Decoding
the Secret Of Price Action
The information contained in tweets
is for educational purposes only.
the Secret Of Price Action
The information contained in tweets
is for educational purposes only.
The importance of price action is as follows
•You can trade the markets without
relying on fundamentals,news,trading
indicators, signal
services or tips.
•You can identify proftable trading
opportunities
across different markets and time
frames.
👇👇
•You can trade the markets without
relying on fundamentals,news,trading
indicators, signal
services or tips.
•You can identify proftable trading
opportunities
across different markets and time
frames.
👇👇
•You can take timely entries and
exits so you can reduce your losses and
maximize your profts.
exits so you can reduce your losses and
maximize your profts.
Disclaimer :-
👉THERE’S NO BEST TRADING
STRATEGY OUT THERE.
👉NO TRADING STRATEGY WORKS ALL
THE TIME.
👉 TRADING IS NOT A !LOTTERY TICKET! IT'S A GET-RICH-SLOW
SCHEME.
👉THERE’S NO BEST TRADING
STRATEGY OUT THERE.
👉NO TRADING STRATEGY WORKS ALL
THE TIME.
👉 TRADING IS NOT A !LOTTERY TICKET! IT'S A GET-RICH-SLOW
SCHEME.
What is Price
Action
Trading and
How Does it
Work?
•Price action trading is about
understanding the imbalance between
buying and selling pressure so that you can
identify trading opportunities and make a
profit.
👇👇👇
Action
Trading and
How Does it
Work?
•Price action trading is about
understanding the imbalance between
buying and selling pressure so that you can
identify trading opportunities and make a
profit.
👇👇👇
•In price action trading price is God and Volume is prayer everything else is secondary.
•Price action trading is not a strategy
but a framework for trading in different
market
conditions.
👇👇👇
•Price action trading is not a strategy
but a framework for trading in different
market
conditions.
👇👇👇
•Price action trading is not the holy
grail, and it has its downsides. For instance,
it’s impossible to perform an accurate
backtest, it takes a lot of time to validate a trading strategy, and there is subjectivity is
involved.
grail, and it has its downsides. For instance,
it’s impossible to perform an accurate
backtest, it takes a lot of time to validate a trading strategy, and there is subjectivity is
involved.
Structural Behavior of
the Markets
1. ACCUMULATION STAGE
•Accumulation stage occurs after the price has fallen
over the long period of time.
•It looks like a range market with
obvious areas of support and resistance
with with very low Volumes.
Ex- 👇
the Markets
1. ACCUMULATION STAGE
•Accumulation stage occurs after the price has fallen
over the long period of time.
•It looks like a range market with
obvious areas of support and resistance
with with very low Volumes.
Ex- 👇
2. ADVANCING STAGE
•Advancing stage occurs after the price breaks out of
resistance with very high Volume in an accumulation stage.
•You’ll see a series of higher highs and
lows.
Example:- 👇👇
•Advancing stage occurs after the price breaks out of
resistance with very high Volume in an accumulation stage.
•You’ll see a series of higher highs and
lows.
Example:- 👇👇
3. DISTRIBUTION STAGE
•It occurs after the price has risen for
the long period of time.
•It looks like a range market with
obvious support and resistance areas in an
uptrend.
At this point, there’s no guarantee the
market will break down. But if it breaks then👇
•It occurs after the price has risen for
the long period of time.
•It looks like a range market with
obvious support and resistance areas in an
uptrend.
At this point, there’s no guarantee the
market will break down. But if it breaks then👇
4. DECLINING STAGE
•It occurs after the price breaks out of
support in a distribution stage.
•You’ll see a series of lower highs and
lows.
•It occurs after the price breaks out of
support in a distribution stage.
•You’ll see a series of lower highs and
lows.
In next tweet (Tomorrow) we'll learn about Support and resistance. Stay tuned
SUPPORT AND
RESISTANCE
WHAT ARE SUPPORT AND
RESISTANCE,
AND HOW DO THEY WORK?
RESISTANCE
WHAT ARE SUPPORT AND
RESISTANCE,
AND HOW DO THEY WORK?
Support: the horizontal area on
charts where potential buying pressure
could come in and push the price higher.
charts where potential buying pressure
could come in and push the price higher.
Resistance: the horizontal area on
charts where selling pressure could come in
and push the price lower.
charts where selling pressure could come in
and push the price lower.
In short, you can treat support and resistance as
areas of value on our charts to help us buy low
and sell high.
areas of value on our charts to help us buy low
and sell high.
How do we draw
support and resistance?
1.Zoom the charts out so you can see maximum candlestick.
2.Draw the most obvious levels.
3.Adjust the levels to get as many “
touches” as
possible.
support and resistance?
1.Zoom the charts out so you can see maximum candlestick.
2.Draw the most obvious levels.
3.Adjust the levels to get as many “
touches” as
possible.
THE MORE TIMES SUPPORT OR
RESISTANCEARE TESTED IN A SHORT
PERIOD OF TIME,
THE WEAKER THEY BECOME.
The market reverses at support
because there’s buying pressure to push
the price higher. 👇👇
RESISTANCEARE TESTED IN A SHORT
PERIOD OF TIME,
THE WEAKER THEY BECOME.
The market reverses at support
because there’s buying pressure to push
the price higher. 👇👇
This buying pressure could be from institutions, hedge funds, or banks
that have orders to fll around certain price
levels.
that have orders to fll around certain price
levels.
And when the price re-tests support,
some of these orders get flled. So the more
the price re-tests support, the more orders
get flled. And when all the orders get flled,
who’s left to buy?
No one, and that’s when the market
breaks down. Here’s what I mean:👇👇👇
some of these orders get flled. So the more
the price re-tests support, the more orders
get flled. And when all the orders get flled,
who’s left to buy?
No one, and that’s when the market
breaks down. Here’s what I mean:👇👇👇
SUPPORT AND RESISTANCE ARE
NOT A LINE BUT ZONE/AREAS ON CHART
This is a result of two groups of traders: traders with
the fear of missing out (FOMOs) and traders who
want to trade at the best possible price (cheapos).
👇👇👇
NOT A LINE BUT ZONE/AREAS ON CHART
This is a result of two groups of traders: traders with
the fear of missing out (FOMOs) and traders who
want to trade at the best possible price (cheapos).
👇👇👇
What are FOMO Traders and CHEAPOS
FOMO traders enter a trade the moment price
comes to support because they’re afraid of missing
the move. And if there’s enough buying pressure, the price will barely touch support before rallying
higher.
👇👇👇
FOMO traders enter a trade the moment price
comes to support because they’re afraid of missing
the move. And if there’s enough buying pressure, the price will barely touch support before rallying
higher.
👇👇👇
CHEAPO TRADERS:
CHEAPO traders only want to
trade at the best possible price, and they look to buy
at the lows of support. If there are enough traders
who behave in this manner, the price will reverse
near the lows of support.
CHEAPO traders only want to
trade at the best possible price, and they look to buy
at the lows of support. If there are enough traders
who behave in this manner, the price will reverse
near the lows of support.
💡But here’s the thing:💡
We have no idea which
group of traders are dominant at any one time and
whether what we’re seeing is due to the FOMOs or
the cheapos.
👇👇👇
We have no idea which
group of traders are dominant at any one time and
whether what we’re seeing is due to the FOMOs or
the cheapos.
👇👇👇
That’s why we want to treat support
and resistance as an area on charts and go in
with the expectation that the market could reverse
anywhere within the area.
and resistance as an area on charts and go in
with the expectation that the market could reverse
anywhere within the area.
WHEN THE PRICE BREAKS SUPPORT/RESISTANCE,
IT COULD BECOME FUTURE RESISTANCE/SUPPORT
°When the price breaks below support, that
horizontal area could become future resistance.
°And when the price breaks above resistance, that
horizontal area could become future support.
IT COULD BECOME FUTURE RESISTANCE/SUPPORT
°When the price breaks below support, that
horizontal area could become future resistance.
°And when the price breaks above resistance, that
horizontal area could become future support.
THERE ARE OTHER WAYS TO
IDENTIFY AREAS OF VALUE
(NOT JUST SUPPORT AND RESISTANCE)
We’ve learned support and resistance are horizontal
areas on your chart with potential buying/selling
pressure lurking nearby.
👇👇👇
IDENTIFY AREAS OF VALUE
(NOT JUST SUPPORT AND RESISTANCE)
We’ve learned support and resistance are horizontal
areas on your chart with potential buying/selling
pressure lurking nearby.
👇👇👇
However, this isn’t the only
way to identify areas of value on your chart.
We can also use tools like moving averages,
trendlines, channels, and so on to help you identify
areas of value.
way to identify areas of value on your chart.
We can also use tools like moving averages,
trendlines, channels, and so on to help you identify
areas of value.
For example, in a healthy trend (more on this later),
the price tends to respect the 50-period moving
average and this acts as an area of value.
Example :-👇👇
the price tends to respect the 50-period moving
average and this acts as an area of value.
Example :-👇👇
Whatever technique we use, the concepts shared
earlier still apply. We’re always dealing with an area
on our charts, not a line. And the more times the
market re-tests an area within a short period of time,
the greater the likelihood it’ll break.
earlier still apply. We’re always dealing with an area
on our charts, not a line. And the more times the
market re-tests an area within a short period of time,
the greater the likelihood it’ll break.
HOW TO TELL WHEN SUPPORT
AND RESISTANCE WILL BREAK
There’s no way to tell for sure whether support or
resistance will break. But here are a few things we’ll
want to pay attention to:
👇👇👇
AND RESISTANCE WILL BREAK
There’s no way to tell for sure whether support or
resistance will break. But here are a few things we’ll
want to pay attention to:
👇👇👇
Resistance tends to break in an uptrend — As you
know, an uptrend consists of higher highs and higher lows. And for it to continue, the price must break out of
resistance (or swing high).
know, an uptrend consists of higher highs and higher lows. And for it to continue, the price must break out of
resistance (or swing high).
Support tends to break in a downtrend —
Likewise, a downtrend consists of lower highs and
lower lows. And for a downtrend to continue, the price
must break out of support (or swing low).
Likewise, a downtrend consists of lower highs and
lower lows. And for a downtrend to continue, the price
must break out of support (or swing low).
Higher lows into resistance are a sign of strength
— This looks something like an ascending triangle(Discuss later).
It’s a sign of strength because it tells us buyers
are willing to buy at higher prices (despite the price
being near resistance). Here’s an example:
— This looks something like an ascending triangle(Discuss later).
It’s a sign of strength because it tells us buyers
are willing to buy at higher prices (despite the price
being near resistance). Here’s an example:
Lower highs into support are a sign of weakness
— This looks like a descending triangle (Discuss later). It’s a sign
of weakness because it tells us sellers are willing
to sell at lower prices (despite the price being near
support). Here’s what I mean:👇
— This looks like a descending triangle (Discuss later). It’s a sign
of weakness because it tells us sellers are willing
to sell at lower prices (despite the price being near
support). Here’s what I mean:👇
In next tweet (Tomorrow) we will learn about CANDLESTICKS. STAY TUNED
CANDLESTICK PATTERNS
WHAT IS A CANDLESTICK PATTERN
AND HOW DOES IT WORK?
WHAT IS A CANDLESTICK PATTERN
AND HOW DOES IT WORK?
History:-
It’s said that Japanese candlestick patterns
originated from a Japanese rice trader called
Munehisa Homma during the 1700s
Almost 300 years later this concept was introduced
to the Western world by Steve Nison, in his book
Japanese Candlestick Charting Techniques
It’s said that Japanese candlestick patterns
originated from a Japanese rice trader called
Munehisa Homma during the 1700s
Almost 300 years later this concept was introduced
to the Western world by Steve Nison, in his book
Japanese Candlestick Charting Techniques
Now,
it’s likely the original ideas have been modified
somewhat, leading to the candlestick patterns we see today.
it’s likely the original ideas have been modified
somewhat, leading to the candlestick patterns we see today.
How do
we read a Japanese candlestick chart?
Every candlestick
pattern has four data points:
Open: the opening price.
High: the highest price over a specific time period.
Low: the lowest price over a specific time period.
Close: the closing price.
we read a Japanese candlestick chart?
Every candlestick
pattern has four data points:
Open: the opening price.
High: the highest price over a specific time period.
Low: the lowest price over a specific time period.
Close: the closing price.
Parts of CANDLESTICK
There are three parts in a Candlestick
1. Upper Shadow
2. Body
3. Lower Shadow
There are three parts in a Candlestick
1. Upper Shadow
2. Body
3. Lower Shadow
1. Upper Shadow
It is the vertical line between the high of the day and the close (for Bullish Candle) or the open (for Bearish Candle).
It is the vertical line between the high of the day and the close (for Bullish Candle) or the open (for Bearish Candle).
2. Body
It is the wide part of a candle, showing the difference between the open and closing price. If the open is below the close, then it is a bullish candle and if the close is below the open, then it is a bearish candle.
It is the wide part of a candle, showing the difference between the open and closing price. If the open is below the close, then it is a bullish candle and if the close is below the open, then it is a bearish candle.
3. LOWER SHADOW
It is the vertical line between the low of the day and the open (for Bullish Candle) or the close (for Bearish Candle).
It is the vertical line between the low of the day and the open (for Bullish Candle) or the close (for Bearish Candle).
TYPES OF CANDLESTICK
1. BULLISH CANDLESTICKS
2. BEARISH CANDLESTICKS
1. BULLISH CANDLESTICKS
2. BEARISH CANDLESTICKS
1. Bullish Candlesticks
When the close price is higher than the open price, then such a candle is known as a bullish candle. The central part of such a candle is filled with white or green colour.
When the close price is higher than the open price, then such a candle is known as a bullish candle. The central part of such a candle is filled with white or green colour.
Such a candle signifies positive sentiment and indicates that the price of the security is likely to increase further.
2. Bearish Candlesticks
When the close price is lower than the open price, then such a candle is known as a bearish candle. The central part of such a candle is filled with black or red colour.
When the close price is lower than the open price, then such a candle is known as a bearish candle. The central part of such a candle is filled with black or red colour.
Such a candle signifies negative sentiment and indicates that the price of the security is likely to decrease further.
REVERSAL CANDLESTICK PATTERNS
BULLISH REVERSAL PATTERN
Bullish Reversal Candlestick Patterns indicate that the ongoing downtrend is going to end and it may reverse to an uptrend. The Bullish Candlestick Pattern can be single or multiple candlestick patterns.
BULLISH REVERSAL PATTERN
Bullish Reversal Candlestick Patterns indicate that the ongoing downtrend is going to end and it may reverse to an uptrend. The Bullish Candlestick Pattern can be single or multiple candlestick patterns.
However, this doesn't mean that should buy immediately when spot such a pattern because we must take the market conditions into consideration (discuss later).
Five MAIN BULLISH REVERSAL CANDLESTICK PATTERNS :-
• Hammer.
• Bullish engulfing pattern.
• Piercing pattern.
• Tweezer bottom.
• Morning star.
• Hammer.
• Bullish engulfing pattern.
• Piercing pattern.
• Tweezer bottom.
• Morning star.
There are many more bullish reversal
candlestick patterns out there. But we don’t need
to know them all since the key focus here is just to get the gist of how to read candlestick patterns (and
not to memorize any of the specific patterns).
candlestick patterns out there. But we don’t need
to know them all since the key focus here is just to get the gist of how to read candlestick patterns (and
not to memorize any of the specific patterns).
1. Hammer
A hammer is a (one-candle) bullish reversal pattern
that forms after a decline in price.
Here’s how to recognize it:
• Little or no upper shadow
• The price closes at the top ¼ of the range.
• The lower shadow is about two or three times the
length of the body
A hammer is a (one-candle) bullish reversal pattern
that forms after a decline in price.
Here’s how to recognize it:
• Little or no upper shadow
• The price closes at the top ¼ of the range.
• The lower shadow is about two or three times the
length of the body
Here what a hammer means:
1. When the market opened, the sellers took control
and pushed the price lower
2. At the selling climax, huge buying pressure
stepped in which pushed the price higher
3. The buying pressure was so strong that it closed
Near/above the opening price
1. When the market opened, the sellers took control
and pushed the price lower
2. At the selling climax, huge buying pressure
stepped in which pushed the price higher
3. The buying pressure was so strong that it closed
Near/above the opening price
Hope these informations are helpful for You
If still have doubts then ping me on telegram @Sandeep_ATR
Telegram channel t.me
In next tweet (Tomorrow) we'll learn about Bullish engulfing pattern, Piercing pattern, Tweezer bottom, Morning star.
Stay Tuned
If still have doubts then ping me on telegram @Sandeep_ATR
Telegram channel t.me
In next tweet (Tomorrow) we'll learn about Bullish engulfing pattern, Piercing pattern, Tweezer bottom, Morning star.
Stay Tuned
In short, a hammer is a bullish reversal candlestick
pattern that shows rejection of lower prices.
pattern that shows rejection of lower prices.
2. Bullish Engulfing Pattern
A bullish engulfing pattern is a (two-candle) bullish
reversal pattern that forms after a decline in price.
A bullish engulfing pattern is a (two-candle) bullish
reversal pattern that forms after a decline in price.
How to recognize BULLISH ENGULFING:-
• The first candle has a bearish close.
• The body of the second candle completely
“covers” the body of the first candle (without
taking into consideration the shadow).
• The second candle closes bullish.
• The first candle has a bearish close.
• The body of the second candle completely
“covers” the body of the first candle (without
taking into consideration the shadow).
• The second candle closes bullish.
Bullish Engulfing means
1.On the first candle the sellers are in control
because they closed lower for the period
2.On the second candle strong buying pressure
stepped in and the close was above the previous
candle’s high which tells that buyers have
won the battle for now
1.On the first candle the sellers are in control
because they closed lower for the period
2.On the second candle strong buying pressure
stepped in and the close was above the previous
candle’s high which tells that buyers have
won the battle for now
In essence, a bullish engulfing pattern tells us that
the buyers have overwhelmed the sellers and they’re
now in control.
the buyers have overwhelmed the sellers and they’re
now in control.
3. PIERCING PATTERN
A piercing pattern is a (two-candle) reversal pattern
that forms after a decline in price.
A piercing pattern is a (two-candle) reversal pattern
that forms after a decline in price.
Unlike the bullish engulfing pattern which closes
above the previous open, the piercing pattern
closes within the body of the previous candle. Thus,
in terms of strength, the piercing pattern isn’t as
strong as the bullish engulfing pattern.
above the previous open, the piercing pattern
closes within the body of the previous candle. Thus,
in terms of strength, the piercing pattern isn’t as
strong as the bullish engulfing pattern.
How to recognize Piercing Pattern:-
• The first candle has a bearish close.
• The body of the second candle closes beyond the
halfway mark of the first candle.
• The second candle closes bullish.
• The first candle has a bearish close.
• The body of the second candle closes beyond the
halfway mark of the first candle.
• The second candle closes bullish.
Piercing Pattern means
1.On the first candle the sellers are in control
because they closed lower for the period
2.On the second candle buying pressure has
stepped in and the close was bullish (more than
50% of the previous body) which tells there is
buying pressure present
1.On the first candle the sellers are in control
because they closed lower for the period
2.On the second candle buying pressure has
stepped in and the close was bullish (more than
50% of the previous body) which tells there is
buying pressure present
4. TWEEZER BOTTOM
When I say tweezer, I don’t mean the tool you use to
pick your nose hairs😂 (although it sure looks like one).
Instead, a tweezer bottom is a (two-candle) reversal
pattern that occurs after a decline in price.
When I say tweezer, I don’t mean the tool you use to
pick your nose hairs😂 (although it sure looks like one).
Instead, a tweezer bottom is a (two-candle) reversal
pattern that occurs after a decline in price.
How to recognize Tweezer Bottom:-
• The first candle shows rejection of lower prices.
• The second candle re-tests the low of the previous
candle and closes higher
• The first candle shows rejection of lower prices.
• The second candle re-tests the low of the previous
candle and closes higher
What a tweezer bottom means:-
1. On the first candle, the sellers pushed the price
lower and were met with some buying pressure.
2. On the second candle, the sellers again tried to
push the price lower but failed and were finally
overwhelmed by strong buying pressure.
1. On the first candle, the sellers pushed the price
lower and were met with some buying pressure.
2. On the second candle, the sellers again tried to
push the price lower but failed and were finally
overwhelmed by strong buying pressure.
In short, a tweezer bottom tells you the market has
difficulty trading lower (after two attempts) and the
price is likely to head higher.
difficulty trading lower (after two attempts) and the
price is likely to head higher.
5. MORNING STAR
A morning star is a (three-candle) bullish reversal
pattern that forms after a decline in price.
A morning star is a (three-candle) bullish reversal
pattern that forms after a decline in price.
How to recognize Morning Star:-
•The first candle has a bearish close.
•The second candle has a small range.
•The third candle closes aggressively higher (at
more than 50% of the first candle).
•The first candle has a bearish close.
•The second candle has a small range.
•The third candle closes aggressively higher (at
more than 50% of the first candle).
What a morning star means
1. On the first candle, the sellers are in control since
the price closes lower.
2. On the second candle, there is indecision in
the markets because both selling and buying
pressure are in equilibrium (that’s why the range
of the candle is small)
1. On the first candle, the sellers are in control since
the price closes lower.
2. On the second candle, there is indecision in
the markets because both selling and buying
pressure are in equilibrium (that’s why the range
of the candle is small)
3. On the third candle, the buyers have won the
battle and the price closes higher.
battle and the price closes higher.
In short, a morning star tells you that the sellers are
exhausted and the buyers are momentarily in control.
exhausted and the buyers are momentarily in control.
Hope these informations are helpful for You
If still have doubts then ping me on telegram @Sandeep_ATR
Telegram channel t.me
Telegram Group t.me
In next tweet we'll learn about BEARISH REVERSAL CANDLESTICK PATTERNS.
Stay Tuned
If still have doubts then ping me on telegram @Sandeep_ATR
Telegram channel t.me
Telegram Group t.me
In next tweet we'll learn about BEARISH REVERSAL CANDLESTICK PATTERNS.
Stay Tuned
BEARISH REVERSAL CANDLESTICK PATTERNS
Bearish reversal candlestick patterns signify that
sellers are momentarily in control However this
doesn’t mean sell immediately when
you spot such a pattern because must take the
market conditions into consideration (more on that
later)
Bearish reversal candlestick patterns signify that
sellers are momentarily in control However this
doesn’t mean sell immediately when
you spot such a pattern because must take the
market conditions into consideration (more on that
later)
Five Main Bearish Reversal
Candlestick Patterns
• Shooting star
• Bearish engulfing pattern
• Dark cloud cover
• Tweezer top
• Evening star
Candlestick Patterns
• Shooting star
• Bearish engulfing pattern
• Dark cloud cover
• Tweezer top
• Evening star
1. SHOOTING STAR
A shooting star is a (one-candle) bearish reversal
pattern that forms after an advance in price.
A shooting star is a (one-candle) bearish reversal
pattern that forms after an advance in price.
How to recognize SHOOTING STAR:
• The upper shadow is about two or three times the
length of the body
• There is little or no lower shadow.
• The price closes at the bottom quarter of the
range.
• The upper shadow is about two or three times the
length of the body
• There is little or no lower shadow.
• The price closes at the bottom quarter of the
range.
What a Shooting Star means:
1. When the market opened, the buyers took control
and pushed the price higher.
2. At the buying climax, huge selling pressure
stepped in and pushed the price lower
3. The selling pressure was so strong that it closed
below the opening price.
1. When the market opened, the buyers took control
and pushed the price higher.
2. At the buying climax, huge selling pressure
stepped in and pushed the price lower
3. The selling pressure was so strong that it closed
below the opening price.
In short, a shooting star is a bearish reversal
candlestick pattern that shows rejection of higher
prices.
candlestick pattern that shows rejection of higher
prices.
2. BEARISH ENGULFING PATTERN
A bearish engulfing pattern is a (two-candle) bearish
reversal pattern that forms after an advance in price.
A bearish engulfing pattern is a (two-candle) bearish
reversal pattern that forms after an advance in price.
How to recognize BEARISH ENGULFING:
• The first candle has a bullish close.
• The body of the second candle completely
“covers” the body first candle (without taking into
Consideration the shadow).
• The second candle closes bearish
• The first candle has a bullish close.
• The body of the second candle completely
“covers” the body first candle (without taking into
Consideration the shadow).
• The second candle closes bearish
What a Bearish Engulfing Pattern means
1.On the first candle buyers were in control
since they closed higher for the period
2.On the second candle strong selling
stepped in and price closed below
previous candle’s low which tells that the
sellers have won the battle for now
1.On the first candle buyers were in control
since they closed higher for the period
2.On the second candle strong selling
stepped in and price closed below
previous candle’s low which tells that the
sellers have won the battle for now
In essence, a bearish engulfing pattern tells us the
sellers have overwhelmed the buyers and are now in
control.
sellers have overwhelmed the buyers and are now in
control.
3. DARK CLOUD COVER
Dark cloud cover is a (two-candle) reversal pattern
that forms after an advance in price. Unlike the
bearish engulfing pattern that closes below the
previous open, the dark cloud cover closes within
the body of the previous candle.
👇👇
Dark cloud cover is a (two-candle) reversal pattern
that forms after an advance in price. Unlike the
bearish engulfing pattern that closes below the
previous open, the dark cloud cover closes within
the body of the previous candle.
👇👇
Thus, in terms of
strength, dark cloud cover isn’t as strong as the
bearish engulfing pattern.
strength, dark cloud cover isn’t as strong as the
bearish engulfing pattern.
How to recognize Dark Cloud Cover Pattern:
• The first candle has a bullish close.
• The body of the second candle closes beyond the
halfway mark of the first candle.
• The second candle closes bearish.
• The first candle has a bullish close.
• The body of the second candle closes beyond the
halfway mark of the first candle.
• The second candle closes bearish.
Dark Cloud Cover means:
1. On the first candle, the buyers are in control
because they closed higher for the period.
2. On the second candle, selling stepped in
and the price closed bearishly (more than 50% of
the previous body), which tells there is some
selling pressure.
1. On the first candle, the buyers are in control
because they closed higher for the period.
2. On the second candle, selling stepped in
and the price closed bearishly (more than 50% of
the previous body), which tells there is some
selling pressure.
In next tweet we'll learn about TWEEZER TOP and EVENING STAR Candlestick patterns.
Stay Tuned
Stay Tuned
4. TWEEZER TOP
A tweezer top is a (two-candle) reversal pattern that
occurs after an advance in price.
A tweezer top is a (two-candle) reversal pattern that
occurs after an advance in price.
How to recognize Tweezer Top:-
• The first candle shows rejection of higher prices.
• The second candle re-tests the high of the
previous candle and closes lower.
• The first candle shows rejection of higher prices.
• The second candle re-tests the high of the
previous candle and closes lower.
What a tweezer top means:
1. On the first candle, the buyers pushed the price
higher and were met with some selling pressure.
2. On the second candle, the buyers again tried to
push the price higher but failed and were finally
overwhelmed by strong selling pressure.
1. On the first candle, the buyers pushed the price
higher and were met with some selling pressure.
2. On the second candle, the buyers again tried to
push the price higher but failed and were finally
overwhelmed by strong selling pressure.
In short, a tweezer top tells you the market has
difficulty trading higher (after two attempts) and it’s
likely to head lower.
difficulty trading higher (after two attempts) and it’s
likely to head lower.
5. EVENING STAR
An evening star is a (three-candle) bearish reversal
pattern that forms after an advance in price.
An evening star is a (three-candle) bearish reversal
pattern that forms after an advance in price.
How to recognize Evening Star :-
• The first candle has a bullish close.
• The second candle has a small range.
• The third candle closes aggressively lower (more
than 50% of the first candle).
• The first candle has a bullish close.
• The second candle has a small range.
• The third candle closes aggressively lower (more
than 50% of the first candle).
What an evening star means:
1.The first candle shows the buyers are in control as
the price closes higher
2.On the second candle there is indecision in the
markets because both the selling and buying
pressure are in equilibrium (that’s why the range
of the candle is small)
1.The first candle shows the buyers are in control as
the price closes higher
2.On the second candle there is indecision in the
markets because both the selling and buying
pressure are in equilibrium (that’s why the range
of the candle is small)
3. On the third candle, the sellers won the battle and
the price closed lower.
the price closed lower.
In short, an evening star tells you the buyers are
exhausted, and the sellers are momentarily in
control.
exhausted, and the sellers are momentarily in
control.
Now, the purpose of going through these individual
patterns is to teach how to analyze them step
by step. You might be thinking, there are so
many candlestick patterns to learn!
👇👇👇
patterns is to teach how to analyze them step
by step. You might be thinking, there are so
many candlestick patterns to learn!
👇👇👇
Don’t worry because you’re about to learn a simple
technique that will help you understand any
candlestick pattern that comes your way—even if
you don’t know the name of it.
technique that will help you understand any
candlestick pattern that comes your way—even if
you don’t know the name of it.
In next tweet, we'll learn " HOW TO UNDERSTAND ANY CANDLESTICK
PATTERNS WITHOUT MEMORIZING A SINGLE ONE"
Stay Tuned...
PATTERNS WITHOUT MEMORIZING A SINGLE ONE"
Stay Tuned...
HOW TO UNDERSTAND ANY CANDLESTICK PATTERNS WITHOUT MEMORIZING A SINGLE ONE
All we need to do is ask ourself these two
questions:
1. Where did the price close relative to the range?
2. What’s the size of the candlestick pattern
relative to the earlier ones?
All we need to do is ask ourself these two
questions:
1. Where did the price close relative to the range?
2. What’s the size of the candlestick pattern
relative to the earlier ones?
1. Where did the price close relative to the range?
Look at this candlestick pattern:
Who’s in control? Well, the price closed the near
highs of the range, which tells us the buyers are in
control.
Look at this candlestick pattern:
Who’s in control? Well, the price closed the near
highs of the range, which tells us the buyers are in
control.
Now look at this candlestick pattern:
Who’s in control? Although it’s a bullish candle,
the sellers are actually the ones in control. Why?
Because the price closed near the lows of the range
and shows rejection of higher prices.
Who’s in control? Although it’s a bullish candle,
the sellers are actually the ones in control. Why?
Because the price closed near the lows of the range
and shows rejection of higher prices.
Now look at this Candlestick Pattern:-
Who's in control?
Well, open and close are virtually equal for the given time period. Which indicates that neither the buyers nor sellers are gaining.
Means Indecision
Who's in control?
Well, open and close are virtually equal for the given time period. Which indicates that neither the buyers nor sellers are gaining.
Means Indecision
So remember, if you want to know who’s in control, ask yourself, “Where did the price close relative to
the range?”
the range?”
2. What’s the size of the candlestick pattern
relative to the earlier ones?
This question will help us determine if there’s any
strength behind the move. So what
we want to do is compare the size of the current
candle to the earlier ones.
👇👇👇👇
relative to the earlier ones?
This question will help us determine if there’s any
strength behind the move. So what
we want to do is compare the size of the current
candle to the earlier ones.
👇👇👇👇
If the current candle is
much larger (like two or more times larger), this tells
us there’s strength behind the move.
much larger (like two or more times larger), this tells
us there’s strength behind the move.
If there’s no strength behind the move, the size of
the current candle is about the same as the earlier
ones.
It doesn’t matter if it’s a doji, a spinning top,
a harami, three white soldiers, or any other kind of
pattern.
👇👇👇
the current candle is about the same as the earlier
ones.
It doesn’t matter if it’s a doji, a spinning top,
a harami, three white soldiers, or any other kind of
pattern.
👇👇👇
Does this make sense?
Candlestick patterns are useful as entry
triggers to help our time our entry.
👉Recall that
market structure tells us what to do.
👉Support and
resistance (or the area of value) tells us where to
trade.
👉Candlestick patterns tell us when to
enter.
triggers to help our time our entry.
👉Recall that
market structure tells us what to do.
👉Support and
resistance (or the area of value) tells us where to
trade.
👉Candlestick patterns tell us when to
enter.
I hope you’re starting to see the picture I’m trying
to paint.
to paint.
SUMMARY
• Candlestick patterns give us an idea of who’s
currently in control of the markets.
• There are three types of candlestick patterns:
reversal, indecision, and continuation.
👇👇👇
• Candlestick patterns give us an idea of who’s
currently in control of the markets.
• There are three types of candlestick patterns:
reversal, indecision, and continuation.
👇👇👇
• If you want to know who’s currently in control of
the markets, ask yourself “Where did the price
close relative to the range?
• If you want to know if there’s strength behind
a move, ask yourself What’s the size of the
candlestick pattern relative to the earlier ones?👇
the markets, ask yourself “Where did the price
close relative to the range?
• If you want to know if there’s strength behind
a move, ask yourself What’s the size of the
candlestick pattern relative to the earlier ones?👇
• Candlestick patterns are useful as entry triggers to
time our entries.
• Don’t trade candlestick patterns in isolation. Must take into account the context of the markets
(and aspects like market structure and area of
value).
time our entries.
• Don’t trade candlestick patterns in isolation. Must take into account the context of the markets
(and aspects like market structure and area of
value).
In next tweet we'll start learning about the CHART PATTERNS.
STAY TUNED....
STAY TUNED....
👉Agenda👈
• Understanding
Patterns and
Their Limits
.
• Techniques for
Trading Patterns.
• Construction
of Common
Chart Patterns
.
• Understanding
Patterns and
Their Limits
.
• Techniques for
Trading Patterns.
• Construction
of Common
Chart Patterns
.
Understanding
Patterns and
Their Limits
Defining Patterns
:-
• A pattern is bounded by at least two trend lines (straight or curved)
• All patterns have a combination of entry and exit points
• Patterns can be Continuation, Reversal or Neutral.
👇👇👇
Patterns and
Their Limits
Defining Patterns
:-
• A pattern is bounded by at least two trend lines (straight or curved)
• All patterns have a combination of entry and exit points
• Patterns can be Continuation, Reversal or Neutral.
👇👇👇
• Patterns are fractal, meaning that they can be seen in any charting
period (weekly, daily, hourly, etc.)
• A pattern is not complete or activated until an actual breakout occurs
.
period (weekly, daily, hourly, etc.)
• A pattern is not complete or activated until an actual breakout occurs
.
The Limits of Patterns
Keep in Mind
Some of our human tendencies can be
dangerous for trading. 👇
• See patterns where there aren’t any
• Believe “market lore,” without evidence
If you want success then👇
(Ignore the Rumours and trade the fact)
👇👇
Keep in Mind
Some of our human tendencies can be
dangerous for trading. 👇
• See patterns where there aren’t any
• Believe “market lore,” without evidence
If you want success then👇
(Ignore the Rumours and trade the fact)
👇👇
• Look backwards rather than forward
• Stick with original price targets of patterns after conditions have changed.
• Stick with original price targets of patterns after conditions have changed.
Techniques for
Trading Patterns
• Breakouts
• Stops loss
• Protective Stops
• Retracements
Trading Patterns
• Breakouts
• Stops loss
• Protective Stops
• Retracements
👉Breakouts👈
Violation of Trend Line,
Support or Resistance, or
previous reversal point
. It signifies that a change
in buyer and seller behavior and signals
the beginning or end of a trend.
Violation of Trend Line,
Support or Resistance, or
previous reversal point
. It signifies that a change
in buyer and seller behavior and signals
the beginning or end of a trend.
*False and Failed Breakouts*
*False Breakout*
Price breaks out but almost immediately returns back through its breakout price.
*False Breakout*
Price breaks out but almost immediately returns back through its breakout price.
🚨Failed Breakout (Trap)🚨
False breakout occurs and the price then breaks out in the opposite direction.
False breakout occurs and the price then breaks out in the opposite direction.
👉Stop Loss👈
A stop-loss is placed to buy or sell a specific stock once the stock reaches a certain price. A stop-loss is designed to limit the loss on a security position.
A stop-loss is placed to buy or sell a specific stock once the stock reaches a certain price. A stop-loss is designed to limit the loss on a security position.
*Protective Stop Loss*
Protects Capital
Determines the amount of
capital risk before entry
Types of
placement
• Keep Sl (Stop Loss) according to percent,
points, or according to capital
• According to trend line, support or
resistance level.
Protects Capital
Determines the amount of
capital risk before entry
Types of
placement
• Keep Sl (Stop Loss) according to percent,
points, or according to capital
• According to trend line, support or
resistance level.
Sl saves your capital if you are wrong/the trade goes opposite to your analysis.
*Retracements*
Counter Trend
Correction
Types
• Pullback (on breakout down)
• Throwback (on breakout up)
*Can use Fibonacci*(will discuss later)
Waiting for
• Don’t always occur
• Performance can suffer
Counter Trend
Correction
Types
• Pullback (on breakout down)
• Throwback (on breakout up)
*Can use Fibonacci*(will discuss later)
Waiting for
• Don’t always occur
• Performance can suffer
*Construction of
Common Chart
Patterns*
👉Common Chart Patterns👈
Reversal Chart Patterns
• Head and Shoulder / Inverted H&S
• Double/Triple Top/Bottom
• Rounding Top/Bottom
👇👇👇
Common Chart
Patterns*
👉Common Chart Patterns👈
Reversal Chart Patterns
• Head and Shoulder / Inverted H&S
• Double/Triple Top/Bottom
• Rounding Top/Bottom
👇👇👇
Continuation Chart Patterns
• Ascending/Descending Triangle
• Rectangle
• Cup and Handle/Inverted Cup and Handle
• Pennant/Flag
👇👇👇
• Ascending/Descending Triangle
• Rectangle
• Cup and Handle/Inverted Cup and Handle
• Pennant/Flag
👇👇👇
Neutral Chart Patterns
• Channel
• Wedge
• Symmetrical Triangle
👇👇👇
• Channel
• Wedge
• Symmetrical Triangle
👇👇👇
In next Tweet we'll learn about REVERSAL CHART PATTERNS.
Stay Tuned.......
Stay Tuned.......
REVERSAL CHART PATTRENS
In technical analysis, any pattern on a chart that indicates a previous trend is changing to a new trend is called REVERSAL CHART PATTERN.
👇👇👇
In technical analysis, any pattern on a chart that indicates a previous trend is changing to a new trend is called REVERSAL CHART PATTERN.
👇👇👇
Reversal Chart Pattern usually occurs after a major movement in the price of a stock, which is an indication that investors/trader should adjust their positions to take advantage of the coming change in market direction.
Ex:- •Diamond, •H&S/Inverted H&S, •Double Top/Bottom etc
Ex:- •Diamond, •H&S/Inverted H&S, •Double Top/Bottom etc
1. DIAMOND PATTREN
This pattern occurs when a strong up/down trending price shows a flattening sideways movement over a prolonged period of time that forms a diamond shape.
Diamond is sign of reversal. Once rightly identified, it is one of the most profitable reversal patterns.
This pattern occurs when a strong up/down trending price shows a flattening sideways movement over a prolonged period of time that forms a diamond shape.
Diamond is sign of reversal. Once rightly identified, it is one of the most profitable reversal patterns.
How to identify:-
Diamond Chart pattern is characterized by four limited trend lines representing, two support lines below and two resistance levels above which respectively connect the most recent lows and highs.
👇👇👇
Diamond Chart pattern is characterized by four limited trend lines representing, two support lines below and two resistance levels above which respectively connect the most recent lows and highs.
👇👇👇
Bullish Diamond Pattern is also called as 'Diamond Bottom' and Bearish Diamond Pattern is called as 'Diamond Top'.
TARGET:-
To calculate potential target for a diamond formation take the distance between the highest and lowest point in the diamond formation and add it to the breakout point However, in most occurrences a breakout from the diamond chart formation will carry stocks much further
To calculate potential target for a diamond formation take the distance between the highest and lowest point in the diamond formation and add it to the breakout point However, in most occurrences a breakout from the diamond chart formation will carry stocks much further
Stop Loss:-
The initial Stop Loss for Diamond Pattern is above the recent high in Pattren before Breakout.
Then ride the trend with trailing SL for maximum gains.
You will better understand by the given examples 👇👇
The initial Stop Loss for Diamond Pattern is above the recent high in Pattren before Breakout.
Then ride the trend with trailing SL for maximum gains.
You will better understand by the given examples 👇👇
Example of BULLISH DIAMOND PATTREN
👇👇👇👇👇
👇👇👇👇👇
Example of BEARISH DIAMOND PATTREN
👇👇👇
👇👇👇
Hope the information is helpful for you.
If you still have doubts you can ask me by simply joining my telegram discussion group👇
t.me
Keep learning keep earning.
In next tweet we'll learn about H&S/INVERTED H&S reversal PATTRENS.
Stay Tuned........
If you still have doubts you can ask me by simply joining my telegram discussion group👇
t.me
Keep learning keep earning.
In next tweet we'll learn about H&S/INVERTED H&S reversal PATTRENS.
Stay Tuned........
2.(a)HEAD AND SHOULDER PATTREN
Head and Shoulder Pattern appears as a baseline with three peaks, where the outside two are close in height and the middle is highest. Head and shoulder pattern describes a specific chart formation that predicts a bullish-to-bearish trend reversal
Head and Shoulder Pattern appears as a baseline with three peaks, where the outside two are close in height and the middle is highest. Head and shoulder pattern describes a specific chart formation that predicts a bullish-to-bearish trend reversal
The head and shoulders pattern is believed to be one of the most reliable trend reversal patterns. It is one of several top patterns that signal, with varying degrees of accuracy, that an upward trend is nearing its end.
👇👇👇
👇👇👇
The pattern appears on all time frames. Entry levels, stop levels, and price targets make the formation easy to implement, as the chart pattern provides important and easily visible levels.
Head and Shoulder Pattern Looks Like:-
• Left shoulder: Price rise followed by a price peak, followed by a decline.
• Head: Price rise again forming a higher peak
• Right shoulder: A decline occurs again followed by a rise to form the right peak which is lower than the head
• Left shoulder: Price rise followed by a price peak, followed by a decline.
• Head: Price rise again forming a higher peak
• Right shoulder: A decline occurs again followed by a rise to form the right peak which is lower than the head
• Neckline:
Neckline refers to a support drawn below a head and shoulders pattern that is used to signals selling opportunities. It connects the low points of the Head and Shoulder Pattern, following the first two peaks.
👇👇👇
Neckline refers to a support drawn below a head and shoulders pattern that is used to signals selling opportunities. It connects the low points of the Head and Shoulder Pattern, following the first two peaks.
👇👇👇
The neckline is used by traders to determine the strategic areas to place orders. The price of the stock falling below the neckline may indicate a reversal in trends of the stock price.
⚠️
Formations of Head and Shoulder Patterns are rarely perfect, which means there may be some noise between the respective shoulders and head.
Formations of Head and Shoulder Patterns are rarely perfect, which means there may be some noise between the respective shoulders and head.
Entry:- There are two types of entry in H&S Pattren
1. Take entry just the price breakdown the neckline (in the case look at volumes and the strength of the breakout candle). This type of entry is little bit risk as the breakout can be fake.
👇👇👇
1. Take entry just the price breakdown the neckline (in the case look at volumes and the strength of the breakout candle). This type of entry is little bit risk as the breakout can be fake.
👇👇👇
2. Second type of entry is safe entry in which we take entry after the price re-test the neckline/breakdown.
TARGET:-
The profit target for the pattern is the price difference between the head and the low point of either shoulder. This difference is then subtracted from the neckline breakdown level to provide a price target to the downside.
The profit target for the pattern is the price difference between the head and the low point of either shoulder. This difference is then subtracted from the neckline breakdown level to provide a price target to the downside.
Stop Loss:-
The initial stops loss are placed just above the right shoulder after the neckline is penetrated.
Ride every trade with proper SL.
Then trail SL to secure the profits.
The initial stops loss are placed just above the right shoulder after the neckline is penetrated.
Ride every trade with proper SL.
Then trail SL to secure the profits.
Some Examples of Head and Shoulder Pattern:- 👇👇👇
2.(b) Inverted Head and Shoulder Pattern
Inverted H&S Pattern appears as a topline with three bottoms, where the outside two are close in low and the middle is lowest. Inverted H &S pattern describes a specific chart formation that predicts a bearish-to-bullish trend reversal.
Inverted H&S Pattern appears as a topline with three bottoms, where the outside two are close in low and the middle is lowest. Inverted H &S pattern describes a specific chart formation that predicts a bearish-to-bullish trend reversal.
The Inverted Head and Shoulders pattern is believed to be one of the most reliable trend reversal patterns. It is one of several top patterns that signal, with varying degrees of accuracy, that an down trend is nearing its end.
👇👇👇
👇👇👇
The pattern appears on all time frames. Entry levels, stop levels, and price targets make the formation easy to implement, as the chart pattern provides important and easily visible levels.
Inverted H&S Pattern Looks Like:
• Left shoulder: Price fall followed by a price low, followed by a rise.
• Head: Price fall again forming a lowest Bottom.
• Right shoulder: A rise occurs again followed by a fall to form the right bottom which is higher than the head.
• Left shoulder: Price fall followed by a price low, followed by a rise.
• Head: Price fall again forming a lowest Bottom.
• Right shoulder: A rise occurs again followed by a fall to form the right bottom which is higher than the head.
• Neckline:
Neckline refers to a resistance drawn above a inverted head and shoulders pattern that is used to signals buying opportunities. It connects the higher points of the Inverted Head and Shoulder Pattern, following the first two bottoms.
👇👇👇
Neckline refers to a resistance drawn above a inverted head and shoulders pattern that is used to signals buying opportunities. It connects the higher points of the Inverted Head and Shoulder Pattern, following the first two bottoms.
👇👇👇
The neckline is used by traders to determine the strategic areas to place orders. The price of the stock rising above the neckline may indicate a reversal in trends of the stock price.
⚠️
Formations of Inverted Head and Shoulder Patterns are rarely perfect, which means there may be some noise between the respective shoulders and head.
Formations of Inverted Head and Shoulder Patterns are rarely perfect, which means there may be some noise between the respective shoulders and head.
Entry:- There are two types of entry in Inverted H&S Pattren
1. Take entry just the price break above the neckline (in the case look at volumes and the strength of the breakout candle). This type of entry is little bit risk as the breakout can be fake.
👇👇👇
1. Take entry just the price break above the neckline (in the case look at volumes and the strength of the breakout candle). This type of entry is little bit risk as the breakout can be fake.
👇👇👇
2. Second type of entry is safe entry in which we take entry after the price re-test the neckline/breakout.
TARGET:
The profit target for the pattern is the price difference between the head and the high point of either shoulder. This difference is then added from the neckline breakout level to provide a price target to the upside.
The profit target for the pattern is the price difference between the head and the high point of either shoulder. This difference is then added from the neckline breakout level to provide a price target to the upside.
Stop Loss:
The initial stops loss are placed just below the right shoulder after the neckline is penetrated.
Ride every trade with proper SL.
Then trail SL to secure the profits.
The initial stops loss are placed just below the right shoulder after the neckline is penetrated.
Ride every trade with proper SL.
Then trail SL to secure the profits.
Here's Some examples of INVERTED HEAD AND SHOULDER PATTRENS:-👇👇👇
Hope the information is helpful for you.
In next tweet we'll learn about DOUBLE TOP AND DOUBLE BOTTOM CHART PATTERNS.
STAY TUNED.......
In next tweet we'll learn about DOUBLE TOP AND DOUBLE BOTTOM CHART PATTERNS.
STAY TUNED.......
3. (a) Double Top/Bottom Chart Pattrens (Traditional)
Double top and double bottom are reversal chart patterns which appears at the end of a trend. No chart pattern is more common in trading than the double bottom or double top.
Double top and double bottom are reversal chart patterns which appears at the end of a trend. No chart pattern is more common in trading than the double bottom or double top.
Double Top/Bottom consists of three parts:
1. Top 1/Bottom 1
2. Neckline
3. Top 2/Bottom 2
1. Top 1/Bottom 1
2. Neckline
3. Top 2/Bottom 2
3.(a) Double Top Chart Pattern :-
Double Top patterns occur when prices fail to make new highs compared to previous high. These patterns are quite reliable patterns to trade as they will often give us the profit.
Double Top patterns occur when prices fail to make new highs compared to previous high. These patterns are quite reliable patterns to trade as they will often give us the profit.
How to identify the Double Top Pattern?
Double Top pattern is one of the most frequently occurring pattern we can identify double top patterns based on the following 3 points :-
1. Top 1 :– This is the point where price takes rejection for the first time from upper levels.
Double Top pattern is one of the most frequently occurring pattern we can identify double top patterns based on the following 3 points :-
1. Top 1 :– This is the point where price takes rejection for the first time from upper levels.
2. Neckline :– This is the point at which price takes support from the lower levels which form the swing low.
3. Top 2 :– This is the point where price takes rejection for the second time from the same level which confirms the double top pattern.
3. Top 2 :– This is the point where price takes rejection for the second time from the same level which confirms the double top pattern.
Double tops usually indicate the end of a bullish market depending upon the width of the top formation. Volumes at the first swing may be greater as compared to volume at the second swing.
In addition to this, the volume increases hugely at the breakdown from the neckline. If the volume is weaker at the neckline, then it may indicate a potential triple or multiple top patterns.
Limitations of Double Tops:-
Double top formations are highly effective when identified correctly. However, they can be extremely detrimental when they are interpreted incorrectly. Therefore, one must be extremely careful and patient before jumping to conclusions.
👇👇👇
Double top formations are highly effective when identified correctly. However, they can be extremely detrimental when they are interpreted incorrectly. Therefore, one must be extremely careful and patient before jumping to conclusions.
👇👇👇
Sometimes the situations arise when second top is formed slightly higher or lower relative to the first top. Such variations of the pattern are also correct.
In TRADITIONAL method trade can be initiated after the breakdown from the neckline.
👇👇👇👇
In TRADITIONAL method trade can be initiated after the breakdown from the neckline.
👇👇👇👇
If Double Top is spotted in a strong uptrend, chances are, the market will continue heading higher.
How to work correctly with the pattern, Necessary Conditions:-
1. Distance between the tops should not be too small. When there are more Distance between the top 1 and top 2, the swing levels becomes more significant as traders become aware of the price level.
1. Distance between the tops should not be too small. When there are more Distance between the top 1 and top 2, the swing levels becomes more significant as traders become aware of the price level.
And when a level receives more attention, it attracts more order flow
2. The strength of the pattern becomes more significant, if its tops are on the level of support/resistance.
2. The strength of the pattern becomes more significant, if its tops are on the level of support/resistance.
Entry:-
A double top pattern confirmation occurs at the breakdown from the neckline with larger volumes.
Safe entry is only after Breakdown re-test the neckline. Don't run after BREAKDOWN entry if there is no buildup before breakdown to avoid false Breakdown.
A double top pattern confirmation occurs at the breakdown from the neckline with larger volumes.
Safe entry is only after Breakdown re-test the neckline. Don't run after BREAKDOWN entry if there is no buildup before breakdown to avoid false Breakdown.
The Breakdown is more significant if there is price buildup near neckline.
Target :- Target can be set as the distance between the top of the pattern to the neckline from the breakdown.
Stop Loss :-
Before the neckline gets breached we normally see some consolidation/Buildup before the breakdown which will form a minor swing high and it will become the stop loss area for the pattern. The right placement of stop will give us a favorable risk and reward ratio
Before the neckline gets breached we normally see some consolidation/Buildup before the breakdown which will form a minor swing high and it will become the stop loss area for the pattern. The right placement of stop will give us a favorable risk and reward ratio
Always ride the profits with trailing SL.
“Rome was not built in a day and no real movement of importance ends in one day or in one week. It takes time for it to run its logical course”. — Jesse Livermore
“Rome was not built in a day and no real movement of importance ends in one day or in one week. It takes time for it to run its logical course”. — Jesse Livermore
Some Examples of DOUBLE TOP CHART PATTERNS:-
👇👇👇
👇👇👇
Conclusion
• Double Top chart pattern signals a possible trend reversal as the market is unable to move higher.
• Don’t short a Double Top chart pattern against a strong uptrend because the market is likely to continue higher
• Double Top chart pattern signals a possible trend reversal as the market is unable to move higher.
• Don’t short a Double Top chart pattern against a strong uptrend because the market is likely to continue higher
• Pay attention to the Distance between the Tops to filter for higher probability trading setups
• Re-test and buildup are entry techniques to trade the Double Top chart pattern
• We can combine multiple timeframes and Double Top to pinpoint market reversals with precision.
• Re-test and buildup are entry techniques to trade the Double Top chart pattern
• We can combine multiple timeframes and Double Top to pinpoint market reversals with precision.
3. (b) Double Bottom Chart Pattern:-
The Double Bottom Pattern is exactly the opposite of the double top pattern. Double bottom patterns occur when prices fail to make lower lows as compared to previous lows.
The Double Bottom Pattern is exactly the opposite of the double top pattern. Double bottom patterns occur when prices fail to make lower lows as compared to previous lows.
These patterns are formed at the bottom of the downtrend, and the pattren considered quite reliable patterns which offer a good risk to reward ratios.
How to identify the Double Bottom Pattern?
Double Bottom pattern is one of the most frequently occurring pattern we can identify double Bottom patterns based on the following 3 points :-
Double Bottom pattern is one of the most frequently occurring pattern we can identify double Bottom patterns based on the following 3 points :-
1. Bottom 1 :– This is the point where price takes the support for the first time, and the first bottom is formed.
2. Neckline :– This is the point at which price takes resistance from the upper levels which forms the swing high.
3. Bottom 2 :– This is the point where price takes the support for the second time from the same level which confirms the double bottom pattern.
3. Bottom 2 :– This is the point where price takes the support for the second time from the same level which confirms the double bottom pattern.
Double bottoms usually indicate the end of a bearish market depending upon the width of the top formation. Volumes at the first low may be greater as compared to volume at the second low.
In addition to this, the volume increases hugely at the breakout from the neckline. If the volume is weaker at the neckline, then it may indicate a potential triple or multiple bottom patterns.
Limitations of Double Bottoms:
Double Bottom formations are highly effective when identified correctly. However, they can be extremely detrimental when they are interpreted incorrectly. Therefore, one must be extremely careful and patient before jumping to conclusions.
👇👇👇
Double Bottom formations are highly effective when identified correctly. However, they can be extremely detrimental when they are interpreted incorrectly. Therefore, one must be extremely careful and patient before jumping to conclusions.
👇👇👇
Sometimes the situations arise when second bottom is formed slightly higher or lower relative to the first top. Such variations of the pattern are also correct.
In TRADITIONAL method trade can be initiated after the breakout from the neckline.
👇👇👇
In TRADITIONAL method trade can be initiated after the breakout from the neckline.
👇👇👇
If Double Bottom is spotted in a strong downtrend, chances are, the market will continue lower.
How to work correctly with the pattern, Necessary Conditions:
1. Distance between the Bottoms should not be too small. When there are more Distance between the bottom 1 and bottom 2, the swing levels becomes more significant as traders become aware of the price level.
1. Distance between the Bottoms should not be too small. When there are more Distance between the bottom 1 and bottom 2, the swing levels becomes more significant as traders become aware of the price level.
And when a level receives more attention, it attracts more order flow
2. The strength of the pattern becomes more significant, if its bottoms are on the level of support/resistance.
2. The strength of the pattern becomes more significant, if its bottoms are on the level of support/resistance.
Entry:
A double bottom pattern confirmation occurs at the breakout from the neckline with larger volumes.
Safe entry is only after Breakout re-test the neckline. Don't run after BREAKOUT entry if there is no buildup before breakout to avoid false Breakout.
👇👇👇
A double bottom pattern confirmation occurs at the breakout from the neckline with larger volumes.
Safe entry is only after Breakout re-test the neckline. Don't run after BREAKOUT entry if there is no buildup before breakout to avoid false Breakout.
👇👇👇
The Breakout is more significant if there is price buildup near neckline.
Target :- Target can be set as the distance
between the bottom of the pattern to the neckline from the breakout.
between the bottom of the pattern to the neckline from the breakout.
Stop Loss :-
Before the neckline gets breached we normally see some consolidation/Buildup before the breakout which will form a minor swing low and it will become the stop loss area for the pattern. The right placement of stop will give us a favorable risk and reward ratio.
Before the neckline gets breached we normally see some consolidation/Buildup before the breakout which will form a minor swing low and it will become the stop loss area for the pattern. The right placement of stop will give us a favorable risk and reward ratio.
Always ride the profits with trailing SL.
Some Examples of DOUBLE BOTTOM PATTERNS:-👇👇👇
Conclusion
• Double Bottom chart pattern signals a possible trend reversal as the market is unable to move lower.
• Don't Buy a Double Bottom chart pattern against a strong downtrend because the market is likely to continue lower.
• Double Bottom chart pattern signals a possible trend reversal as the market is unable to move lower.
• Don't Buy a Double Bottom chart pattern against a strong downtrend because the market is likely to continue lower.
• Pay attention to the Distance between the Bottoms to filter for higher probability trading setups
• Re-test and buildup are entry techniques to trade the pattern.
. We can combine multiple timeframes and Double Bottom to pinpoint market reversals with precision.
• Re-test and buildup are entry techniques to trade the pattern.
. We can combine multiple timeframes and Double Bottom to pinpoint market reversals with precision.
Hope The Information is Helpful For You!
In next Tweet we'll learn about the Rounding Top and Rounding Bottom Chart Patterns.
Stay Tuned......
Happy New Year 🎉🎉🥳
In next Tweet we'll learn about the Rounding Top and Rounding Bottom Chart Patterns.
Stay Tuned......
Happy New Year 🎉🎉🥳
@ShivaPa74136556 Done bro👍
4. ROUNDING TOP and ROUNDING BOTTOM CHART PATTERNS:-
The rounded top and bottom are reversal patterns designed to catch the end of a trend and signal a potential reversal point on a price chart.
👇👇👇
The rounded top and bottom are reversal patterns designed to catch the end of a trend and signal a potential reversal point on a price chart.
👇👇👇
The ROUNDING TOP/BOTTOM Patterns can develop over several days, weeks, months, or even years, with longer time frames to completion forecasting longer changes in trend.
4.(a) ROUNDING TOP CHART PATTERN:-
• The rounding top pattern appears as an inverted 'U' shape.
• Rounding Top signals the end of an uptrend and the possible start of a downtrend.
• Rounding top can indicate an opportunity to go short.
• The rounding top pattern appears as an inverted 'U' shape.
• Rounding Top signals the end of an uptrend and the possible start of a downtrend.
• Rounding top can indicate an opportunity to go short.
How to identify a Rounding Top Pattern:-
• Uptrend
• Rounded top
• Neckline
(already learnt about neckline in Double Top/Bottom and H&S/Inverted H&S pattrens)
• Uptrend
• Rounded top
• Neckline
(already learnt about neckline in Double Top/Bottom and H&S/Inverted H&S pattrens)
In order for the pattern to occur, the price must first rally upwards and consolidate for an extended period, forming the rounded top. Then falls back down below the neckline of the consolidation area.
Entry:-
Once the price breaks through and a candle closes below the Neckline/Re-test the Neckline, we can enter the market with a sell order.
Once the price breaks through and a candle closes below the Neckline/Re-test the Neckline, we can enter the market with a sell order.
Stop Loss:-
Before the neckline gets breached we normally see some consolidation/Buildup before the breakdown which will form a minor swing high and it will become the stop loss area for the pattern.
Before the neckline gets breached we normally see some consolidation/Buildup before the breakdown which will form a minor swing high and it will become the stop loss area for the pattern.
Target :-
The profit target is measured by taking the height of the actual pattern and extending that distance down from the neckline.
The profit target is measured by taking the height of the actual pattern and extending that distance down from the neckline.
Some Examples of ROUNDING TOP CHART PATTERN:- 👇👇👇👇
4. (b) ROUNDING BOTTOM CHART PATTERN:-
• The rounding bottom pattern appears as a clear 'U' formation.
• ROUNDING Bottom signals the end of a downtrend and the possible start of an uptrend.
• The Rounded Bottom can indicate an opportunity to go long.
• The rounding bottom pattern appears as a clear 'U' formation.
• ROUNDING Bottom signals the end of a downtrend and the possible start of an uptrend.
• The Rounded Bottom can indicate an opportunity to go long.
How to identify a Rounding Bottom Pattern:-
• Downtrend
• Rounded bottom
• Neckline
This pattern also requires a sustained price move, this time to the downside before consolidating for an extended period and forming the rounded bottom.
👇👇👇
• Downtrend
• Rounded bottom
• Neckline
This pattern also requires a sustained price move, this time to the downside before consolidating for an extended period and forming the rounded bottom.
👇👇👇
The price then begins to rally back above the neckline of the consolidation area. At this point the pattern has been completed.
Entry:-
Once the price breaks through and a candle closes above the Neckline/Re-test the neckline, we can then enter the market with a buy order.
Once the price breaks through and a candle closes above the Neckline/Re-test the neckline, we can then enter the market with a buy order.
Stop Loss :-
Before the neckline gets breached we normally see some consolidation/Buildup before the breakout which will form a minor swing low and it will become the stop loss area for the pattern.
Before the neckline gets breached we normally see some consolidation/Buildup before the breakout which will form a minor swing low and it will become the stop loss area for the pattern.
Target:-
Target is measured by taking the height of the actual pattern and extending that distance up from the neckline.
Target is measured by taking the height of the actual pattern and extending that distance up from the neckline.
Some Examples of ROUNDING BOTTOM CHART PATTERNS:- 👇👇👇👇
Summary:-
• The Rounding Top is a reversal pattern designed to identify the end of an uptrend and the beginning of a potential downtrend. It has the appearance of an inverted 'U' shape on the price chart.
👇👇👇
• The Rounding Top is a reversal pattern designed to identify the end of an uptrend and the beginning of a potential downtrend. It has the appearance of an inverted 'U' shape on the price chart.
👇👇👇
• The Rounding Bottom is a reversal pattern designed to identify the end of a downtrend and the beginning of a potential uptrend. It has the appearance of a 'U' shape on the price chart.
👇👇👇
👇👇👇
• Both patterns consist of an initial move in one direction, followed by consolidation or price rounding; then a breakout of the neckline in the opposite direction to that of the first move.
👇👇👇
👇👇👇
• Traders would only look to enter the market when the neckline of the pattern is broken. Look for candle closes above (for rounding bottom) or below (for rounding top) the neckline to confirm this.
👇👇👇
👇👇👇
• Volume Should be highest on either end (Specially on Breakout/Breakdown).
• Volume should be lower/dry in the . consolidation zone/ middle of the pattern.
👇👇👇
• Volume should be lower/dry in the . consolidation zone/ middle of the pattern.
👇👇👇
• The stop loss can be placed above the neckline when trading the rounded top and below the neckline when trading the rounded bottom.
• The profit target is measured by taking the height of the actual pattern and extending that distance from the break of the neckline.
• The profit target is measured by taking the height of the actual pattern and extending that distance from the break of the neckline.
Hope the information is helpful for you. In next tweet we'll start learning about "Continuation Chart Patterns".
If you still have queries then you can ask me by simply joining the telegram discussion group 👇👇👇
t.me
For more information STAY TUNED.......
If you still have queries then you can ask me by simply joining the telegram discussion group 👇👇👇
t.me
For more information STAY TUNED.......
• The initial Stop loss for Bullish Diamond pattren is below the recent Swing low before breakout.
• The initial Stop loss for bearish Diamond Pattern is above the recent Swing high before breakdown.
• The initial Stop loss for bearish Diamond Pattern is above the recent Swing high before breakdown.
CONTINUATION CHART PATTERNS:-
Continuation Patterns are recognizable chart patterns that signify a period of temporary consolidation before continuing in the direction of the original trend. Consolidation appears in the form of sideways price movement.
👇👇👇
Continuation Patterns are recognizable chart patterns that signify a period of temporary consolidation before continuing in the direction of the original trend. Consolidation appears in the form of sideways price movement.
👇👇👇
The pattern completes itself upon a strong breakout of the consolidation zone, resulting in the continuation of the preceding trend. Continuation patterns usually play out over the short to intermediate term.
Continuation Chart Pattrens:-
• Ascending/Descending Triangle
• Rectangle
• Cup and Handle/Inverted Cup and Handle
• Pennant/Flag
• Ascending/Descending Triangle
• Rectangle
• Cup and Handle/Inverted Cup and Handle
• Pennant/Flag
Bullish Continuation Chart Pattrens:-
Bullish continuation patterns appear midway through an uptrend and are easily identifiable.
1. Ascending triangle
2. Bullish Rectangle Pattern
3. Cup and Handle
4. Bullish Pennant
5. Bullish Flag
Bullish continuation patterns appear midway through an uptrend and are easily identifiable.
1. Ascending triangle
2. Bullish Rectangle Pattern
3. Cup and Handle
4. Bullish Pennant
5. Bullish Flag
Bearish Continuation Chart Pattrens:-
Bearish continuation pattrens appear midway through an downtrend.
1. Descending triangle
2. Bearish Rectangle
3. Inverted Cup and Handle
4. Inverted Pennant (Bearish Pennant)
5. Inverted Flag (Bearish Flag)
Bearish continuation pattrens appear midway through an downtrend.
1. Descending triangle
2. Bearish Rectangle
3. Inverted Cup and Handle
4. Inverted Pennant (Bearish Pennant)
5. Inverted Flag (Bearish Flag)
1. ASCENDING and DESCENDING TRIANGLE CHART PATTRENS:-
👇👇👇
👇👇👇
1.(a) ASCENDING TRIANGLE PATTERN:-
• The ascending triangle is a bullish continuation pattern and is characterized by a rising lower trendline as SUPPORT and a flat upper trendline that acts as RESISTANCE.
👇👇👇
• The ascending triangle is a bullish continuation pattern and is characterized by a rising lower trendline as SUPPORT and a flat upper trendline that acts as RESISTANCE.
👇👇👇
• The pattern indicates that buyers are more aggressive than sellers as price continues to make higher lows. The pattern completes itself when price breaks out of the triangle in the direction of the overall trend.
Key elements for ASCENDING TRIANGLE PATTERN:-
1. Uptrend:- The stock must be in an uptrend (in any time frame) before the ascending triangle appears.
2. Consolidation:- The ascending triangle starts to take on its form as the stock enters the consolidation phase.
1. Uptrend:- The stock must be in an uptrend (in any time frame) before the ascending triangle appears.
2. Consolidation:- The ascending triangle starts to take on its form as the stock enters the consolidation phase.
3. Rising lower trendline:- While the stock is consolidating, a rising trendline can be drawn by connecting the Higher Lows. This ascending trendline shows that buyers are slowly pushing the price up – which provides further support for a bullish trading bias.
4. Flat upper trendline:-Upper trendline acts as resistance. Price often approaches this level and bounces off until the breakout eventually occurs
5. Trend continuation:-After a strong break above the resistance look for confirmation of the pattern via continued upward momentum
5. Trend continuation:-After a strong break above the resistance look for confirmation of the pattern via continued upward momentum
Entry:- After viewing a strong breakout above the resistance, we can enter a long position.
• For safe entry we can wait for a Re-test the breakout.
• For safe entry we can wait for a Re-test the breakout.
Stop Loss:-
The initial Stop Loss for Ascending Triangle Pattern is below the recent low formed before Breakout.
• Then ride the trend with trailing SL for maximum gains.
The initial Stop Loss for Ascending Triangle Pattern is below the recent low formed before Breakout.
• Then ride the trend with trailing SL for maximum gains.
Target :- We can measure the distance from the start of the pattern, at the lowest point of the rising trendline to the flat resistance line. That same distance can be transposed later on, starting from the breakout point and ending at the potential take profit level.
Examples of ASCENDING TRIANGLE PATTERNS:- 👇👇👇
1.(b) DESCENDING TRIANGLE PATTERN:-
• The Descending Triangle is a bearish continuation pattern that is characterized by a descending upper trendline as RESISTANCE and a flat lower trendline that acts as SUPPORT.
• The Descending Triangle is a bearish continuation pattern that is characterized by a descending upper trendline as RESISTANCE and a flat lower trendline that acts as SUPPORT.
• The pattern indicates that sellers are more aggressive than buyers as price continues to make Lower Highs. The pattern completes itself when price breaks down of the triangle in the direction of the overall trend.
Key elements for DESCENDING TRIANGLE PATTERN:-
1. Downtrend:- The stock must be in a downtrend (in any time frame) before the descending triangle pattern appears.
2. Consolidation:- The descending triangle then appears while the stock enters the consolidation phase.
1. Downtrend:- The stock must be in a downtrend (in any time frame) before the descending triangle pattern appears.
2. Consolidation:- The descending triangle then appears while the stock enters the consolidation phase.
3.Upper trendline:- While the stock is consolidating, a downward sloping trendline can be drawn by connecting the lower highs. This downward sloping trendline shows that sellers are slowly pulling the price down – which provides further support for a bearish trading bias.
4. Lower trendline:- The lower trendline acts as support. Price often approaches this level and bounces off until the breakout eventually occurs.
5. Trend continuation:- After a strong break below the support, look for confirmation of the pattern via continued downward momentum
5. Trend continuation:- After a strong break below the support, look for confirmation of the pattern via continued downward momentum
Entry:- After viewing a strong breakdown below the support, we can enter a short position.
• For safe entry we can wait for a Re-test the breakdown.
• For safe entry we can wait for a Re-test the breakdown.
Stop Loss:- The initial Stop Loss for Descending Triangle Pattern is above the recent high formed before Breakdown.
• Then ride the trend with trailing SL for maximum gains.
• Then ride the trend with trailing SL for maximum gains.
Target:- We can measure the distance from the start of the pattern, at the highest point of the descending triangle to the flat support line. That same distance can be transposed later on, starting from the breakdown point and ending at the potential take profit level.
Examples of DESCENDING TRIANGLE PATTERNS:-👇👇👇
Hope the information is helpful for you. If you still have queries then simply ask me by joining our free telegram discussion group👇
t.me
In next tweet we'll learn about "RECTANGLE" Chart patterns.
Stay Tuned...
t.me
In next tweet we'll learn about "RECTANGLE" Chart patterns.
Stay Tuned...
Loading suggestions...