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Many people like trading foreign currencies on the foreign exchange forex market because it requires the least amount of capital to start day trading. Forex trades 24 hours a day during the week and offers a lot of profit potential due to the leverage provided by forex brokers. Forex trading can be extremely volatile, and an inexperienced trader can lose substantial sums. The following scenario shows the potential, using a risk-controlled forex day trading strategy. Every successful forex day trader manages their risk; it is one of, if not the most, crucial elements of ongoing profitability.

Forex price action course download investing commodities gold technical

Forex price action course download

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Bad market — Very deep trend waves Although we have a trend here, we need to stay away from such a trend because the retracements are too deep and not easy to trade. Download or. Contact Us. Home Courses. Share on Facebook Share on Twitter. Related Posts. The Technical Floor Course. Technical Prosperity — Red Package Course. Quality FX Academy Course. Premium Forex Indicators. Get help. Privacy Policy.

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The other important support and resistance area is the period moving average, because a lot of long-term traders and investors use the average of the last days while analyzing the chart. Now that you understand what candles are, and what different types of support and resistance are, it is time to combine candles with support and resistance to better understand the price structure.

Remember the Japanese Rice Trader example from the previous chapter, where Bill the first was the Rice Trader, and Bill the second was changing his mind after realizing the high and low of the day? Well, you see, a new candle forms every 5 minutes if you have the timeframe set to 5 minutes, and every day if you have the timeframe set to 1 day. But most of the time, the data that candles show, or in other words, all candlestick patterns most of the time are not that useful.

However, there are few exceptions. If you are trading the strong short-term momentum especially on a smaller timeframe, you can use the first red candle that shows up after a series of green candles to exit the long trade and book a profit.

Or if you are trading on the daily or higher timeframes where there is less market noise, every single candlestick pattern holds more value than it does on smaller timeframes. But candlestick patterns are best used to see the reaction of the market participants near the support and resistance areas. Instead of buying immediately, you wait for the candles to show the sellers stepping out, and buyers stepping in. In other words, you want a candlestick pattern to form near the support area, that shows the buying pressure.

First, the Bullish Candlestick Patterns, or in other words, if the following candles are formed, it indicates a higher probability of price making a move in the upward direction. After a series of red candles, a Hammer Pattern indicates a potential upward move. Here, the price made a move in the downward direction, but then there was more buying pressure, that took over the sellers. In the inverted hammer, the price first made a strong move in the upward direction indicating a strong buying pressure, but then there was a good selling pressure.

However, the selling pressure was not strong enough to take out all the buyers. Then there is a Dragonfly Doji. This pattern is formed when the price makes a move in the downward direction, but then the buyers bring the price back to where it opened. Bullish Engulfing Pattern is formed, when the buying pressure is so strong, that the green candle completely engulfs the body of the previous red candle.

In the Morning Star Candlestick Pattern, first a big red bar is formed indicating good selling pressure. But then a small green bar is formed indicating a loss of selling pressure. The Morning Star Pattern is completed, when another strong green bar appears confirming a buying pressure after the loss of selling pressure. In the Three White Soldiers Candlestick Pattern, three consecutive green bars with almost no wick at the top are formed after a series of red candles. There are other candlestick patterns, but these are the most important and reliable patterns out there.

Shooting Star. As you can tell, this one looks like a shooting star, and opposite of the hammer pattern. When the shooting star pattern is formed after a series of green candles, it indicates selling pressure. The buyers made the price move in the upward direction, but then the sellers took over all the buyers and a red candle was formed. In the Hanging Man Candlestick Pattern, there was an increase in selling pressure as soon as the previous green candle was closed, but then there was some buying pressure from the bottom.

However, the buying pressure was not greater than the selling pressure. Gravestone Doji is a pattern where the buyers made the price move in the upward direction, but then sellers entered the market and brought the price back where the candle opened. This pattern is similar to the shooting star pattern and indicates a potential downward move. In the Bearish Engulfing Pattern, the red candle completely engulfs the previous green candle. In other words, the sellers completely took over the buyers of the previous candle.

In the Evening Star Pattern, first a green candle is formed indicating a buying pressure, but then the buying pressure is lost and a small red candle is formed. The Evening Star Pattern is completed when a big red candle is formed confirming a strong selling pressure. Three Black Crows Pattern is formed when three consecutive red candles are formed with almost no wick at the bottom after a series of green candles.

They are formed when the buying and selling pressure is pretty much equal. A neutral candle can look like a Plus symbol, also known as a Doji candle. Or can also look like a spinning top. When these patterns are formed, it means there is no strong buying or selling pressure and you should wait for other confirmations. If everything is edited as I thought it would be, I should have said that I started trading with Price Action Only, but after trading for thousands of hours and making money with it, I quit.

We will get to Why I stopped being a Price Action Only Trader in the next chapters, but in this chapter, we will see what I found, and one of the price action strategies I actually traded. After thousands of hours of trading with price action strategies in the live market, I found out that these three patterns work the best. These are the most reliable patterns in the long run, especially the engulfing pattern.

Now, if you have watched one of the candlestick patterns videos I did on the Trading Rush Channel, you know that the Hammer Candlestick Pattern and the Bullish Engulfing Candlestick Pattern are basically the same things, or in other words, they are telling the same story. In both of these patterns, the price goes in one direction, and then the opposite pressure makes the price go in the opposite direction. The only difference between the two is that, one did it in a short time, and the other one took a while, resulting in two separate candles.

For example, imagine that there are two candles, but one has fewer seconds left to close than the other. In the bullish hammer and the engulfing pattern, the price makes a move down indicating selling pressure. The price movement is exactly the same, but this time, the second candle closes when the price makes a move in the downward direction, resulting in a completed red bar.

Since the first candle still has enough time to close, when the buying pressure increases and the price makes a move in the upward direction, the first candle creates a Hammer pattern, but since the second candle was closed in the middle, it ended up creating a Bullish Engulfing Pattern, even though the price made the exact same move.

Since the engulfing patterns were most reliable in my experience, I was able to make money by simply buying when a bullish engulfing or a hammer pattern was formed near a strong support area. And by selling when a bearish engulfing pattern was formed near a strong resistance area. This simple strategy was quite effective, but there is a slight problem with these setups. We will see them in the next chapters. Although Candlestick charts are the most popular charts, there are two other types of charts that you will see some traders use.

One is the Bar, which looks very similar to the candlestick chart, except there is no candle body. Then there is the Heiken-Ashi Chart, where the candles look a lot smoother. Even though Heiken-Ashi looks better than normal candlestick charts, most professional traders will not use it and stick to the normal candlesticks or bar charts that sometimes look like a mess. Heiken-Ashi is basically taking an average of the price movement, but by doing this, a lot of data is lost that a professional trader might find useful.

So Heiken-Ashi is best used to trail the stop loss and stay in the trend for a longer period of time, read the price movement better, and analyze the strength of the trend. To analyze the strength, or in other words, to see if the momentum is slowing down or increasing, all you have to do is look at the size and shadow of the candles.

If a green Heiken-Ashi candle has no shadow below the candle, it indicates upward momentum. If the size of the Heiken-Ashi candle is relatively bigger, it shows a strong upward momentum. If the size of the green candle is smaller, it shows a weak upward momentum. If the Heiken-Ashi candle has shadows on both sides, it means a slow, or a sideways momentum.

If the red Heiken-Ashi candle has no shadow above the candle, it indicates downward momentum. If the size of the Heiken-Ashi candle is relatively bigger, it shows a strong downward momentum. If the size of the red candle is relatively smaller, it shows a weak downward momentum. So far, I have only talked about and recommended things I actually made money with or were helpful in the long run. But out of all of these patterns, I have only found three patterns that work the best.

You have even seen 2 of them in one of the live trading videos on the Trading Rush Channel. The first one is the bullish flag pattern, where the price makes a strong move in the upward direction, then gives a small pullback, that looks like a flag you drew as a kid.

Sure, the quality is a lot better, but when this kind of flag pattern is formed, the price has a higher probability of making a good move in the upward direction after the price breaks out of this flag. This kind of flag pattern can be easily found on the stock that opens with a gap. In other words, the price finds support at pretty much the same place, but the new swing high keeps forming at a lower point. When the price breaks above this pattern, it has a higher probability of making a move in the upward direction.

The first and second patterns tell the same story, there was a strong buying pressure. But then there was a not-so-strong selling pressure indicated by the small and weak pullback. When the price gives a breakout, there is strong upward momentum to capitalize on.

The third one is the head and shoulders pattern. This one is best understood by actually understanding how it is formed. Also, this pattern works best in a strong resistance area. When the price reaches a resistance area, selling pressure is increased as expected, but the selling pressure was not strong to take out all the buyers. When the buying pressure is increased, the price breaks the resistance, or in other words, the price gives a breakout.

But then the buyers fail to make the price go higher. The selling pressure is increased and the price is back inside the resistance area, resulting in a false breakout. The price retest the resistance area again, and after all of this rejections and mess, when the price breaks below the support, or in other words, when the price breaks below the area where the buyers were stepping in, the buyers are taken out and a strong selling pressure can be seen most of the time.

Of course, there is a chance none of what I just said actually happens, but these 3 patterns, and especially the first two, I have found to work the best after trading for thousands of hours with price action only. As you can see, the price is in a good uptrend.

On this chart, we know the price is moving in the upward direction, or in other words, the price is in an uptrend. But if you look closely, you will notice that after making the upward move, it went in the sideways direction for a while. We saw how to draw support and resistance like a pro in the previous chapters, and on this chart, this is the resistance where the price has reversed multiple times.

As you can see, the price broke above the resistance, so now the resistance will act as a support area. Since we know the price is in a long-term uptrend, we will look for long trading opportunities. We will wait for the price to come back near the support area, and take a long position when we see buying pressure. We will use the candlestick patterns that we saw in the previous chapters to find that buying pressure.

But as you can see, the price went straight through the support area resulting in a false breakout. When the price gave a breakout above the resistance area, the sellers who had the stop loss above the resistance got stopped out, and new buyers stepped in. But then there was a strong selling pressure that took over all the new buyers resulting in strong selling pressure. Since we were waiting for a bullish candlestick pattern near the support area, which never appeared, we have no reason to enter the trade.

If there was some kind of bullish pattern near this support area, we would have set the stop loss below this breakout support area. When the price was moving in the sideways direction, we can see the price found support in this area. And right now, the price is near that area again. Furthermore, when the price touched this support area, we can see a big price rejection from below. Since the candle is still red and not green, it is not the bullish candlestick pattern we are looking for.

But then, as you can see, the next candle completely engulfs the body of the previous candle, resulting in a Bullish Engulfing Pattern, or in other words, a signal to buy. So we will take a long position when the candle is completed, and we will set the stop loss below the support area. If the swing high was far away, we could have used a 1.

But here, only 1 to 1 is possible before the swing high resistance. Yes, if you were paying attention, you probably noticed that I took entry near the previous resistance. You see, there are two kinds of resistance areas. One is weak resistance, and the other one is strong resistance.

Identifying and telling the difference between weak and strong resistance will come with experience. But basically, the resistance and support areas that are visible on the higher timeframes, are strong resistance areas, because everyone can see them at the same place.

But these kinds of support and resistance areas are weak resistance. Because, on our entry timeframe, we can see this as a resistance, but if we switch to a higher timeframe, the resistance area is not clearly visible. So many traders on higher timeframes will not see any kind of resistance. Since we know the price is in a good uptrend, and even your dog knows that the price has a higher probability of breaking the recent resistance area in an uptrend, and we saw the strong buying pressure when the price touched the support area, and we took entry after the engulfing pattern which is one of the most reliable candlestick patterns I found after thousands of hours of trading with price action only, the price not only has a very high probability of going in the upward direction, but our trade has an even higher probability of winning, because the stop loss is below the support area, and profit target is below the swing high resistance.

If we fast forward the live trading clip a little, we can see the price went exactly how we anticipated. No indicators were used, and all of the analysis was done in the live market with the price action alone. The live trading example was important, because there was no hand-picked setup where everything went perfectly. And as you saw, when the analysis is done in the live market, you will see things going against us, and not so smoothly. But hopefully, this was more helpful than a hand-picked setup from the past.

After all, every trade is different from the previous one, and one liive trade example is not enough. Making money in trading is easy, making money with price action is easy, but not understanding when not to try to make money, is where people lose money and blame the strategies. Even your neighbor who bought Bitcoin when it was at the top knows, that to make money more consistently in trading, or in other words, to have a higher probability of winning, you have to trade in the direction where the price is already heading.

The trend! But if your strategy is a trend trading strategy, the last thing you want is to risk your money when the market is ranging. It sounds simple, but people lose money first, and then realize that the market was not worth trading. In the previous chapters, we saw that if the price is trending, it looks something like this. If it is up-trending, it will make higher swing highs and higher swing lows.

If your trend trading strategy gives entry signals near the end of the pullbacks, you will take trades somewhere around here. If the price was making higher swing highs at the time of entering the trade, the entry is completely valid. But if the price does not make a new swing high, it is an early sign of a slow or a sideways market. At this point, the price can make higher swing lows while creating relatively similar swing highs.

If this happens, you will probably end with a chart pattern that we saw in the previous chapters. On the other hand, the price can reverse from the previous swing high, and find support again at the previous swing low. This is when the range market is pretty much confirmed, and the uptrend is most likely over.

But there are different kinds of range markets. One is a wide range, that is usually visible on multiple timeframes, and another one is a small range that is only visible on your entry timeframe as we saw in the previous live trading video.

If more people can clearly see a slow or a range market, more people will take trades while keeping the range in mind. If only you can see it on your smaller timeframe, and on the higher timeframe the price is in a strong uptrend, the price has a higher probability of breaking the resistance of that weak range. But when you see the price could not cross above the previous swing high in an uptrend, it is a good idea to stop taking new long trades, especially with profit targets above the previous swing high.

Similarly, if you see the price could not cross below the previous swing low in a downtrend, it is a good idea to stop taking new short trades, especially with profit targets below the previous swing low. Although people lose money when the market is ranging, the range market is fairly easy to identify.

The beginner traders really lose money is when the market looks like this, and not like this. As you can see, the price on both of these charts are trending and is not in a range. But one chart looks easier to read and clean like something out of a fairy tale, but on the other hand, there is this mess.

This is a choppy market, and this is where most strategies, including your indicator strategies, become less reliable. You see, when I started trading, I used to take screenshots of the winning and losing trades, and store them in two separate folders. After a while, when I used to analyze them, I noticed that most of the charts of the winning trades looked like this, and most of the charts of the losing trades looked messy like this. Have a good and close look at it. I switched to the 1hr timeframe and waited for price to come and hit the confluence zone and saw a shooting star, a bearish reversal Candlestick pattern also sometimes called a bearish pin bar.

That was my clue to execute a short trade right there. Good thing as I was stilling writing this guide this trade played out so I can show you what happened: As you can see, I managed to make pips on the first trade. Note also that I also made a 2 nd trade which made pips as well. Even though my profit target was not hit, I used trailing stop loss as shown below until I got stopped out when price moved back up.

This short trade setup had 4 factors of confluence supporting it :. All this information here is providing you the foundation; the basic framework you need to trade price action, the learning comes from observing and doing. If you are trading strictly using the large timeframes like the daily chart, your stop loss distance will be huge and the issue with that is your risk:reward ratio can be reduced no necessarily all the time :.

So in that case your risk:reward ratio will be And even though you are trading with a setup in the daily chart, for your trade entry, you are actually switching to the smaller timeframe and watching for a sell signal in the 1hr timeframe?

This chart below is a daily chart and shows a triple top pattern in a solid resistance level. Price has been pushed down twice from this level and when the third time it price reaches this level, it was pushed down again. Now, you can see the bearish harami reversal candlestick pattern and you could have used this as your sell signal by placing a pending sell stop order just a few pips under the low.

And placed your stop loss outside of the resistance line as shown on the chart above. Notice that for the 1hr trade entry, it was done almost at the very top and the stop loss distance was very small in comparison to the trade taken in the daily timeframe. Which means that the risk:reward of the 1hr timeframe trade is a lot better than what you would get in the daily. Now, you can do this with daily timeframe and 4hrs or even down to the 30 and 15 minute timeframes.

Or you can watch trade setups in the 4hr but switch to either the 1hr, 30mins, 15min and 5mins for your trade entries. I often use the 1hr for my trade entries and can even go down to 5min timeframe for my entries. If you are new trader, stick to 1hr or 4hr timeframe for your trade entries. So when you trade in the 1hr timeframe or much smaller timeframe you can actually trade a lot more contracts without risking more because your stop loss distance are very small compared to the larger timeframe trade.

For example, the stop loss for the 1hr timeframe trade is 20 pips but for the daily timeframe trade is 80 pips. This simple example explains why I wait patiently for trade setups to happen in the monthly, weekly, daily, 4hr timeframes and then use smaller timeframes to get good trade entries. This is the beauty of multi-timeframe trading using price action. This is the monthly chart:. Now, lets zoom in on the daily chart and see what the price action is like on where the arrow is pointing see chart below :.

So now you can see how I do my multi-timeframe analysis to get down a timeframe where I execute a trade at a very good price level or entry point whilst keeping my stop loss distance tight. But when you switch back and forth between timeframes, you begin to see how you can trade the larger timeframes setups based on the setups that happen in the smaller timeframes.

I will be waiting for a pullback to buy, if that happens. I hope you have learnt how powerful price action trading can be. Now, not all trading setups you see will become winners. When you are watching the chart for trading setups, you need see and trade the obvious. I should have taken a trade here and look at how the market moved after that bearish shooting star candlestick was formed after hitting the resistance level. When you trade the obvious, then you trade with what everybody else is seeing and in essence you are really doing piggy-back, riding on the market move created by all these orders that puts the odds in your favour.

See chart below for this: if you see a support major support level and price is heading down to it and at the same time, that support level is coinciding with an upward trendline…. What does this mean? And then you see a bullish Piercing line reversal candlestick form right at the area of confluence. Are you going to be undecided about this price signal and pull up stochastic or CCI indicator to really make sure give you confidence you need to buy???

I would really appreciate that. Thank you. Hi Paul, there is no true volume indicator in forex telling you exactly how much volume is going through the forex market at any given time period. This is because forex is not a centralized market like the share market where true volume information can be seen. The volume indicator you see on your MT4 trading platform does not measure the true volume at all.

It simply measures the number of ticks for a given time period. Hi R Key Thanks a lot for the knowledge Is it also necessary to you use Volume Analysis in Forex can it help when combines with price action. Thank you so much for your time, efforts and enormous generosity in sharing it for free with the trading world.

I like it so much that I have bookmarked it to refer to it again and again as part of my must keep and review again and again trading library. A HUGE thank you to you. I really wanted to try me my psychology management.. Hi Rkay I would like to ask for advice to you.. I hope you give advice and risk lavarage what should I use thank you. Hi Hilman, you need figure out the answers to those questions yourself. Leverage is totally irrelevant.

How much risk per trade is. Hai Rkay Terima kasih telah membuat blog yang sangat sangat saya cari selama ini Sudah sekian banyak saya mengunjungi web dan blog forex ,tetapi mereka hanya menjelaskan dasar nya saja.. Tetapi disini dijelaskan sampai ke akar nya.. Price Action adalah yang terbaik.. Maaf jika komentar saya tidak menggunakan bahasa inggris, itu karena saya tidak begitu faham..

If we want to find out more should pay a very high price.. But here described to her roots.. Price Action is the best.. As you rightly pointed out that most of the PAT course in the market covers the same material as yours and you have provided for free. God bless you and helps to change your mindset to have a proper money management.

Keep doing your wonderful work. All the very best. Thanks Rkay. I am waiting for a long time to find a website like yours. Now I found it its feel like heaven. The free training is very helpful for beginnrrs like me. I sm very happy. What i Like most everything in one Glance single page and you learn what expensive courses will teach and free. I am from India and has been a kind of active trader from last many years.

From last couple of years i am into price action trading and finally the account is moving to a positive direction. Though most of the things you shared above , i was already aware of but still learnt few concepts that i think can provide an extra edge to my trading. As a token of gratitude i am sharing couple of very important and knowledgeable links with you. Please visit them whenever you get a chance —. With multi-timeframe trading, the lower timeframe does not necessarily have to be in the same direction as the larger timeframe.

You will notice that: 1 the main trend was up up on the daily timeframe the larger timeframe 2 switching to lower timeframe, 4hr or 1hr to wait there for sell signals bearish reversal candlesticks. Based on this example, you can see that daily trend was up, even the 4hr or 1 hr trend was heading up as well. Hi Rkay, When analyzing the charts on a daily timeframe is in an uptrend then I switch to a 4hr chart is in downtrend.

Should both timeframe be in the same direction before I entry a trade? God bless. Dude thanks so much for putting this up!!! A BIG Thanks to those traders that are clicking the sharing links like facebook share, tweet etc to share this free price action trading course with your fans and friends. Excellent — I have learned so much reading this material. I shall be using it over and over again until it all sinks in to my mind.

Thank you so much for such first rate intelligent information that was enjoyable to read. Comprehensive but easy to digest. All of that for free. Thank you so much for helping people like me that do not have the wherewithal to pay for price action trading lessons.

I book marked this page and will spend weeks and months studying your teachings. Once again remain blessed. Hi Leo, thanks for visiting. Glad you like the PA course. Cheers RKay. After going through the price action trading course, you will need this: Enjoy! Or if you are smart do I have to remind you of that?

Ok…fair question. In order for me to answer your question, I will have to ask you a question before I can answer your question … Do you need to know everything about how a car operates from how the engine works, what makes the wheels turn, how it changes gear, how the brakes work etc. No… Right…exactly! So traders are like that… If we get the direction wrong, we lose money, we get it right, we make money.

This is the basic definition of price action trading: When traders make trading decisions based on repeated price patterns that once formed, they indicate to the trader what direction the market is most likely to move. The chart below shows and example of what can happen when there is major forex fundamental news release: This is one experience I will never forget.

My stop loss was never triggered at the price level where I set initially. Later I found out that it was a major economic news release that moved the market like that. The high impact news are colour coded in Red. This can works for you or against you. You need to know what you are doing during these times. If you already have a trade that has been running prior to the news release time for some time and in profit, think about moving stop loss tighter or taking some profits off that table in case the market goes against you once the news is released.

In an ideal case, you would have taken this trade a while ago and that the current market price is far away from your trade entry price and you would have locked some profits already and if the market moves in the direction of your trade after the news release, you will make a lot of money.

Human behavior in the market creates some specific patterns on the charts. So price action trading is really about understanding the psychology of the market using those patterns. Because of collective human reaction! Price action gives structure to the forex market. However with price action, you can, to an extent predict where the market can potentially go.

This is because price action brings structure. So if you know the structure , you can reduce the uncertainty to some extent and predict with some degree of certainty where the market will go next. If you are trading with stochastic or CCI indicators etc, they tend to give too many false signals. This is also the case with many other indicators.

Price action helps to reduce these kinds of false signals. Price action is not immune to false signals but it is a much better option than using other indicators…which are essentially derived from the raw price data anyway. What is noise? Market noise is simply all the price data that distorts the picture of the underlying trend… this is mostly due to small price corrections as well as volatility.

See the 2 charts below to see what I mean: And now, compare market noise in the 4hr chart notice the white box on the chart? What is a trading edge? Trading using Support and resistance levels. Making your winners larger than your losing trades Trading only in larger timeframes Waiting patiently for the right trade setups and not chasing trades.

Some of you will go through this guide and learn and make much money but some of you will fail. Price action trading is not the holy grail but it sure does beat using other indicators most of which often lag and a derived from price action anyway! Price action trading will not make you an overnight success. You need to put in the hard yards, observe and see how price reacts and see those repetitive patterns and then have the confidence to trade them then you will be rewarded for that.

Start learning to trade naked price action. And you can see this happen in the trading world as well: The way multitude of traders think and react form patterns… repetitive price patterns that one can see and then predict with a certain degree of accuracy where the market will most likely go once that particular pattern is formed.

They will be waiting with their sell orders…not just one sell order but thousands of them, some small and some big orders. So once they take their profits around resistance levels, that means there are now less buyers now and more sellers. Not-So-Pure Price Action Trading This is when price action trading is used with other indicators and these other indicators form part of the price action trading system. Origin of Price Action Trading Charles Dow is the guy credited to be the father of technical analysis.

What is price? If the demand is more, price increases as more traders start buying and driving prices up. If there is an oversupply, price falls as there are more seller and less buyers. Supply zones on your charts are on and around resistance levels where sellers come in and drive the prices down due the fact that there are very few buyers.

The chart you see below is a bar chart. What Is A Candlestick Chart? What Is A Line Chart? The line chart is one of the least favorite of charts for trading. The candlestick The candlestick chart had its origins in Japan and can also be referred to as the Japanese candlestick chart.

The colour of the candlestick chart tells you if price was up or down in a particular timeframe which means that candlesticks are either bullish or bearish Now most traders prefer to set green candlesticks as bullish and red candlesticks as bearish.

If you are a woman, you may change a bullish candlestick to pink! And bearish candlestick to Purple! I have never seen a pink and purple candlestick yet. This candlestick shown below is an example of bullish candlestick. A Bullish candlestick simply means the price opened lower and closed up higher after a certain time period, which can be 1minute, 5minute, 1hr or 1 day etc.

The candle body represents the distance price has moved from the opening price to the closing price. The longer the body, means price has moved a great deal upward after opening. The shorter the candle body means the exact opposite. The high is the highest price that was reached during that time period.

The low is the lowest price that was reached during that time period. All these candlesticks shown below are bullish candlesticks which mean that their opening prices was lower than the closing prices and therefore reflect and overall uptrend in the timeframe each candlestick was formed: Now, the candlestick shown below is an example of a bearish candlestick. A bearish candlestick simply means that the candlestick opened up at a high price and closed lower after a certain time period: All these candlesticks shown below are bearish candlesticks meaning that the opening price was higher than the closing price, therefore reflecting a downtrend: Understanding Buying and Selling Pressure on Candlesticks Did you know that there are bullish candlesticks that are considered bearish and bearish candlesticks that are considered bullish?

It means price opened and got pushed higher by the buyers but then at the highest price, sellers got in and drove it back down. Sellers drove the price down but buyers got in and drove the price back up. What about the length of the body of candlesticks? The longer the body of the candle indicates very strong buying or selling pressure. A short body of a candlestick indicates little price movement and therefore less buying or selling pressure.

Sometimes the candles will have no upper or lower shadows but with very long bodies. These are interpreted the same way as standard candlesticks but are an even stronger indication of bullish or negative market sentiment. In the case of bullish candle, prices never decline below the open. In the case of bearish candle, price never trade above the open.

See below: Now, so far we have looked at individual candlesticks…what if you combine more than one candlesticks? Well, one important thing that group of candlestick can show you is how strong or weak a bullish or bearish move is. They can also tell you if the bullish or bearish move is weakening. The word used to describe such a situation is momentum. What you will see is that the prior candlesticks will tend to be longer and as price nears the support level, the candlesticks starts to get shorter: This next chart below shows 3 bullish candles in an uptrend each with decreasing lengths.

Well, they are formed because of a change in market sentiment. For an upper wick, price is moving up and then market perception is changed by traders and then price is pushed down towards the open by sellers. For the lower shadow, price is moving down but the market sentiment changes and price is pushed up towards the close buy the bulls. Longer wicks indicate increase change in market sentiment: What is the Significance of Candlestick Wicks? Candlestick wicks with long upper shadows commonly occur when an uptrend is losing strength.

Long lower shadows occur when the downtrend is losing steam. And you only need to use price action to tell you if a trend is up, down or sideways. These structures are derived from the Dow Theory. But I will explain it in here briefly. The Dow Theory Of Trends Summarized The theory in simple terms says that: when price is in an uptrend, prices will be making increasing higher highs and higher lows until a higher low gets intercepted, then that signals the end of the uptrend and the beginning of a downtrend.

For downtrend, prices will be making increasing lower highs and lower lows until a lower low is intercepted and that signals an end of the downtrend and a beginning of an uptrend. This is how you use price action to identify trends. You should know this stuff. Now that broken support level acts as resistance level when price came for a re-test of the level and sent the price tumbling down: Now, what about continuation then?

The chart below makes this concept a bit more clearer: So the big question is: how to spot trend continuity and execute trades at the right time? For example, in a downtrend, you will sell when the market is just doing an upswing! Not good! Which means, you will get stopped out or you need to put in a large stop loss.

Large stop loss does not necessarily mean large risk if you do position sizing based on the stop loss distance. As a matter of fact, support and resistance trading is the core of price action trading. Now, in here, I talk about 3 types of support and resistance levels and they are: The normal horizontal support and resistance levels that you are probably most familiar about.

Broken support levels become resistance levels and broken resistance levels become support levels. Horizontal Support and Resistance Levels These are fairly easy to spot on your charts. They look like peaks and troughs. And when price reacts to these levels, they usually tend to move for a very long time.

Here is an example shown on the chart below: So when you see such happening, you should be looking for bearish reversal candlestick to go short. This section is about that. The path price follows and the area enclosed within it is called the price channel. General Rules For Trading Channels If you buy or sell on the other side of the channel, you wait for price to reach the other end of the channel to take profit or exit the trade. Place your stop loss on just outside the channel or just above the high of the candlestick for a sell order or just below the low of the candlestick for a buy order that touched the channel and shows signs of rejection.

This candlestick can also be a reversal candlestick. You may also decide to take half the profits off as price is in the middle of the channel for a profitable trade. Chart patterns are not candlestick patterns and candlestick patterns are not chart patterns: Chart patterns are geometric shapes found in the price data that can help a trader understand the price action, as well make predictions about where the price is likely to go.

Candlestick patterns on the other hand can involve only one single candlestick or a group of candlestick which have formed one-after-the other in regard to how they form in relation to one another in terms of their body length, opening and closing prices, wicks or shadows etc. These are the 9 chart patterns you will learn about today: Triangle chart patterns-symmetrical, ascending and descending 3 patterns Head and shoulders and Inverse Head and Shoulders 2 patterns Double Bottom and Double Top 2 patterns Tripple Bottom and Tripple Top 2 patterns But first up, I am going to talk about triangle chart patterns.

Symmetrical Triangle There are 3 types of triangle chart patterns and the chart below shows the differences between each very clearly: Now, lets starts with the symmetrical triangle pattern first. The Symmetrical triangle chart pattern is a continuation pattern therefore it can be both a bullish or bearish pattern: What does this mean then?

See an example below: If you see a symmetrical triangle pattern form in a downtrend, then expect a breakout of this pattern to the downside like this one shown below: How To Draw A Symmetrical Triangle You will see price moving up and down but this up and down movement is converging to a single point.

You need a minimum of 2 peaks and 2 troughs to draw the two trendlines on both sides. It will be only a matter of time before price breaks out of the pattern and either moves up or down. I often see that such breakout of extremely long candlesticks are not sustainable and price will often tend to reverse after such candlesticks as can be seen by the chart above …notice that after the breakout candlestick, there was one bearish green pin bar and then for the next 4 candlesticks afterward, the price went down.

This is what tends to happened with such long breakout candlesticks. So if you entered a buy order using that long breakout candlestick above, you would have to wait a while for your trade to turn profitable. This may also be handy if you had an extremely long breakout candlestick on the initial breakout, you best option is to wait for a retest of the breakout trendline then if that happens you enter.

Stop loss Placement Options On Symmetrical Triangle Pattern Here are 3 ways on how to place stop loss on triangle patterns, which include symmetrical, ascending and descending triangle patterns which you will learn next. The stop loss placement techniques here are applicable to all triangle patterns so take note of that: Ascending Triangle Chart Pattern And ascending triangle pattern looks like this chart shown below: And this is how a real chart looks like: Is Ascending Triangle Pattern Bullish Or Bearish?

However, it can also be a strong reversal signal bullish when you see it form in a downtrend. Stop Loss Placement Options You can use the strategies given in symmetrical triangle. Take Profit Options I prefer to target previous resistance levels as my take profit target. Descending Triangle Chart Pattern Important things to note about the descending triangle chart pattern: The descending triangle chart pattern is characterized by a descending resistance levels and a fairly horizontal support levels converging to a point until a breakout happens to the downside as shown below: And this is how a descending triangle looks like on a chart shown below: Is Descending Triangle Pattern Bullish Or Bearish?

It is a bearish chart pattern that forms in a downtrend as a continuation pattern. However, this pattern can also form as a bearish reversal pattern at the end of an uptrend. How to Trade The Descending Triangle Formation Similar to the other 2 triangle patterns, you can either trade the initial breakout or wait to see if price reverses back to test the broken support level and then sell. How To Take Profit I prefer to use previous support levels, lows or troughs and use those as my take profit target level.

This is what a head and shoulder reversal pattern looks like: Important things to note about the head and shoulder pattern: The head and shoulders pattern is a bearish reversal pattern and when found in an uptrend, it signals the end of the uptrend.

Sellers come in at the highs left shoulder and the downside is probed beginning neckline. Buyers soon return to the market and ultimately push through to new highs head. However, the new highs are quickly turned back and the downside is tested again continuing neckline. Tentative buying re-emerges and the market rallies once more, but fails to take out the previous high.

This last top is considered the right shoulder. Buying dries up and the market tests the downside yet again. Your trendline for this pattern should be drawn from the beginning neckline to the continuing neckline. The following chart below makes it much clearer. However, you can also use the distance in pips between the neckline and the head as your take profit target level.

Double Bottom Chart Pattern A double bottom chart pattern is bullish reversal chart pattern and when it forms in an existing downtrend, it signals a possible upward trend. Take Profit Target levels If you buy on bottom 2, you can use the neckline as your take profit level, or any previous highs above that as well.

If you buy the breakout of the neckline, use the distance between the bottom and the neckline in pips to calculate your profit target. See chart below for example: Double Top Chart Pattern A double top chart pattern is a bearish reversal chart pattern and when found in an uptrend and once the neckline is broken, that confirms a downtrend. Triple Bottom I do not see triple bottoms forming quite as often…Regardless of that, you should have an idea of what it looks like: Triple bottoms are bullish reversal chart patterns, which means if found in a downtrend and this pattern starts to form and once the neckline is broken and price head up, this confirms that the trend is up.

Others will wait for a retest of the broken neckline to enter a buy order once they see a bullish reversal candlestick… I prefer to take trades on the 3rd bottom by watching the price action. If I see a bullish reversal candlestick pattern, I buy. Why do I do that? Well, if price goes up and breaks the neckline and goes upward, I would be in a lot more profit than if I bought the breakout of the neckline.

Profit taking methods would be similar to double bottom chart pattern mentioned previously… The Triple Top Chart Pattern Triple tops are the opposite of triple bottoms and they are bearish chart patterns. Some will most likely wait for retest of neckline and then sell. I prefer to take trades on Peak 3 and if the trade breaks the neckline and goes all the way down, I have a lot more profit to make.

The key to taking a good trade on peak 3 is by looking for bearish reversal candlesticks. These are your signals to go short. If you take a trade at peak 3, you profit target can be the neckline. Or if you take a trade on the breakout of the neckline, measure the distance in pips between the neckline and the highest of the 3 peaks and use that distance to calculate your profit target. Or you can use a previous low and use that as your take profit target level as well.

There are 4 types of doji candlesticks as shown below: The doji cross can be both considered a bullish or bearish signal depending on where it forms. The gravestone doji is considered a bearish reversal candlestick when formed in an uptrend or in a resistance level. The dragonfly doji is considered a bullish candlestick pattern when formed in a downtrend or in a support level. For a bullish engulfing pattern, you will see that the first candle is bearish followed by the second candle which is very bullish and this 2 nd candle completely engulfs Bullish Engulfing-when formed in a support level or in a downtrend, this can signal that the downtrend is potentially ending.

Bearish Engulfing-when formed in an uptrend or or in a resistance level, this is a signal that the uptrend may be ending. Bullish Harami -this is a 2 candlestick pattern. The first candlestick is a very bearish candlestick followed by a bullish candle, which is quite short and is completely covered by the shadow of first candle. When you see this in a downtrend or in an area of support, this will be your bullish buy signal. Bearish Harami is the exact opposite of bullish harami.

When you see this pattern form in a resistance level or in an uptrend, this is a bearish reversal signal and may indicate that the uptrend is ending and you should go short sell. The easiest way to remember the harami patterns is to think about a pregnant woman and a baby inside her tummy: 4: Dark Cloud Cover Candlestick Pattern The dark cloud is another bearish reversal candlestick pattern formation consisting of 2 candlesticks.

It has a very long tail and a short upper wick or none at all. For a bearish railway track, the first candle is bullish followed by almost exactly the same length and body of the second candlestick which is bullish. This tells you that bulls are losing ground and bears have gained controlled. Similarly but opposite is the bullish railway track pattern.

When you see this in a downtred or in an area of support, take note because the market may be heading up and this is your signal to buy. Example below shows what I mean: Spinning tops are fairly short in length compared to other candlesticks and their body length is a few steps wider than that of doji candlesticks which actually have none or very tiny bodies. Here are few more examples: Notice also that a piercing line pattern when blended forms a hammer.

A Dark cloud cover when blended also forms a shooting star. So what actually is a Fibonacci Retracement? If you are using metetrader4 Trading platform, the Fibonacci tool has an icon as shown on the chart below: Top 3 Reasons Why You Need A Fibonacci Retracement Tool: In a downtrend, after price has been going down for some time, it will move back up upswing…remember?

The Fibonacci retracement tool can help you estimate or predict potential price reversal areas or levels. Similarly, in an uptrend, price will make minor downtrend moves downswings and the Fibonacci retracement tool will help you predict potential reversals areas or price levels. If used in conjunction with support and resistance levels and combined with price action, they do really form a powerful combination and do give highly profitable trading signals. I will talk more on that later.

Step 3b: In an uptrend market, click and drag first on the trough up to the peak and release. And you need a minimum of 2 peaks to draw a downward trendline for a market that is in a downtrend and you need 2 troughs to draw an upward trendline for a market that is in an uptrend. How To Draw Downtrend Trendlines Now, for a market in a downtrend, you can connect the peaks with a line and that forms you downward trendline. How To Draw Upward Trendlines When the the market is in an uptrend, connect 2 troughs and you have an upward trendline.

What happens if the trendline gets intersected? There are a couple of things you need to be aware when a trendline gets intersected: 1 The first is that it could mean the trend has now changed. So if price breaks the first trendline, it still has yet to head to the 2 nd and the third etc… So if you take a sell trade on the first trendline but price intersects it and you are stopped out with a loss and now price is heading to the 2 nd trendline above, you should also look to sell if you get bearish reversal candlestick signal.

Well, now we are at it! In a downtrend, you should be looking for bearish reversal candlesticks like the shooting star, bearish harami, spinning tops, dark cloud cover, hanging man etc to go short sell. So you have 3 things lining up for you, here they are again: the overall trend is down you have a resistance level that price is coming to and you notice that the price is also heading up to the fib level is And I also noticed that the previous support level that was broken could potentially act as a resistance level causing price to reverse.

Therefore now I have two things coming together. Next thing I did was to check what the fib retracement level to see if price came and hit that resistance level what the ratio would be. Surprisingly, it was So now I have 3 things coming together. So how did I take the trade then? Update: Good thing as I was stilling writing this guide this trade played out so I can show you what happened: As you can see, I managed to make pips on the first trade.

They have great chance of being profitable. What price action signals that formed there that could have given anybody an indication that this massive move was about to happen? You will be bloody surprised at what type of reversal candlesticks and chart patterns you will find!!! Then with that knowledge, get back to the present and see if you can see these patterns unfolding in the current market.

This short trade setup had 4 factors of confluence supporting it : The doji had confluence with the dominant downtrend, as it formed telling you to sell the market with the trend. The doji showed a clear indecision by the sellers and the buyers therefore the breakout of the low of doji candlestick was what the sellers were waiting for to push the market down.

The doji candlestick also formed between The moving averages providing dynamic resistance. So in that case your risk:reward ratio will be But what if you decided that you want to minimize your stop loss distance? Two things can happen here: Price is going to hit the resistance level and head back down and I will be waiting for a bearish reversal candlestick there to sell when I see one.

What do I mean by that? Things like: Trendlines or channels or bullish pin bar forming on major support level, if you can see that, there are many that will be seeing the same thing. All these traders will be waiting to see what happens at these levels and say if a bullish hammer forms on a major support level, then guess what will happen next? The most likely outcome of that is that as soon as the high of the hammer candlestick is broken, price will shoot up!

Trade the obvious! See chart below for this: if you see a support major support level and price is heading down to it and at the same time, that support level is coinciding with an upward trendline… What does this mean? NO need for that…Just Trade the obvious! You see, the more a level is tested multiple times, sooner or later it will get broken.

From my observations, times is the average, after that, expect a breakout of the level. They can stuff up your decision making process and cloud your judgement. Later, I check the chart and see that If I had sold, I would have made money. So use your own independent judgment based on what you see on your charts. Find your best timeframe to trade. Your personality, work circumstances etc may dictate what timeframe you can use.

Be patient for the right trading setups to form. If you are suffering from losing streaks, take a break. Take a week off from trading to clear up your mind then come back with a clear mind to trade. You streaks of losses may be just around the corner.

Prev Article Next Article. Hope this answers your question. Paul Angel. Raymond Piscopo. Hi Rkay, dude, this is hands down one of the best blogs, if not the best blog I have ever seen on price action. Hi Raymond, thanks for your comment. Regards RKay. Thanks for your comment, Ihsan.