Kangaroo tail forex is a term used in the forex trading industry to describe a particular type of price action pattern. This pattern is named after the shape of a kangaroo’s tail, which has a long body and a thin, tapered end. The kangaroo tail pattern is characterized by a long wick or tail protruding from the body of a candlestick chart.
The kangaroo tail pattern can occur in both bullish and bearish markets, and it is a reliable indicator of a potential reversal in the price trend. In a bullish market, the kangaroo tail pattern may indicate that the buying pressure is starting to weaken, while in a bearish market, it may indicate that the selling pressure is losing momentum.
The kangaroo tail pattern is a strong signal to traders because it represents a shift in market sentiment. It indicates that the price has moved lower (in a bullish market) or higher (in a bearish market), but then buyers or sellers have pushed the price back up (or down), leaving a long wick or tail on the candlestick chart.
To identify a kangaroo tail pattern, traders look for a long wick or tail on a candlestick chart, which is at least two to three times longer than the body of the candlestick. The longer the wick or tail, the stronger the signal. The body of the candlestick can be either bullish or bearish, but it is typically small in comparison to the length of the wick or tail.
Traders use the kangaroo tail pattern in conjunction with other technical indicators and tools to confirm the potential reversal. For example, traders may look for a confluence of other signals, such as a trendline break, a support or resistance level, or a divergence in an oscillating indicator.
One of the advantages of the kangaroo tail pattern is that it can be used on any time frame, from short-term intraday trading to long-term swing trading. Traders can use the pattern to identify potential entry and exit points, as well as to manage their risk by setting stop-loss orders.
However, it is important to note that the kangaroo tail pattern is not infallible and should not be relied upon as the sole indicator for trading decisions. Traders should always conduct their own analysis and risk management strategies before entering a trade.
In conclusion, the kangaroo tail forex pattern is a reliable indicator of a potential reversal in the price trend. It is characterized by a long wick or tail on a candlestick chart and can occur in both bullish and bearish markets. Traders use the pattern in conjunction with other technical indicators and tools to confirm the potential reversal and manage their risk. While the kangaroo tail pattern is a strong signal, traders should always conduct their own analysis and risk management strategies before entering a trade.