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.

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

Count the Breakout Length

In today’s lesson, we are going to demonstrate an example of a chart where the price makes an H4 breakout at the last week’s low. However, the chart does not offer entries. It rather gets choppy. We will try to find out the reason behind that. Let us get started.

It is an H4 chart. The chart shows that the price makes a bearish move and had a bullish correction. Upon producing a bearish engulfing candle, it heads towards the South again. The market is about to close for the weekend, and the sellers are going to wait for the H4 chart to make a bearish breakout and go short in the pair.

The chart produces a Doji candle to start its trading week. The next candle comes out as a bearish engulfing candle. It seems that the pair is going to make an H4 breakout at the week’s low soon.

The chart produces a long bearish candle closing well below the week’s low. It does not consolidate but produces a spinning top with a bearish body. The chart looks bearish, and the sellers may love to wait for the price to consolidate and to offer them a short entry. The question is whether they should wait to go short in the pair or not.

Look at those two drawn lines. One at the above indicates the highest high of the current week. The other one at the bottom indicates the lowest low of the last week. The difference between these two lines is vital. It determines the length of the next move. Usually, the price travels twice the distance of that length with good momentum. Once it travels three times that distance, the price usually makes longer consolidation or correction. The price travels three times that distance here. Thus, it may make a long bullish correction.

The chart produces a bullish engulfing candle followed by another bullish candle closing within the last week’s lowest low. The chart then creates an inverted hammer and drives the price towards the South. Look at the pace of that bearish move. It has been sluggish, and it suggests that the sellers are not interested in going short in this chart. The price has been roaming around the last swing low for quite a while. In a word, the H4 traders must wait for the price to give them the next direction. Meanwhile, it is a chart not to invest money and time in.

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.

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

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.

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

The H1-15M Combination Trading: Waiting for an H1 Reversal Candle Ensures Better Reward

The H1 reversal candle plays a significant part in the H1-15M chart combination trading. If the traders wait to get an H1 reversal candle, by using candle’s lower low/higher high, they get a better risk-reward. In a bearish market, a trader needs to wait for an H1 bearish reversal candle after the breakout. In a bullish market, he needs to do the opposite. In today’s lesson, we are going to demonstrate an example of a bullish market where the H1-15M chart combination offers an entry upon producing an H1 bullish reversal candle. Let us get started.

This is an H1 chart. The chart shows that the price heads towards the North with good bullish momentum. The price, then upon finding its resistance, has been in a bearish correction. It consolidates around a level and heads towards the North. The buyers are to keep their eyes on the chart with a hope that it may make a bullish breakout.

The chart shows that the last candle makes a bullish breakout closing well above the last highest high. The buyers are to wait for the chart to produce an H1 bullish reversal candle followed by a 15M bullish candle to trigger a long entry. Let us keep watching the chart to get that H1 bullish reversal candle.

The chart shows that it produces two doji candles. It means the price has been in bearish correction at the minor charts. An H1 bullish reversal candle at the breakout level would be the ‘getting ready’ signal to go long in the pair.

Look at the last candle. The last candle comes out as a bullish candle forming at the breakout level. The buyers are waiting for the chart to produce such a candle. They may flip over to the 15M chart now. Let us flip over to the 15M chart.

The last candle comes out as a bearish inside bar. Since the H1 candle closes as a bullish candle, so a 15M bullish candle is the signal to trigger a long entry. Let us proceed to the next chart.

Here it is. The chart produces a bullish Pin Bar. The buyers may trigger a long entry right after the last candle closes. Traders may set their stop loss below the H1 bullish reversal candle’s lowest low, which is below the red-marked level. To set take profit, they may use Fibonacci levels. If the price trends from 61.8%, it usually goes up to the level of 161.8%. Let us find out how this one goes.

Yes, the price heads towards the level of 161.8% with good bullish momentum. If we flip over to the 15M chart right after the breakout, we would take entry by setting stop loss below 00.00%. By waiting for an H1 reversal candle, we may set the stop loss below 38.2%. This ensures a better risk-reward. On the other hand, if we always wait to get an H1 reversal candle after the breakout, we may not get it all the time. Thus, we end up being offered less number of entries in the H1-15M chart combination trading.

 

Categories
Forex Fibonacci

Fibonacci Trading: When Momentum is Lacking

Traders wait for the price to trend from 61.8% Fibonacci level. This is what attracts more traders to trade, which generates good momentum. When the price trends from 61.8% level, it usually goes up to 161.8%. Since the price gets enough space to move, it offers better risk-reward. This is another reason that Fibonacci traders love to trade in a chart when the price trends from 61.8%. However, the Forex market is uncertain. We may see that the price does not head towards 161.8% with good momentum upon trending from 61.8% from time to time. In today’s lesson, we are going to demonstrate an example of this.

This is an H1 chart. The chart shows that the price heads towards the South with good bearish momentum. Upon producing a strong bearish candle, it starts having a bullish correction. Fibonacci traders shall get themselves ready by drawing Fibo levels on the chart to find out potential short opportunities in the pair.

Here it is. The chart shows that the price breaches 78.6% level and trades above the level for two more candles. This means the price is in 61.8% zone. If the price trends from here, it may go towards 161.8% level. Yes, it would be better if the price goes towards the North and trends right from the level 61.8%. Nevertheless, the sellers still are to count the move from 61.8% zone. The chart produces a bearish engulfing candle followed by a doji candle. Since the reversal candle comes out as a bearish engulfing candle forming from 61.8% zone, some sellers may trigger a short entry (some may wait for the price to breach the last lowest low). Let us proceed to the next chart to find out what the price does.

The price heads towards the South and it makes a breakout at the last swing low as well. The pair may get more short orders now. However, the price does not head towards the South. It seems that 161.8% level is far away for the price to reach. It does not usually happen but this is how the Forex market runs. It does not always run on a single equation. A question may be raised here what does a trader do with his entry? Since it is an H1 chart based entry, it must be left behind and let it decide its fate by setting Stop Loss and Take Profit accordingly.

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.

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.

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

Draw Fibonacci Levels on Your Trading Chart

Fibonacci traders are to find out a good move, followed by a price correction. They keep their eyes on the 61.8% level with extreme attention. If the level of 61.8% produces a reversal candle, traders trigger for entry. Usually, the price goes up to the level of 161.8% if the price trends from 61.8%. This allows an excellent risk-reward to the traders as well. In today’s article, we are going to demonstrate an example of how the golden ratio of 61.8% plays such an important role in moving the market towards the trend. Let us get started.

The chart shows that it makes a bullish move upon producing a bullish engulfing candle. The price makes a downside correction and moves towards the North again. This time the price makes the move with good bullish momentum. The Fibonacci traders are to wait for the price to make a downside correction and draw Fibonacci levels to go long in the pair. Let us proceed to the next chart to find out whether it starts having downside correction or heads towards the North further.

This is an interesting move by the chart. It has a bearish gap, but the candle comes out as a bullish candle. Despite having an upper shadow, this is a bullish reversal candle. Let us find out how the price reacts upon getting such a bullish reversal candle.

The price heads towards the North with extreme bullish momentum. The bull outplays the bear. This is such a strong bullish move that the buyers would love to make full use of it. Do you notice something interesting? Yes, the price trends from the 61.8% zone. Let us draw the Fibonacci levels and see how it looks.

The chart shows that despite having a bearish gap, the chart produces a bullish candle within 61.8% zone and heads towards the North. It hits the level of 161.8% in a hurry as well. This is what the Fibonacci golden ratio level does almost all the time. There are different ways of trading and catch such a move. Some traders enter before the breakout, while some enter after the breakout at the highest high of the wave. Both have merits and demerits, which we will learn in our forthcoming Fibonacci lessons. Meanwhile, concentrate on your chart and practice drawing Fibonacci levels by pointing out the highest high and the lowest low. Start practicing this, so you get well acquainted with Fibonacci significant levels and how the price reacts to them. This will help you trade much better soon.

Categories
Forex Price-Action Strategies

When Price Finds New Support/Resistance

Price action traders are to be calculative and watchful. Breakout and breakout confirmation are two things that price action traders keep eyes on. Trend initiating candle is another important factor. We often see that the price upon finding its support/resistance does not make a breakout straightway. It sometimes makes a little correction and then starts trending to make a breakout. This new level of support/resistance plays a significant role in price action breakout trading. In today’s lesson, we are going to demonstrate an example of this.

The chart shows that the price after being bearish makes a bullish correction. It produces a bearish engulfing candle and drives the price towards the downside. However, look at the last candle. It comes out as a bullish engulfing candle. This means the price is to find its resistance again.

It does not take long to find its resistance. The next candle comes out as a bearish engulfing candle. The sellers are to keep their eyes on the pair to get a breakout. It seems that the price may head towards the South and make a breakout this time upon finding its new resistance.

The chart makes the breakout by the next candle. The sellers are to wait for the next candle to close below the breakout candle to trigger a short entry. Do not forget that it makes the breakout upon finding a new resistance.

The next candle comes out as a bearish candle having a long lower shadow. Thus, they should flip over to the 15 M chart to see how the last 15 M candle comes out. Despite having a long lower shadow, the last 15M candle comes out as a bearish candle too. The sellers may trigger a short entry right after the last candle closes. Stop Loss is to be set above the last resistance and Take Profit is to be set with 1R. This is why the new level of support/resistance plays a significant role.

The price heads towards the South but not with strong bearish momentum. It hits 1R though. The distance between new resistance to entry point= Entry point to Take Profit= 1R.

Whenever the price finds its new resistance/breakout, breakout traders must count those to set their stop loss and take profit level. Breakout trading needs the price to make a breakout with good momentum. If it takes any pauses before making a breakout, ignore the last support/resistance. It gives us better risk-reward as well as more chance of winning a trade.

Categories
Forex Price-Action Strategies

Breakout Confirmation Candle and the Difference It Makes

Breakout trading strategy traders first wait for the breakout with good momentum. Then, they are to wait for the breakout confirmation candle. A breakout can be confirmed in two ways. It can take the price towards the trend, or it could come out as in inside bar reversal candle. As long as the candle closes below the breakout level, it confirms the breakout. However, these two types of breakout confirmation push the price towards the trend a bit differently. In today’s article, we are going to demonstrate an example of this.

The price after being bearish makes a bullish correction. The last candle comes out as a bearish pin bar. This is a strong bearish reversal signal. The sellers are to wait for the price to head towards the level of support, where the price has a bounce earlier.

The price heads down with good bearish momentum. It seems that it is going to make a breakout at the drawn level. The breakout sellers are to keep their eyes on the pair closely to take a short entry upon a bearish breakout and breakout confirmation.

Here it comes. The last candle breaches the level of support closing well below it. This is an explicit breakout, which the sellers wait for. If the next candle confirms the breakout, the sellers may drive the price towards the South further.

The next candle comes out as a bullish inside bar. However, it closes within the breakout level. It means the breakout is valid. It is not an A+ breakout confirmation. It offers less reward and does not drive the price towards the trend with good momentum. If the candle came out as a bearish candle closing below the breakout candle, it would be a different ball game. The price may make a move towards the downside by offering 1R at least. Let us see what happens here.

The next candle comes out as a bearish candle. Some sellers may trigger a short entry. In most cases, it does not travel as far as it has traveled to offer the entry.

It produces a strong bearish candle. It seems that the sellers are in control. The question is whether it travels the same distance of Stop Loss-Entry or not. Let us find out from the next chart.

The price starts making an upward correction. It goes back within the breakout level. This chart does not look good for the sellers any more unless it makes a bearish breakout at the last lowest low.

We have seen that the breakout candle and breakout momentum are good. However, the price does not head towards the trend and travel the distance as it usually does. This is what happens if the breakout confirmation candle comes out as an inside bar reversal candle. Thus, it is best if we skip taking such entry.

Categories
Forex Price-Action Strategies

The Benefit of Checking Minor Chart before Taking Entry

In one of our lessons, we have learned that when a breakout confirmation candle comes out with a long upper or lower shadow needs to be checked on the 15-min chart. The last 15 M candle plays a significant role to drive the price towards the breakout direction. A breakout confirmation candle with a long upper or lower shadow does not mean that the last 15M candle comes out as a reversal candle. We are going to demonstrate an example of this in today’s lesson.

The price after being bearish finds its support. The chart produces two bullish candles consecutively. A level of resistance produces a bearish reversal candle. The correction length looks good. Let us proceed to the next chart.

The next candle comes out as a bearish candle as well. However, it closes within the consolidation support. The sellers are to wait for a candle to breach the level closing well below it. It is waiting time for the sellers.

The last candle breaches through the consolidation support. The breakout does not look an explicit breakout. However, it closes below the level. If the next candle closes below the breakout level, that would confirm the breakout. The breakout confirmation candle holds the key for the sellers.

The last candle closes below the breakout candle. This confirms the breakout. However, look at the long lower spike. This looks ominous for the sellers. In naked eyes, it does not look to be a good confirmation candle for the sellers to trigger a short entry. Let us now flip over to the 15 M chart and find out how the last candle comes out.

This is the 15 M chart. The last candle is a strong bearish candle despite having a long lower spike. We do not need to flip over to any minor chart here. This means the pair is having a strong bearish momentum in the 15 M chart, which is a signal for the sellers to trigger a short entry.

As expected, the next candle comes out as a bearish candle. It seems that the price is going to hit 1R in a hurry. Let us proceed to the next chart to find out how the trade goes.

The price heads towards the South with one more candle. It hits the take profit level (1R) with ease. The price may make a more bearish move as well. The trade setup with a less promising breakout confirmation candle works wonderfully well for the traders. Do not forget to check the 15 M chart if the confirmation candle has a long upper/lower shadow. It may help you decide which entry to take and which one not to.

Categories
Forex Basic Strategies Forex Daily Topic Forex Price Action

Support, Resistance and Trade Management

-Support and Resistance are the two most important concepts in the financial market. Forex traders strongly rely on support and resistance, as well. Price action traders’ main weapon is support and resistance. In today’s article, we are going to demonstrate an example of how the price reacts to a major level of support and resistance. Let us get started.

Look at the chart. The price consolidates around the red-marked level, it finds its resistance there and makes a bearish move. After having a correction, it makes the new lowest low. This is now the sellers’ territory. Let us assume that there is no significant level, which may hold the price as support. Thus, we are not able to mark any level as support. The sellers are to wait for the price to consolidate and produce a bearish reversal candle to offer them short entry in this chart.

The price makes new lowest lows and heads towards the South with good bearish momentum. However, it seems that it may have found its support. It consolidates for a while around the red-marked level and produces a bullish engulfing candle. The buyers on the minor chart may get them engaged to keep an eye on the chart to go long above the highest high of the last candle. Let us find out what happens next.

The price heads towards the North. It consolidates and produces another bullish engulfing candle. It means the chart is now the buyers’ territory. This is where the game of support and resistance begins. You may have noticed that we have red-marked the level. This is the most significant level in this chart for the buyers. The price may consolidate and find its resistance in this chart before it reaches the red-marked level. However, this is where traders may make a decision concerning their long position. They may either close their whole trade or take partial profit.

The price keeps heading towards the North. It buyers are having a party here. They must not forget the red-marked level, though. Let us proceed to the next chart.

Look at the chart carefully. Do you notice that the price consolidates around the red-marked level, which is the swing high in this chart? It produces a bearish engulfing candle followed by another bearish one. The last candle on this chart comes out as a bullish inside bar. If the next candle comes out as a bearish engulfing candle, the sellers may drive the price towards the South. I am sure now you know where the sellers are to be careful with their trade management. Yes, they must take the red-marked support (swing low in this chart) into account to manage their short entries.

Categories
Forex Daily Topic Forex Price-Action Strategies

ABC Pattern Trading: A Little Adjustment Needed According to the Charts

The ABC pattern is one of the traders’ favorite trading patterns for its lucrative risk-reward. It usually offers at least 1:2 risk-reward. In many cases, it offers even more. However, the price may sometimes find it hard to make a breakout at point B. That is where the ABC pattern traders must be patient and hold their nerves while trading on the minor charts. However, with major charts, it is a bit different. In today’s lesson, we are going to demonstrate an example of the ABC pattern trading on a minor chart.

This is an H1 chart. The price heads towards the North with good bullish momentum after having consolidation for a long time. The ABC pattern traders are to wait for the price to make a downside correction and produce a bullish reversal candle at C point.

The price has been on a downside correction. It produces three consecutive bearish candles. The ABC pattern buyers shall keep their close eyes on the chart to get a bullish reversal candle.

The chart produces a bullish engulfing candle. This is an A+ bullish reversal candle. The ABC pattern traders have some drawing work to do before the price produces a reversal candle. We find this out in a minute. Can you guess where the chart produces the bullish reversal candle? Have a look at the chart below.

Do you notice that the price had a massive rejection at the same level earlier? The chart produces the bullish reversal candle at the flipped support. This is an ideal C point. The buyers may trigger a long entry right after the candle closes by setting stop loss below the signal candle. As mentioned, take profit may be set at least with 1:2 risk-reward.

After triggering the entry, the price heads towards the North with good bullish momentum for three more candles. It then starts having consolidation around the last swing high (at point B). It often happens. The buyers must wait and hold their positions since the trade setup in on the H1 chart. The intraday ABC pattern traders must follow the rule “Set and Forget”. With the H4, the Daily, it is different though. Let us proceed to the next chart.

The chart produces another bullish candle and hits the target. The buyers’ have achieved their 2 R target. We must remember that when we trade on the ABC pattern, we adjust our target according to the chart. Intraday charts (5M, 15M, H1) usually makes a breakout at Point B. Thus, we let the trade run and decide its route. On the other hand, if an entry is taken on the charts such as the H4 and the daily based on the ABC pattern, we may consider taking at least 50% profit at Point B. This is where a little adjustment is needed if we trade based on the ABC pattern.

Categories
Forex Daily Topic Forex Price-Action Strategies

Look for Such Price Action to Trade on the ABC Pattern

In today’s lesson, we are going to demonstrate an example of the ABC pattern trading. The trend-initiating candle comes out as a bullish engulfing candle followed by a bullish breakout. The price then makes a bearish correction and makes a bullish move upon producing a bullish reversal candle at a flipped support. Let us demonstrate with the charts how it happens.

The price has been bearish, but it has produced a bullish engulfing candle at the support zone. The buyers are to wait for the price to head towards the North and make a bullish breakout at the last swing high. Let us proceed to the next chart.

The price makes a breakout at the nearest swing high. The buyers are to wait for consolidation or correction and a bullish breakout. The last candle comes out as a strong bullish candle as well. It may keep going towards the North. Let us wait and find out what it does next.

It starts having a correction. Then, it produces a bearish inside bar followed by two more bearish candles. The price is at the flipped support. The buyers are to keep their eyes on this chart very closely.

Here it comes. The chart produces a bullish reversal candle. Do not miss the point that the level is the breakout level when the price heads towards the North. Such level is very significant as far as the ABC pattern trading is concerned.

The price makes a bullish breakout again and produces a new higher high. Traders may trigger a long entry right after the last candle closes by setting stop loss below the level of flipped support. It usually provides at least 1:1 risk-reward, which is the safest option. Let us proceed to the next chart to find out how it goes.

The price heads towards the North as expected. It hits the target (1R) with ease. The chart suggests that it may go towards the North further. Anyway, the ABC pattern traders shall enjoy their profit and hunt for the next one somewhere else.

In this example, we have seen that four aspects of the ABC pattern trading such trend initiating candle, breakout, reversal candle at the breakout level, and the signal candle get 10 on 10. Consequently, the price heads towards the desired direction with good momentum. If any of them fails to get 10 on 10, the trade may not go, exactly we would love to see it go. To keep excellent trading consistency, try your best to trade the ABC pattern on such price action that we have demonstrated today.