Tag: bullish reversal candle

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Forex Daily Topic Forex Price Action

Weekly High/Low Breakout Trading: The Chart You May Want to Avoid

In today’s lesson, we are going to demonstrate an example of a breakout at a weekly high. The price consolidates afterward but fails to make a breakout at consolidation resistance. Thus, the price does not head towards the North. Let us find out how that happens and what lesson it holds for us.

In today’s lesson, we are going to demonstrate an example of a breakout at a weekly high. The price consolidates afterward but fails to make a breakout at consolidation resistance. Thus, the price does not head towards the North. Let us find out how that happens and what lesson it holds for us.

In today’s lesson, we are going to demonstrate an example of a breakout at a weekly high. The price consolidates afterward but fails to make a breakout at consolidation resistance. Thus, the price does not head towards the North. Let us find out how that happens and what lesson it holds for us.

It is an H4 chart. The chart shows that the price makes a strong bearish move to start its trading week. Then, it gets choppy for the rest of the week. The chart closes its week, producing a bullish engulfing candle. Let us proceed to see how the next week goes.

The chart produces a bullish candle to start its trading week. However, it produces three consecutive bullish candles and makes a breakout at the last weekly high. The buyers are to wait for the price to consolidate and produce a bullish reversal candle closing above consolidation resistance to go long in the pair.

The chart produces two bearish candles closing within the breakout level. A bullish reversal candle closing above consolidation resistance is the signal for the buyers to trigger entry. They must keep their eyes on this chart.

The chart produces a bullish inside bar. It is a bullish reversal candle but not a very strong one. Since it closes within consolidation resistance, the buyers are to wait longer for the chart to produce a bullish candle closing above consolidation resistance.

The chart produces two more bullish candles. However, it has not made a breakout yet. It has been taking too long to produce the signal candle. Let us wait and see what it produces afterwards.

It produces a bearish inside bar at the consolidation resistance. It does not look good for the buyers. The price has a rejection at the level, and it produces a bearish inside bar. It means it is a double top resistance. A breakout at the last swing low may change the equation and attract the sellers instead. Let us proceed and see what happens next.

The price does not make a breakout at the last swing low, either. It produces a doji candle followed by a bullish engulfing candle at the last swing low. It means the chart keeps traders waiting for the next breakout. The bull holds the edge but weekly high/low breakout traders do not love to see such price action after a breakout. It is best to avoid taking entry on a chart like this.

 

Categories
Forex Daily Topic Forex Price Action

Using Weekly High or Weekly Low in the H4 Chart Trading

The Weekly high or Weekly low plays a significant part in the H4 chart traders. In today’s lesson, we will demonstrate an example of how last week’s high works as a level of support and pushes the price towards the upside by offering a long entry to the buyers. Let us get started.

The Weekly high or Weekly low plays a significant part in the H4 chart traders. In today’s lesson, we will demonstrate an example of how last week’s high works as a level of support and pushes the price towards the upside by offering a long entry to the buyers. Let us get started.

The Weekly high or Weekly low plays a significant part in the H4 chart traders. In today’s lesson, we will demonstrate an example of how last week’s high works as a level of support and pushes the price towards the upside by offering a long entry to the buyers. Let us get started.

It is an H4 chart. Look at the vertical dotted line. The price starts its week with a spinning top having a bullish body. The price then heads towards the North and come down again. In the end, the price closes its week around the level where it starts its trading week.

The pair starts its week with a spinning top having a bearish body this time. The price heads towards the North and makes a breakout at the last week’s high. The price usually comes back at the breakout level to have consolidation and ends up offering entry upon producing a reversal candle. Let us draw the breakout level to have a clearer picture.

The drawn line indicates the last week’s high. Now, the H4 chart suggests that the price made a breakout, and the pair is trading above the level currently. The buyers are to wait for the price to consolidate and produce a bullish reversal candle to go long in the pair.

The chart produces a bearish candle closing within the breakout level first. The next candle comes out as a Doji candle. The buyers are to wait for a breakout at consolidation resistance to go long in the pair. Let us proceed to the next chart to find out what the price does next.

The chart produces three more bullish candles. One of the candles breaches through the level of resistance closing above it. The buyers may trigger a long entry right after the last candle closes. The buyers may set their stop loss below the breakout level. To set the take-profit level, the buyers may set their take profit with 2R. It is the best thing about this trading strategy. It offers at least 2R. Sometimes the price travels even more than 2R. Let us find out how the trade goes.

The price heads towards the North with good bullish momentum. Before hitting 2R, it produces a bearish inside bar. It continues its journey towards the North and travels more than 2R. The last candle comes out as a bearish engulfing candle. It suggests that the price may get bearish now.

The best things about using the strategy are

  1. Traders know where the price is going to consolidate.
  2. Which level is going to produce the signal candle.
  3. It offers an excellent risk-reward.
Categories
Forex Price Action

Trend Line Trading: An Incident That Often Confuses Traders

In today’s lesson, we are going to demonstrate an occurrence that often happens when the price trends with a trendline. A trendline works as a support/resistance. However, there is a little dissimilarity between horizontal support/resistance and trendline support/resistance. To draw a horizontal support/resistance, one bounce or rejection is enough. However, a trendline can be drawn only when the price makes a new higher low/lower high. This is what traders must remember, and we find this out the reason behind it.

In today’s lesson, we are going to demonstrate an occurrence that often happens when the price trends with a trendline. A trendline works as a support/resistance. However, there is a little dissimilarity between horizontal support/resistance and trendline support/resistance. To draw a horizontal support/resistance, one bounce or rejection is enough. However, a trendline can be drawn only when the price makes a new higher low/lower high. This is what traders must remember, and we find this out the reason behind it.

In today’s lesson, we are going to demonstrate an occurrence that often happens when the price trends with a trendline. A trendline works as a support/resistance. However, there is a little dissimilarity between horizontal support/resistance and trendline support/resistance. To draw a horizontal support/resistance, one bounce or rejection is enough. However, a trendline can be drawn only when the price makes a new higher low/lower high. This is what traders must remember, and we find this out the reason behind it.

The price makes a strong bullish move, as it produces seven consecutive bullish candles. The last candle comes out as a bearish engulfing candle. Considering the trend’s length, the buyers may keep their eyes on the pair to go long upon having a bullish reversal candle at flipped support.

The price consolidates and bounces at the same level twice. The last candle comes out as a bullish reversal candle. The buyers on the minor chart may look to go long in the pair and push the price towards the North.

The price heads towards the North and makes a breakout at the last swing high. It means we can draw an up-trending trend line and wait for the price to come at trendline’s support and to get a bullish reversal candle to go long in the pair. Let us find out what happens next.

The price does not produce a bullish reversal candle. It makes a breakout at trendline’s support and trades below the level for several candles. If the price makes a breakout at the last swing low, the sellers may look to go short in the pair. Let us see what happens next.

The price upon finding its horizontal support heads towards the North and makes a breakout at the last swing high. What does that mean? It means we can draw an up-trending trend line by using the last swing low from where the price makes a bullish breakout. Let us draw it and see how it looks.

It is a new trendline. It offers price to makes more bearish correction and more space towards the North to travel. As a matter of fact, its support zone has changed, but the new trendline is valid for the same old chart. It’s an incident that happens in the Forex market so often. Thus, keep an eye on a chart closely and do not make an immediate trading decision. Be sure about the breakout. If the breakout is confirmed, change your trading direction. If the breakout is not confirmed, let the price decide its way. We just have to follow the price and trade with its direction.

Categories
Forex Daily Topic Forex Price Action

Trend Line Trading: It Takes at Least ‘two’ to Draw a Trend Line

In today’s lesson, we are going to demonstrate an example of trendline trading. We try to learn what steps traders need to take to trade using a trendline strategy. We are going to demonstrate a chart, which heads towards the North by obeying an up-trending trend line. With the trend line trading strategy, we must remember, “It takes at least ‘two’ lows to draw a trend line.” Let us proceed and find out how it works.

In today’s lesson, we are going to demonstrate an example of trendline trading. We try to learn what steps traders need to take to trade using a trendline strategy. We are going to demonstrate a chart, which heads towards the North by obeying an up-trending trend line. With the trend line trading strategy, we must remember, “It takes at least ‘two’ lows to draw a trend line.” Let us proceed and find out how it works.

In today’s lesson, we are going to demonstrate an example of trendline trading. We try to learn what steps traders need to take to trade using a trendline strategy. We are going to demonstrate a chart, which heads towards the North by obeying an up-trending trend line. With the trend line trading strategy, we must remember, “It takes at least ‘two’ lows to draw a trend line.” Let us proceed and find out how it works.

The chart shows that the price produces a double bottom and heads towards the North. The buyers may wait for the price to make a bearish correction and create a bullish reversal candle to go long in the pair. The last candle comes out as a bearish pin bar. The price may make a bearish correction from here.

The price makes a long bearish correction. It produces several Doji candles. However, it does not create any bullish momentum. It is an H4 chart. The correction takes more than six candles. The level of resistance becomes a daily resistance. Some buyers may skip eyeing on the chart to go long in the pair. Let us see what happens next.

The chart produces a bullish engulfing candle and heads towards the North by making a new higher high. Do you notice anything here? Yes, we can draw an up-trending trend line. Let us draw it.

Over here, we have two swing lows. At the second swing low, the price makes a breakout at the last swing high. It means as far as fundamentals of drawing a trend line is concerned, the chart offers the buyers to draw an up-trending trend line. We must remember that it takes at least two swing lows (price trending higher from those points) to draw a trend line. The buyers are to wait for the price to come at the level of support and produce a bullish reversal candle to go long in the pair.

The price comes at the level of support and produces a bullish pin bar. It is delivered right at the trendline’s support. The buyers may get ready to go long in the pair above the reversal candle’s highest high.

The next candle comes out like a spinning top, which breaks the reversal candle’s highest high. However, the price does not head towards the North according to the buyers’ expectations. Nevertheless, on the next day, the price makes bearish correction at intraday charts and heads towards the North. Let us proceed to the following chart to find out how the trade goes.

The price hits the first target in a hurry. It makes a breakout at the level and creates a new higher high as well. It means the buyers are going to keep their eyes on the chart to go long again from the trendline’s support, and this is the beauty of the trendline trading.

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Forex Basics

Some Spikes are Not to Be Ignored

Forex traders often struggle with spikes on their trading charts. The Line chart does not show spikes, but Candlestick Chart does. Price action traders usually use candlestick charts as one of their weapons to trade effectively. Thus, they face this problem every now and then. There is no sure method confirming which spikes are to be ignored, and which are not to be ignored. We have to be sensible about that. In today’s lesson, we find out a kind of spikes that are not to be ignored. Let us get started.

Forex traders often struggle with spikes on their trading charts. The Line chart does not show spikes, but Candlestick Chart does. Price action traders usually use candlestick charts as one of their weapons to trade effectively. Thus, they face this problem every now and then. There is no sure method confirming which spikes are to be ignored, and which are not to be ignored. We have to be sensible about that. In today’s lesson, we find out a kind of spikes that are not to be ignored. Let us get started.

Forex traders often struggle with spikes on their trading charts. The Line chart does not show spikes, but Candlestick Chart does. Price action traders usually use candlestick charts as one of their weapons to trade effectively. Thus, they face this problem every now and then. There is no sure method confirming which spikes are to be ignored, and which are not to be ignored. We have to be sensible about that. In today’s lesson, we find out a kind of spikes that are not to be ignored. Let us get started.

The price heads towards the South with good bearish momentum. It finds its support and produces a bullish reversal candle. The last candle comes out as a bullish candle as well. The sellers are to wait for a bearish reversal candle to go short in this chart.

Here comes the bearish reversal candle that the sellers wait in such price action. We have not drawn any resistance line. If we closely observe, we find that the last two candles’ bodies suggest a line of resistance. Candles’ bodies play a significant role in determining the support/resistance line. Let us draw a line of resistance here.

Here it is. The combination of the last two candles and their bodies suggests that we may draw a line right above their bodies. In most cases, we are to do this. However, the last two spikes have something more to think about. If we closely look, we find that the last two spikes are lined up. They have had their rejection at the same level. This means that the line is significant, which must not be ignored. Thus, if we want to take entry here, we may count the line above as the level of resistance. Let us have a look at the chart below with more drawn lines.

Look at the Stop Loss level. To be safe, we may not ignore such levels, where the price gets rejected multiple times. The candles may end up having spikes, but these spikes shall be counted to determine our stop loss, take profit, and breakout level. Let us not proceed to find out how the entry goes.

The trade setup works well for the traders. The price heads towards the South with more bearish pressure. It gets 1R to the sellers in a hurry. Now many of us may say the price never goes back to the level. In 80% of cases, the price does not go back near to the resistance. In the rest of the 20% cases, it may go. That is when we are to take an unnecessary loss. As they say, it is better to be safe than sorry. Let us be safe with spikes like these.