduction

The Rounding Top and Rounding Bottom are two of the most famous trend reversal patterns in the Forex trading industry. These patterns are mostly used to catch the end of a trend in both bullish and bearish markets. These patterns are extremely reliable as they are back-tested rigorously by a number of professional technical traders. Learning the trading of these patterns introduces us to a lot of trading opportunities while riding a brand new trend. Always remember that the Rounding top pattern appears at the top of an uptrend, and the Rounding Bottom pattern appears at the bottom of a downtrend.

Rounding Top

The Rounding Top pattern appears to be in the form of an inverted ‘U’ shape. Hence it is also referred to as an ‘Inverse Saucer.’ This pattern resembles the Double Top chart pattern but a bit more complex than that. Most of the time, the Rounding Top appears at the major resistance level on a price chart. This pattern has three major components – A rounding shape where the price action fails to print a higher high, a taper off, and the beginning of the lower trend.

Rounding Bottom 

The Rounding Bottom is a bearish reversal chart pattern, and it appears at the end of a downtrend, indicating a long term reversal in the price action. This pattern resembles the Cup and Handle pattern, but it doesn’t go through the temporary downward trend of the handle portion. This pattern can be found at the major support area in any trading timeframe. Just like the Rounding Top, this pattern also has three major components –  The Rounding Shape, where the price action fails to print a brand new lower low, taper off, and the beginning of an uptrend.

Trading The Rounding Top Pattern

The below CAD/CHF charts represents the formation of a Rounding Top pattern in this Forex pair.

We had decided to go short as soon as the pattern is confirmed when the price reached the neckline. The bear candles on the price chart were stronger than the bull candles indicating the gaining strength of sellers in the market. The sell trade is activated when the price goes below the neckline. Stop-loss is placed just above the region where the pattern is formed.

After activating the trade, price action didn’t blast to the south immediately. Instead, it pulled back to buy-side, before eventually going down. In this kind of situation, most of the traders doubt their strategy and exit their positions because of fear. But since our analysis is strong enough, it is a good idea to hold our positions and wait for the price to move in our direction.

Trading The Rounding Bottom Pattern

The below EUR/USD, 240 Minutes chart, represents the formation of the Rounding Bottom pattern on the price chart. We can see the market being in a downtrend when the Rounding Bottom pattern is formed. This is a clear indication for us to understand that the bears are losing momentum, and bulls are about to take over the market. We took a buy-entry when the price went above the neckline. The take-profit was placed at the higher timeframe’s significant resistance area.

Rounding Top Pattern + RSI Indicator

In this strategy, we have paired the Rounding Top pattern with the RSI indicator to identify accurate trading signals. As we all know, the RSI is a momentum indicator that measures the magnitude of the price change. RSI stands for Relative Strength Index, and it is developed, J. Welles Welder.

This indicator oscillates between the 0 and 100 levels. When RSI reaches the 70 level, it indicates overbought market conditions, and we must expect a downside reversal. Likewise, when it reaches the 30 level, it indicates the oversold conditions, and we must expect a buy-side reversal.

The strategy is simple –  Identify the Rounding Top pattern and see if the price action is going below the neckline. If yes, check where the RSI indicator is. If it is in the overbought area, it is a clear indication for us to go short.

The below price chart represents the formation of the Rounding Top pattern on the EUR/CHF Forex pair.

In the below chart, we can see the price going below the neckline. At the same time, RSI gave a reversal at the overbought area, indicating us to go short in this pair. We have activated the trade at the neckline, and the stop-loss placement was above the most recent higher low. We had closed our positions when the price action started to struggle at the Bottom.

Rounding Bottom Pattern + RSI Indicator

The below chart represents the formation of the Rounding Bottom pattern on the NZD/CAD Forex pair.

We had gone long when the price broke the neckline, and the RSI gave a reversal at the oversold area. As you can see in the chart below, right after our buy activation, the price smoothly blasted to the north. We booked our whole profits when the price reached a significant resistance area. Stop-loss was just below our entry as the neckline acts as a strong support to the price action.

Conclusion

The Rounding Top and Bottom are bullish and bearish reversal patterns that are used to identify the end of an ongoing trend. You need to know that you must wait for the breakout of the neckline to take long or short positions according to the pattern formed. The stop-loss can be placed above the neckline when trading the Rounding Top and below the neckline when trading the Rounding Bottom pattern.

The take-profit must be equal to the size of the pattern formed, and if the trend is strong enough, consider going for deeper targets. Overall, these patterns are quite popular and easy to spot on the price chart. Practice trading these patterns using a trading simulator or a demo account before applying these strategies on live accounts.

We hope you find these strategies informative. If you have any questions, make sure to let us know in the comments below. Cheers.

Categories
Forex Price-Action Strategies

Price Action Trading: Dealing with Daily Chart’s Support/Resistance

In today’s price action lesson, we are going to demonstrate an example of a daily chart where the price reacts to support and resistance. We will dig into the chart and find out what message it has to offer us.

In today’s price action lesson, we are going to demonstrate an example of a daily chart where the price reacts to support and resistance. We will dig into the chart and find out what message it has to offer us.

In today’s price action lesson, we are going to demonstrate an example of a daily chart where the price reacts to support and resistance. We will dig into the chart and find out what message it has to offer us.

The chart shows that the price heads towards the North upon producing a bullish track rail pattern. The next candle comes out as another bullish candle. However, the price finds its resistance. The level has been working as a level of resistance where the price has rejection twice already. Look at the last candle on the chart. It comes out as a bearish inside bar. However, the level is now triple top resistance. Intraday sellers may look to go short in the pair and drive the price towards the South.

As expected, the pair produces another bearish candle. The last swing low offers enough space for the sellers to go short in the pair. Thus, they may still go short in the pair and drive the price towards the South further. The daily sellers are to wait for the price to consolidate and produce a bearish reversal candle to offer them a short entry. Let us see what happens next.

The chart produces a bullish inside bar. The sellers on the daily chart may go short if the next daily candle comes out as a bearish reversal candle. They are to keep this chart on their watch list.

The next candle comes out as a bearish engulfing candle. This means the sellers on the daily chart may go short in the pair and drive the price towards the last swing low as far as price action trading is concerned. If the next daily candle breaches the level of support (last swing low), they may keep holding the position to grab more pips. Let us find out what happens next.

The next candle comes out as a bearish candle closing within the last swing low though. The sellers make some green pips. It might be time for them to close the trade since the candle closes within the level of support. If the candle closes below the level of support, it would surely be a different ball game for the sellers.

Intraday traders obey Support/Resistance on the daily chart a lot. Thus, daily support/resistance plays a significant role in the Forex market to make a reversal/correction/consolidation. Thus, if we take entry even based on the daily chart, we must count those to manage our entries.

Categories
Forex Fibonacci

Fibonacci Trading: Be sure whether the Level is Held or Breached

Breakout plays a very vital role in the Forex market. Traders use breakout, breakout levels to make a trading decision. Fibonacci traders are to make sure whether a particular level is breached or it holds the price to make a better trading decision. In today’s lesson, we are going to demonstrate an example where Fibonacci traders may need to concentrate more to be sure about the Fibonacci level from where the price trends. Let us get started.

Breakout plays a very vital role in the Forex market. Traders use breakout, breakout levels to make a trading decision. Fibonacci traders are to make sure whether a particular level is breached or it holds the price to make a better trading decision. In today’s lesson, we are going to demonstrate an example where Fibonacci traders may need to concentrate more to be sure about the Fibonacci level from where the price trends. Let us get started.

Breakout plays a very vital role in the Forex market. Traders use breakout, breakout levels to make a trading decision. Fibonacci traders are to make sure whether a particular level is breached or it holds the price to make a better trading decision. In today’s lesson, we are going to demonstrate an example where Fibonacci traders may need to concentrate more to be sure about the Fibonacci level from where the price trends. Let us get started.

This is an H1 chart. The chart shows that the price makes a strong bearish move. It makes an upside correction followed by a strong bearish move again. The price has been having an upside correction again. Fibonacci traders are to draw the Fibonacci levels in the chart to find out where the price makes a bearish reversal and how far it may go up to.

Here are the levels. The chart shows that the price produces a bearish engulfing candle and heads towards the South with good bearish momentum. The question is whether the price trends from 78.6% or 61.8%. It is a vital issue since the price heads towards either 138.2% or 161.8% based on these two levels. If we concentrate on the chart, we see one of the bullish candles closes above the 78.6% level. However, the price comes back within the 78.6% level with the next candle. This means the H1 chart does not make a bullish breakout at 78.6%. The sellers may plan their entries to go short up to 138.2% in this chart. Let us proceed to the next chart to find out what price does.

The price breaches the 100.0 level and trades below for several candles. The sellers may wait for a bearish reversal candle and go short in the pair as long as they are satisfied with the risk-reward factor. Usually, it is best if the price goes back to the 100.0 level and produces a bearish reversal candle around the level as far as the risk-reward ratio is concerned. However, it may be produced anywhere between 100.0% to 123.6%. The sellers with different strategies may set their stop loss at different levels, but their last take profit level is to be set at 138.2 %. Let us proceed to the next chart to find out what the price does next.

The chart shows that the price hits 138.2%. As expected, it has been roaming around the level. It seems that the price may have found its support around 138.2% level, and it may make a bullish reversal. The sellers with Fibonacci levels have completed their mission with perfection.

Categories
Forex Daily Topic Forex Price Action

Spot the Chart Accordingly before Triggering for an Entry

In today’s lesson, we are going to demonstrate an example of a chart, which may entice traders to take entry more than once. Some traders may get themselves engaged in taking entry. We find out why we price action traders skip taking those entries. Let us get started.

In today’s lesson, we are going to demonstrate an example of a chart, which may entice traders to take entry more than once. Some traders may get themselves engaged in taking entry. We find out why we price action traders skip taking those entries. Let us get started.

In today’s lesson, we are going to demonstrate an example of a chart, which may entice traders to take entry more than once. Some traders may get themselves engaged in taking entry. We find out why we price action traders skip taking those entries. Let us get started.

This is an H4 chart. The price makes a strong bearish move by producing three consecutive Marubozu bearish candles. The last candle comes out as a doji candle. The price may consolidate now. The sellers are to wait for a strong bearish reversal candle upon consolidation to go short in the pair. Let us proceed to the next chart.

The chart produces a bearish Marubozu candle again. As a reversal candle, it is a strong one. However, the price has not consolidated well. It has produced the bearish reversal candle upon having a shallow consolidation. Moreover, the last candle does not close below the level of support. Thus, the sellers may skip taking the entry but wait for the right time to come. The chart still looks good for the sellers.

The chart produces a bullish engulfing candle. The price may make a deeper consolidation this time. The sellers may keep their eyes on the chart again to go short in the pair. Let us proceed to the next chart to find out what happens next.

The price makes a deeper consolidation. Upon finding its resistance, it makes a bearish move. It seems that the price may make a breakout here. A question may be raised here whether the sellers on the H4 chart shall take the entry or not? We find out the answer in a minute. Meanwhile, let us proceed to the next chart.

The next H4 candle closes well below the level of support. The pair trades below the breakout level for one more candle as well. However, the sellers on the H4 chart may skip taking the entry. The reason behind that is the chart takes more than six candles (a day) to make the breakout. This level of support is a daily level of support now. Thus, the sellers may take the trading decision as far as the daily chart is concerned. If they take their trading decision by observing the H4 chart, it may not be that fruitful. The risk-reward may not be a good one. It may not end up being a daily breakout, but the price may come back in. Or, the daily chart may produce a bullish corrective candle next day, which makes the price hit the H4 sellers stop loss. Thus, in such cases, they might have to take losses only because the pair belongs to the daily chart. Thus, for better trading, traders shall take a closer look before taking entry on a chart to determine whether it favors their trading chart.

Categories
Forex Chart Basics Forex Daily Topic

Chart Combination Traders: Do Not Forget to Calculate This

In today’s lesson, we are going to demonstrate an example of the Daily-H4 chart combination, which may end up producing a trading signal. We find out soon whether it produces a trading signal or not in the end. Let us get started.

In today’s lesson, we are going to demonstrate an example of the Daily-H4 chart combination, which may end up producing a trading signal. We find out soon whether it produces a trading signal or not in the end. Let us get started.

In today’s lesson, we are going to demonstrate an example of the Daily-H4 chart combination, which may end up producing a trading signal. We find out soon whether it produces a trading signal or not in the end. Let us get started.

This is the daily chart. The chart shows that the price makes a strong bullish move. It seems that the price has found its resistance. The last candle comes out as a bearish engulfing candle. This suggests that the sellers in the intraday charts may get themselves engaged to look for short opportunities in the pair. Let us flip over to one of the major intraday major charts, the H4 chart.

The chart shows that the price makes a strong bearish move and produces a bullish engulfing candle followed by a bearish inside bar. However, the daily candle ends up being a bearish engulfing candle, thus the H4 sellers have an upper hand than the buyers.  Let us proceed to the next chart with some drawings in it.

The price bounces off at the red marked level. The sellers are to wait for the price to make a breakout at the level of support to go short in the pair. The last candle in this chart comes out as a bearish inside bar. The price may head towards the level of support and make the breakout. However, the sellers may have to wait since an inside bar is not a strong reversal candle. Let us find out what happens next.

The price heads towards the South and bounces off several times at the level of support. It does not make the breakout though. The last candle comes out as a bullish engulfing candle too. A bullish engulfing candle at the level of support indicates that the buyers may get themselves engaged in buying soon. Moreover, there are six H4 candles after that bearish engulfing daily candle (A trading day contains six H4 candles). The level of support has become daily support now. Thus, the H4 sellers must wait for the daily chart to produce another bearish candle before going short in the pair.

It is often seen that if an H4 candle breaks a daily support/resistance, the price does not head towards the breakout direction in a hurry. It often consolidates around the level, which sometimes makes traders lose money. The same thing shall be maintained in the H4-H1 chart combination as well. If an H1 candle does not make a breakout (after an H4 reversal candle) within next four H1 candles, the support resistance becomes H4 support/resistance. Traders shall wait for upcoming H4 candles to give them the price direction and trade.

Categories
Forex Fibonacci

Fibonacci Levels Help Traders Make Better Trading Decision

In today’s lesson, we are going to demonstrate a chart where the price makes a strong bearish move from a Fibonacci level. It has two messages, which we will find out soon. Let us get started with the chart’s price action.

In today’s lesson, we are going to demonstrate a chart where the price makes a strong bearish move from a Fibonacci level. It has two messages, which we will find out soon. Let us get started with the chart’s price action.

In today’s lesson, we are going to demonstrate a chart where the price makes a strong bearish move from a Fibonacci level. It has two messages, which we will find out soon. Let us get started with the chart’s price action.

The chart shows that the price makes a strong bearish move. The last candle comes out as a long bearish candle, which states that the sellers dominate over the buyers. Traders may want to wait for the price to make a bullish correction to go short in the pair with more aggression.

The chart produces a bullish inside bar. The sellers are to keep their eyes on the pair to get a bearish reversal candle to go short. It seems that the pair may produce a strong bearish reversal candle (the signal candle) soon.

The chart produces a bearish inside bar, which is not the sellers’ favorite to go short. The price makes a little bearish move and heads towards the North again. Look at the last candle in the chart. It comes out as a bearish engulfing candle, which is one of the strongest bearish reversal candles.

As expected, the bearish engulfing candle drives the price towards the South. The sellers on the minor chart are going short. Thus, the price is about to make a breakout at the last swing low on the chart as well.

The price makes a breakout at the last swing low and heads towards the South further. Then, it produces two bullish candles in between but continues its bearish journey again. The price may have found its support since it produces four consecutive bullish candles. The price may continue its bearish journey, or it may make a bullish reversal. The bull looks good here. Let us draw Fibonacci levels and see whether it gives us a clue about the trend continuation or a reversal.

The chart produces a bullish inside bar right at 138.2 level. Please note that the price makes its bearish move from 78.6 level. The level of 78.6 has a strong relation with 138.2. If the price trends from 78.6, it often makes a reversal at 138.2. This is what happens here.

To sum up, if we learn the art of using Fibonacci levels and understand how a level is related to others, it becomes easy for us to take trading decisions such as entry, exit, and taking a partial profit. In the end, it makes us prolific traders.

 

Categories
Forex Fibonacci

Fibonacci Trading and Deeper Correction

In today’s lesson, we are going to demonstrate an example where the chart produces a reversal candle at a Fibonacci level, but the price does not head towards the trend’s direction. It then makes a deeper correction. It finds its new resistance and heads towards the trend’s direction with good momentum. Let us now have a look.

In today’s lesson, we are going to demonstrate an example where the chart produces a reversal candle at a Fibonacci level, but the price does not head towards the trend’s direction. It then makes a deeper correction. It finds its new resistance and heads towards the trend’s direction with good momentum. Let us now have a look.

In today’s lesson, we are going to demonstrate an example where the chart produces a reversal candle at a Fibonacci level, but the price does not head towards the trend’s direction. It then makes a deeper correction. It finds its new resistance and heads towards the trend’s direction with good momentum. Let us now have a look.

The price heads towards the South with excellent bearish momentum. It produces six consecutive bearish candles, four of them having solid long bearish bodies. The sellers are to wait for the price to make a bullish correction and to produce a bearish reversal candle at the value area. Let us proceed to the next chart.

 

The price makes a bullish correction and produces a bearish engulfing candle. However, the price does not make a bearish breakout. It rather goes towards the North again. The last two candles come out as bullish candles. The price goes towards the North further for a deeper correction.

The chart produces a bearish Marubozu candle. The combination of the last two candles is called Track Rail. The Track Rail is one of the strongest reversal signal candles. The sellers may keep their eyes on this chart with attention. The Fibonacci traders may draw their Fibonacci levels to find out which level it is trending from.

Let us proceed to the next chart to find out what the price does.

The chart produces another bearish candle and makes a breakout at the wave’s lowest low. The Sellers then take control of the pair and drive the price towards the South at an extreme pace. The last candle on this chart comes out as an inverted hammer. It suggests that the price may keep heading towards the South. However, do not forget that the chart produces a bullish Pin Bar as well, and the last candle closes within the level of support where the Pin Bar bounces off.

Anyway, let’s draw the Fibonacci level on the chart and see how the price reacts to some levels.

The chart gives us a clearer picture. At first, the price produces the bearish reversal candle at 78.6. The asset does not make a breakout. Instead, it goes towards the North and finds its resistance at 61.8. The level produces a bearish reversal candle followed by a breakout at the wave’s lowest low. The price then hits 161.8 level with ease.

If the price makes a breakout by trending from 78.6, it may not hit 161.8 level. The price usually reverses at 138.2 if it trends from 78.6. Stay tuned. We are going to study with some live examples on this soon.

 

Categories
Forex Daily Topic Forex Fibonacci

Fibonacci Trading: The Golden Ratio

Fibonacci trading is one of the most prolific trading methods, which is widely used by Forex traders. Retracement length, Fibo levels as well as reversal candle are three factors that Fibonacci traders need to pay attention to. In today’s article, we are going to demonstrate an example of a chart, which makes an excellent bearish move after having a retracement. The length of retracement, the most significant Fibo level, and the reversal signal all play their part in this example. Thus, fasten your seat belt and read through.

Fibonacci trading is one of the most prolific trading methods, which is widely used by Forex traders. Retracement length, Fibo levels as well as reversal candle are three factors that Fibonacci traders need to pay attention to. In today’s article, we are going to demonstrate an example of a chart, which makes an excellent bearish move after having a retracement. The length of retracement, the most significant Fibo level, and the reversal signal all play their part in this example. Thus, fasten your seat belt and read through.

Fibonacci trading is one of the most prolific trading methods, which is widely used by Forex traders. Retracement length, Fibo levels as well as reversal candle are three factors that Fibonacci traders need to pay attention to. In today’s article, we are going to demonstrate an example of a chart, which makes an excellent bearish move after having a retracement. The length of retracement, the most significant Fibo level, and the reversal signal all play their part in this example. Thus, fasten your seat belt and read through.

The chart shows that it makes a strong bearish move and makes a breakout at long-held support. The price heads towards the South, searching for its support. The sellers are to wait for the price to have a retracement.

The price starts having retracement. It produces a bullish inside bar followed by another bullish candle. The sellers are to wait for the price to find its resistance and produce a bearish reversal candle. However, the Fibonacci traders are to wait for the price to produce a bearish reversal candle at a very particular level, which is the 61.8 level.

The chart produces a bearish engulfing candle closing well below the last bullish candle. The Fibonacci traders must draw the Fibonacci retracement levels to find out which level produces this reversal candle. If this is the level of 61.8, the Fibo sellers are going to go short in the pair.

The highest high is the level of 0.00, and the lowest low is the level of 100.0. The price has a retracement and produces a bearish engulfing candle right at Fibo level 61.8. Usually, when the level of 61.8 works as support/resistance, it drives the price towards the level of 161.8. This means the price may head towards the South and hit the level of 161.8 next. Let us proceed to the next chart and see what the price does here.

The price hits 161.8 level. It makes an upward correction on its way. However, it reaches the level at last. The last candle shows that it breaches the level of 161.8. The price may head towards the South further.

The level of 61.8 is called the Golden ratio. It is a super significant level as far as Fibonacci Retracement is concerned. The buyers in a buying market and the sellers in a selling market wait for the price to produce a reversal candle/signal candle to go long/short in a pair. Yes, there some equations for the traders to know and obey to be able to trade with Fibonacci retracement. Once they learn them well, Fibonacci trading can make them a handful.

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Forex Daily Topic Forex Fibonacci

Fibonacci Retracement: A Magic Trading Tool

Financial traders rely a lot on a tool called Fibonacci Retracement. This shows the percentage of retracement that the price makes after making a strong bullish/bearish move. The percentage of retracement is very significant to the traders. There are some particular levels, where the price reacts heavily and creates a new trend. Thus, financial traders use Fibonacci Retracement tool to measure retracement length and find the potential whether it is going to create a new trend or not. The Forex traders love using the Fibonacci Retracement tool as well. Once we know how to draw it on the chart accordingly, we find out that the currency pairs on almost all the timeframes obey the Fibonacci retracement ratio.

Financial traders rely a lot on a tool called Fibonacci Retracement. This shows the percentage of retracement that the price makes after making a strong bullish/bearish move. The percentage of retracement is very significant to the traders. There are some particular levels, where the price reacts heavily and creates a new trend. Thus, financial traders use Fibonacci Retracement tool to measure retracement length and find the potential whether it is going to create a new trend or not. The Forex traders love using the Fibonacci Retracement tool as well. Once we know how to draw it on the chart accordingly, we find out that the currency pairs on almost all the timeframes obey the Fibonacci retracement ratio.

Financial traders rely a lot on a tool called Fibonacci Retracement. This shows the percentage of retracement that the price makes after making a strong bullish/bearish move. The percentage of retracement is very significant to the traders. There are some particular levels, where the price reacts heavily and creates a new trend. Thus, financial traders use Fibonacci Retracement tool to measure retracement length and find the potential whether it is going to create a new trend or not. The Forex traders love using the Fibonacci Retracement tool as well. Once we know how to draw it on the chart accordingly, we find out that the currency pairs on almost all the timeframes obey the Fibonacci retracement ratio.

Leonardo Fibonacci, an Italian mathematician, identified a series of numbers such as 0, 1, 1, 2, 3, 5, 8. 13, 21, 34, 55, etc. Each number is the sum of the preceding two numbers.  These numbers produce some significant ratios, such as 23.6. 38.2, 50, 61.8. 78.6, 100, 123.6, 138.2, 161.8. These ratios and the Fibonacci sequence are found in nature as well. Thus, people love using the sequence ratios in their design and plan. At the end of the day, people run financial markets. They buy or sell at certain levels. Since Fibonacci ratios are much related to our nature and life, traders love using these ratios to help decide where to buy and where to sell.

As far as Fibonacci ratios are concerned, the 61.8 is considered as the golden ratio. It is found in flower petals, seed heads, pinecones, fruits and vegetables, tree branches, shells, spiral galaxies, hurricanes, fingers, animal bodies, reproductive dynamics, animal fight patterns, DNA molecule, etc.

In the financial/Forex market, the ratios are used by using a tool called Fibonacci Retracement. There are other Fibonacci tools, but this one may be the trader’s most favorite.

In a buying market, a trader draws his Fibonacci retracement levels from the lowest low to highest high.

The level of 00.00 is the lowest low, and the 100.00 is the highest high of a bullish wave. Traders are to wait for the price to make a bearish retracement. All these levels are significant, and the price reacts to these levels. However, the buyers pay more attention when the price is around 61.8 level to go long in a pair.

In a bearish market, it is just the opposite. Let us have a look at how it looks like.

Fibonacci Retracement levels help traders spout out the trend’s initiating point. Thus, it becomes easy for the traders to take entry with excellent risk-reward. In our forthcoming articles, we are going to demonstrate charts on different pairs, time frames to find out how the price reacts to different Fibonacci levels. Stay tuned.

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Forex Price-Action Strategies

The Longer It Ranges, The Harder It Breaks

Price action traders usually look for entries on the chart that has a clear trend. However, even a choppy chart end up providing good entry to the traders. In today’s lesson, we are going to show how a choppy chart ends up producing a good entry. Let us get started.

Price action traders usually look for entries on the chart that has a clear trend. However, even a choppy chart end up providing good entry to the traders. In today’s lesson, we are going to show how a choppy chart ends up producing a good entry. Let us get started.

Price action traders usually look for entries on the chart that has a clear trend. However, even a choppy chart end up providing good entry to the traders. In today’s lesson, we are going to show how a choppy chart ends up producing a good entry. Let us get started.

The chart shows that the price has been choppy. It bounces at a level of support three times. As far as resistance is concerned, the price has a rejection at a level once and comes back down. Then, it heads towards the upside and finds its resistance getting rejection twice. The level of support seems stronger than the resistance here.

The price finds its resistance, and at the second rejection, it makes a breakout. As mentioned, the price bounces three times at the level of support. Thus, the breakout is strong as well. The sellers are to wait for the price to be held by the breakout level and a bearish reversal candle to go short in the pair.

The next candle comes out as a doji candle closing within the breakout level. The breakout comes out as a valid breakout. The sellers are to wait for the level to create a bearish reversal candle to trigger a short entry.

Here it comes. The last candle on the chart comes out as a bearish engulfing candle closing well below the last swing low. The sellers may trigger a short entry right after the candle closes by setting stop loss above the resistance and by setting take profit with 1R. Let us proceed to the next chart to find out how the entry goes.

The price heads towards the South with good bearish momentum. The price hits the take profit (1R). The last candle suggests that the price may head towards the South further. Some traders may take partial profits and let the rest of the trade run to make more pips.

The chart produces a bullish inside bar. The chart still favors the Bear. However, it may be time for the sellers to give it a second thought to close the whole trade. If we look at the chart, the price heads towards the downside and hits the target without producing any bullish candle in between. This is how it usually goes if the price makes a breakout within a long choppy market. Thus, traders may keep their eyes on the choppy charts to see whether the price makes a breakout to offer them an entry. A breakout in a choppy market is often very rewarding.

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Forex Price-Action Strategies

Forex Price Action: Do Not Be Over Confident

Engulfing candle is the strongest reversal candle. In a bearish market, the buyers wait for a bullish engulfing candle and flip over to the minor chart to take entry. It does not usually go wrong. However, from time to time, things may not go according to traders’ expectations, even with engulfing candle. In today’s lesson, we are going to demonstrate an example of that. Let us proceed.

Engulfing candle is the strongest reversal candle. In a bearish market, the buyers wait for a bullish engulfing candle and flip over to the minor chart to take entry. It does not usually go wrong. However, from time to time, things may not go according to traders’ expectations, even with engulfing candle. In today’s lesson, we are going to demonstrate an example of that. Let us proceed.

Engulfing candle is the strongest reversal candle. In a bearish market, the buyers wait for a bullish engulfing candle and flip over to the minor chart to take entry. It does not usually go wrong. However, from time to time, things may not go according to traders’ expectations, even with engulfing candle. In today’s lesson, we are going to demonstrate an example of that. Let us proceed.

This is a daily chart. The chart shows that the price makes a bearish move and finds its support. It produces a bullish engulfing candle. Thus, the H4 breakout traders may flip over to the H4 chart and wait for the price to consolidate and to create a bullish engulfing candle to go long in the pair. Let us flip over to the H4 chart.

The H4 chart also looks very bullish. The price starts having consolidation. Then, it produces a hammer. It seems the chart may not take too long to produce a bullish engulfing candle breaching consolidation resistance.

The chart produces another bullish candle closing within consolidation resistance. The price heads towards the South to search for its support. It has been taking longer than the buyers’ expectations. They must not be impatient but keep their eyes on the chart.

The price finds its support and produces a bullish engulfing candle. The candle closes well above consolidation resistance. The buyers may trigger a long entry right after the last candle closes by setting stop loss below the level of support and by setting take profit with 1R. The signal candle suggests that the buyers find a good deal here. Let us proceed to the next chart to find out what the price does.

I do not think that the buyers are ready for this. The last candle comes out as a bearish inside bar, but it closes within consolidation resistance and support. It does not hit stop loss yet. The buyers still have a chance to win this. This looks ominous for them, though.

The price hits stop loss now. The last candle comes out as a bearish candle closing below consolidation support this time. All of a sudden, it becomes the sellers’ territory. The H4 buyers must avoid this chart for a while.

The lesson we get from today’s example is a chart, which looks only for the buyers’ turns into opposite within two candles. Things get changed anytime in the Forex market. Thus, traders should not be overconfident with their analysis, strategy at any point in their trading life.

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Forex Daily Topic Forex Price-Action Strategies

Price Action Trading and Trade Management

Trade management is such an important factor in Forex trading. Managing trades effectively saves traders from making a loss or help them secure their profit. Sometimes traders are to close their trades earlier or lock the profit. This shall be done only when trading is done on major time frames such as the H4, the daily, or the weekly, though. In today’s lesson, we are going to demonstrate an example of an early exit in the H4 chart.

Trade management is such an important factor in Forex trading. Managing trades effectively saves traders from making a loss or help them secure their profit. Sometimes traders are to close their trades earlier or lock the profit. This shall be done only when trading is done on major time frames such as the H4, the daily, or the weekly, though. In today’s lesson, we are going to demonstrate an example of an early exit in the H4 chart.

Trade management is such an important factor in Forex trading. Managing trades effectively saves traders from making a loss or help them secure their profit. Sometimes traders are to close their trades earlier or lock the profit. This shall be done only when trading is done on major time frames such as the H4, the daily, or the weekly, though. In today’s lesson, we are going to demonstrate an example of an early exit in the H4 chart.

The chart shows that the price makes a strong bearish move. It makes a breakout and produces a bullish inside bar. The H4 breakout traders are to wait for the price to find its resistance and produce a bearish engulfing candle to offer them a short entry. The price is at the breakout level. It seems that the breakout level is going to play a vital role here.

The chart produces a bearish spinning top and a bullish candle. However, the breakout level works as a level of resistance and produces a bearish engulfing candle closing well below consolidation support. The sellers may trigger a short entry right after the candle closes by setting stop-loss above the breakout level and by setting take profit with 1R. The signal candle suggests that the sellers do not have to wait too long to achieve their target.

As expected, the next candle comes out as a bearish Marubozu candle as well. The sellers would love to get a bit longer bearish candle. However, as long as it comes out as a bearish candle, they should be happy with it. Remember, this is an H4 chart. Thus, a bearish Marubozu candle means a lot for the sellers. It seems the price is going to take one more candle to hit the target.

The next candle comes out as a Bearish Marubozu candle as well. However, it does not hit the target 1R. A very few pips are left to achieve the target. The sellers must wait. The last candle suggests that it is only a matter of time for the sellers to reach their destination. Let us proceed to the next chart and find out what happens next.

The last candle comes out as a bullish engulfing candle. This does not convey a good message for the sellers. The price is yet to hit the target. They have some profit running in the trade. What should the sellers do here?

If it is an inside bar bullish candle, the sellers should keep holding the position to hit the target. However, the last candle comes out as a bullish engulfing candle (in an H4 chart). This means a lot for the minor intraday buyers. Thus, the best thing to do would be if the trade is closed manually, right after the last candle closes. It gets the sellers some profit, at least. Yes, the target is not achieved, and some profit is lost. Take it easy. Things go according to plan and sometimes don’t. This is what trading is all about.

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Forex Price-Action Strategies

A Classic Example of the H4 Breakout Trading

In our trading lesson, we have been demonstrating H1 breakout strategies in our last five lessons. Today, we are going to demonstrate an H4 breakout trade setup, which is a classic example of price action breakout trading. The price makes a bullish breakout at the last highest high; comes back at the breakout level and produces a beautiful bullish engulfing candle closing well above consolidation resistance to offer a long entry. Let us proceed and see how it occurs.

In our trading lesson, we have been demonstrating H1 breakout strategies in our last five lessons. Today, we are going to demonstrate an H4 breakout trade setup, which is a classic example of price action breakout trading. The price makes a bullish breakout at the last highest high; comes back at the breakout level and produces a beautiful bullish engulfing candle closing well above consolidation resistance to offer a long entry. Let us proceed and see how it occurs.

In our trading lesson, we have been demonstrating H1 breakout strategies in our last five lessons. Today, we are going to demonstrate an H4 breakout trade setup, which is a classic example of price action breakout trading. The price makes a bullish breakout at the last highest high; comes back at the breakout level and produces a beautiful bullish engulfing candle closing well above consolidation resistance to offer a long entry. Let us proceed and see how it occurs.

The chart shows that the price heads towards the North with good bullish momentum. On its way towards the North, it does not produce even a single bearish reversal. It suggests that the buyers have been very confident. It makes a breakout at the last swing high. The breakout is not explicit though. However, the price continues to go towards the North after the breakout. Then, it finds its resistance and produces two bearish reversal candles. Look at the last candle. It closes within the last highest high (breakout level), which is a flipped support now. This is one of the most important factors in price action trading. The price reacts to such levels and produces reversal candles.

As mentioned, the level produces a bullish engulfing candle closing well above consolidation resistance. The buyers may trigger a long entry right after the candle closes by setting stop loss below the level of support and by take profit with 1R. Let us proceed to the next chart how the trade goes.

The last candle comes out as a spinning top. Not a good start for the buyers, but the buyers must keep patience here. Trading on the H4 chart allows traders to manage their trade and take early exit. However, they must not think taking an early exit here. The last candle is not a strong bullish candle, but it is not a strong bearish reversal either. Let us proceed to the next chart. It may take one good candle to hit the target.

The price does not take too long to hit the target. It hits the target with the last candle. This is a classic example of trading on the H4 breakout trading. After the breakout, the price comes back at the breakout level. It produces a bullish reversal candle right at the breakout level. The bullish reversal candle comes out as an engulfing candle closing well above consolidation resistance. Price actions traders wait for the price to behave like this to take an entry.

 

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Forex Course

97. Where Are The Pivot Point Levels Put To Use?

Introduction

Introduction

Introduction

In our previous two discussions, we enlightened you with different strategies for using the pivot points. If you noticed, there we focused only on the pivot support and resistance levels. We didn’t really touch base on the Pivot Point (P) level. So, in this chapter of pivot points, we shall understand how the pivot point level is useful.

The usefulness of Pivot Point

The pivot point is used to measure market sentiment. Yes, with pivot points, we can even gauge the sentiment of the market. In other words, the pivot point helps us determine the direction of the market. It tells us in which direction is the money flowing in the market. So, basically, it indicates the trend of the market. Now, let’s take a few examples to understand the use of pivot points.

What does a Pivot Point tell us?

We know that the pivot point determines the type of market we are in. Inferences are made when the price falls below or above the pivot point.

  • When the market breaks below the pivot point (P), it indicates a bearish market or a market where the sellers are under control.
  • When the market breaches above the pivot point (P), it indicates a bullish/buyer’s market.

Bearish Example

Consider the chart below representing the GBP/JPY on the 15min timeframe. The pivot points are indicated as shown. Initially, we can see that the market was holding above the Pivot Point (P). Later in the day, it broke below the pivot point and then continued to move south. Also, it didn’t even respect the support levels. From this, we can conclude that the support levels do not work every single time. It perfectly fine when it is combined with other tools of analysis. However, a breakout trader would’ve profited the most from it.

Most importantly, one must not use this pivot point level as a tool to enter a trade. It is only an indicator that determines the sentiment of the market. It only tells us if the buyers are showing interest in the currency pair or the sellers. And with information in hand, we use other trading techniques to time the market.

Bullish Example

In the below chart, we can see that the market was trading below the pivot point level. Then it shot up and broke the pivot level as shown. This marks the start of an uptrend. And it is clearly visible that the market headed north by breaking through R1 as well as R2. But at R3, it found resistance. Now since the market is trending up, one can look at the price drop from R2 as a discount and anticipate buying at the R2 level, which is ‘resistance turned support.’

Similarly, traders can determine the direction of the market using the pivot point level and time their entry based on other technical tools and ideas. We hope you found this lesson informative and interesting. Cheers!

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