Forex for a trader
Forex currency trading chart arrows above and below candlestick

Forex currency trading chart arrows above and below candlestickBest 5 Forex Candlestick Patterns for Day Trading. Forex candlestick patterns are crucial for the success of your price action technical analysis. Along with chart patterns, traders constantly use candlestick patterns for day trading to open and close different trades. This is so because every Forex candle pattern contains a tradable potential. For this reason, I will dedicate the following material to the best 5 candle patterns Forex indicators and the way they should be traded when spotted on the chart. What are the Forex Candlestick Patterns? Forex candlestick patterns are special on-chart formations created by one or few Japanese candlesticks. There are many different candlestick pattern indicators known in Forex, and each of them has specific meaning and tradable potential. Forex traders constantly use candlestick chart patterns for day trading to foretell potential price moves on the chart. Forex candlesticks help them guess where the price will go and they buy or sell currency pairs based on what the pattern is telling them. Therefore, you should also spare time to examine the best candlestick patterns for intraday trading if you want to be a successful Forex trader. Type of Candlestick Patterns for Day Trading. There are two types of Forex candlestick patterns for day trading – continuation and reversal candle patterns. Let’s now briefly go through each of these two kinds. Continuation Forex Candle Patterns.

Continuation Forex candle patterns are the ones that come after a price move and have the potential to continue the price action in the same direction. The truth is that continuation candle patterns are not very popular in Forex trading. The reason for this is that they are not that many. In comparison to that, reversal candlestick patterns are dominating the Forex charts. Reversal Forex Candle Patterns. The reversal Forex candle patterns are the ones that come after a price move and have the potential to reverse the price action. Compared to continuation candle patterns, the reversal candle pattern indicators are the majority of the candle patterns you will meet on the Japanese candlestick charts. Best 5 Candlestick Patterns Explained with Examples. In this relation, you should not be surprised that the best 5 candlestick patterns for day trading are reversal patterns.

5 of the most profitable Forex candlestick indicators are: The Doji Family Tweezer Tops Tweezer Bottoms The Hammer Family Three Inside Ups Three Inside Downs Evening Star Morning Star. Notice that I have separated these into “families” or in their bullish and bearish versions since they refer to the same thing but upside down. Let’s now explain each of these with examples. Doji Candle Patterns. The Doji candle family consists of single candle formations where the price action opens and closes at the same price. Every Doji candlestick symbolizes the equalization of the bearish and the bullish forces. This means that the current price trend is getting exhausted and it is likely to be reversed. The Doji Forex pattern could appear after bullish moves as well as after bearish moves. Despite that, the function of the pattern stays the same – to reverse the price action. Since the Doji candle closes at the same level where it opened, the candle looks like a dash. Yes, but this is not the only Doji candle pattern known in Forex trading. There are other Doji candlesticks too. Below you will find the most popular Doji candlestick pattern types. The confirmation of all of the Doji patterns comes when with the finish of a candle that closes in the direction that is opposite to the trend. This candle is the first indication that the reversal is beginning. Tweezer Tops and Tweezer Bottoms.

The Tweezer Tops is a double candlestick pattern Forex indicator with reversal functions. The pattern comes at the end of bullish trends and signalizes about the beginning of a fresh bearish move. The first candle of the Tweezer Top candlestick formation is usually the last of the previous bullish trend. The second candle of the Tweezer Top pattern should have an upper shadow that starts from the top of the previous shadow. At the same time, the upper shadows of the two candles should be approximately the same size. The Tweezer Tops has its opposite equivalent that is called Tweezer Bottoms. The Tweezer Bottoms Forex pattern has absolutely opposite structure. The pattern comes after price drops and signalizes upcoming bullish moves. The first candle of the Tweezer Bottom is usually the last candle of the previous bullish trend. The second candle of the Tweezer Bottom pattern should have a lower shadow that starts from the bottom of the previous shadow. At the same time, the lower shadows of the two candles should be approximately the same size.

The confirmation of the Tweezer Candlesticks comes with the candle that manages to close beyond the opposite side of the pattern. This candle is a strong indication that the trend is reversing. The Hammer candlestick pattern is a single candle pattern that has three variations depending on the trend they take part in. Every Forex candlestick that belongs to the Hammer family has a small body and a big upper or smaller shadow. At the same time, the other shadow is either missing or very small. You will guess right if you are wondering if the name of the Hammer candle family comes from the structure of the candles. The candles in the Hammer family are four, and they all have reversal character. Let me meet you with these candles now: I have shown the bullish and the bearish version of each candle. Notice that it doesn’t matter which of the two candles you will receive. The meaning is the same. Hammer Candlestick Chart Pattern. The first candle on the sketch is the Hammer candlestick chart pattern. The candle emerges during bearish trends and signalizes that a bullish move is probably on its way. The Hammer candle has a small body, a long lower shadow and a very small or no upper shadow. Traders use the Hammer candlestick to open long trades. Inverted Hammer Candlestick Pattern.

The Inverted Hammer candle has absolutely the same functions as the Hammer candle, but it is upside down. The Inverted Hammer has a small body, a big upper shadow, and a small or no lower shadow. Same as the Hammer candle, the Inverted Hammer candlestick comes after bearish moves and signalizes that a fresh bullish move might be emerging. Traders use the Inverted Hammer pattern to open long trades. Hanging Man Candle Pattern. The Hanging Man candlestick is absolutely the same as the Hammer candlestick pattern. It has a small body, a long lower shadow and a very small or no upper shadow. However, the Hanging Man Forex pattern occurs after bullish trends and signalizes that the trend is reversing. In this relation, the Hanging Man candle pattern is used by traders to open short trades. Shooting Star Candlestick Pattern. The Shooting Star candle pattern has the same structure as the Inverted Hammer candle. It has a small body, a long upper shadow and a tiny or no lower shadow. However, the Shooting Star Forex candle comes after bullish trends and signalizes that the bulls are exhausted. As a result, a reversal and a fresh price decrease usually appear afterward. In this relation, Shooting Star candlestick chart pattern acts as a signal to short Forex pairs.

The confirmation of the Hammer, Inverted Hammer, the Shooting Star and the Hanging Man comes with the candle which closes in the direction opposite to the trend. This candle is likely to be the first of an eventual emerging trend. Three Inside Up and Three Inside Down Candlestick Patterns. The Three Inside Up is another reversal candle pattern indicator that comes after bearish trends and foretells fresh bullish moves. It is a triple Forex candlestick pattern that starts with a bearish candle. The pattern continues with a bullish candle, which is fully engulfed by the fist candle, and which closes somewhere in the middle of the first candle. The pattern ends with a third candle, which is bullish and breaks the top of the first candle. The first candle of the Three Inside Up candle pattern is usually the last candle of the previous bearish trend. The Three Inside Up has its opposite equivalent – the Three Inside Down candlestick pattern. The Three Inside Down is a mirror image of the of the Three Inside Up. It comes after bullish trends and usually begins fresh bearish moves. The Three Inside Down candlestick pattern starts with a bullish candle, which is usually the last of the previous bullish trend.

The pattern continues with a second candle – a bearish one that is fully engulfed by the first candle and closes somewhere in the middle of the first candle. The pattern then continues with a third candle, which is bearish and goes below the beginning of the first candle. The confirmation of the Three Inside Up and the Three Inside Down candlestick patterns comes with the third candle that closes beyond the beginning of the first candle of the pattern. Morning Star Candle and Evening Star Candle Pattern. The Morning Star candle pattern is another three bar formation that has reversal functions. The Morning Star candlestick chart pattern comes after bullish trends and signalizes eventual price reversal. The pattern starts with a bullish candle that is long, and it is usually the last candle of the previous bullish trend. Then it continues with a very small candle that could sometimes even be a Doji star, and it is possible that this candle sometimes gaps up. The third candle of the pattern is bearish and goes below the middle point of the first candle, and it could also gap down from the second candle. The opposite equivalent to the Morning Star Forex figure is called Evening Star candlestick pattern. The Evening Star Forex figure is a mirror version of the Morning Star that comes after bearish trends and signalizes their reversal. The Evening Star candle pattern starts with a bearish candle that is long, and it is usually the last candle of the previous bearish trend. Then it continues with a very small candle that could sometimes even be a Doji star, and it is possible that this candle sometimes gaps down. The third candle of the pattern is bullish and goes above the middle point of the first candle of the pattern.

It could also gap up from the second candle. The confirmation of the Morning Star and the Evening Star candlestick reversal patterns comes with the end of the third candle. If the pattern emerges meeting the requirements of the three candles then you can trade in the respective direction. Best Forex Candlestick Patterns Cheat Sheet. I have created a simple candlestick pattern cheat sheet for your convenience. It contains all the sketches shown above. You can use these Forex candlestick patterns for day trading by simply peeking at the cheat sheet to confirm the patterns. Save the image on your PC, or simply print it for your convenience. Real Examples of Candle Pattern Indicators.

Now that you are familiar with the structure of the best candlestick patterns for intraday trading, I suggest that we go through coupe chart examples of how these work in trading. The first example on the chart shows the Three Inside Up and the Three Inside Down chart pattern indicators in action. See that after each of these two patterns the price action creates a turning point and the price reverses the previous trend. You should open a short trade at the Three Inside Down pattern and a long trade at the Three Inside Up Pattern. You should place your Stop Loss orders at the opposite side of the patterns as shown in the image. This is a Tweezer Bottoms Forex candle pattern. See that the lower shadows of the two candles start and end approximately at the same level, which confirms the validity of the pattern. As a result, the price action reverses, which triggers a long trade. At the same time, you should put a stop loss order below the lowest point of the pattern.

Now let’s go through the Morning Star candle pattern and the Hanging Man candlestick. Both patterns have the ability to end a bullish trend and to start a fresh bearish move. You should approach both patterns with a short trade, and you should sell upon their confirmation placing Stop Loss orders above their high. As you see, in both cases the price decreases after the confirmation of the pattern. Lastly, we will discuss a Doji candlestick pattern that comes after a bearish trend. Our Doji candlestick analysis shows that the price ends the bearish move and starts a fresh bullish move. You should trade in bullish direction here placing a Stop Loss order below the lowest point of the Doji star candle. Stop Loss Orders on Forex Candle Patterns. You should always use a Stop Loss order when trading Forex candle patterns. As you have probably seen on the trading images above, the best place for your stops on candle trades is at the opposite side of the patterns. If you are trading a bullish candlestick pattern, place your Stop Loss order below the formation. If you are trading a bearish candlestick pattern, then you should place your Stop Loss order above the candle figure on the chart. Take Profit Orders and Targets on Forex Candlesticks.

The rule of thumb says that you should trade every candle pattern for a minimum price move equal to the size of the pattern measured from the tip of the upper shadow to the tip of the lower shadow. In some cases, the price action will continue further than that. Therefore, use the basic price action rules to determine further exit points on the chart. If you spot another candle pattern during you trade that suggests the end of the trend, you should simply exit your trade and collect your profit. Forex candlestick patterns are crucial for the price action technical analysis of currency pairs. The candlestick pattern indicators form on the Japanese candlestick charts that visualize the price action of Forex pairs. There are two main types of candle patterns Forex indicators: Continuation candle patterns – not very popular in Forex trading Reversal candle patterns – widely used to profit on the Forex market The best Forex candlestick patterns for day trading have reversal character. These are: The Doji Candlestick Patterns – Doji, Long Legged Doji, Dragonfly Doji, Gravestone Doji, and Four Price Doji Tweezer Tops and Tweezer Bottoms The Hammer Candle Pattern Family: Hammer, Inverted Hammer, Shooting Star, and Hanging Man Three Inside Up and Three Inside Down Evening Star and Morning Star Candle Patterns You should place your Stop Loss orders at the opposite side of the candle pattern you are trading. Stay in each candle trade for a minimum price move equal to the size of the pattern. Extend your targets by applying price action rules. GET STARTED WITH THE FOREX TRADING ACADEMY.

Damyan is a fresh MSc International Management from the International University of Monaco. During his bachelor and master programs, Damyan has been working in the area of financial markets as a Market Analyst and Forex Writer. He is the author of thousands of educational and analytical articles for traders. When being in bachelor school, he represented his university in the National Forex Trading Competition for students in Bulgaria and got the first place among 500 other traders. He was awarded a cup and a certificate at an official ceremony in his university. What is a Japanese Candlestick? While we briefly covered Japanese candlestick charting analysis in the previous forex lesson, we’ll now dig in a little and discuss them more in detail. Let’s do a quick review first. Japanese Candlestick Trading. Back in the day when Godzilla was still a cute little lizard, the Japanese created their own old school version of technical analysis to trade rice. That’s right, rice. Steve researched, studied, lived, breathed, ate candlesticks, and began to write about it. To make a long story short, without Steve Nison, candlestick charts might have remained a buried secret. Steve Nison is Mr. Candlestick. What are Japanese candlesticks? The best way to explain is by using a picture: They are used to describe the price action during the given time frame.

Japanese candlesticks are formed using the open, high, low, and close of the chosen time period. If the close is above the open, then a hollow candlestick (usually displayed as white) is drawn. If the close is below the open, then a filled candlestick (usually displayed as black) is drawn. The hollow or filled section of the candlestick is called the “real body” or body. The thin lines poking above and below the body display the highlow range and are called shadows. The top of the upper shadow is the “high”. The bottom of the lower shadow is the “low”. Basic Japanese Candlestick Patterns. Japanese candlesticks with a long upper shadow, long lower shadow and small real bodies are called spinning tops . The color of the real body is not very important. The pattern indicates the indecision between the buyers and sellers. The small real body (whether hollow or filled) shows little movement from open to close, and the shadows indicate that both buyers and sellers were fighting but nobody could gain the upper hand. Neither buyers nor sellers could gain the upper hand, and the result was a standoff. If a spinning top forms during an uptrend, this usually means there aren’t many buyers left and a possible reversal in direction could occur. If a spinning top forms during a downtrend, this usually means there aren’t many sellers left and a possible reversal in direction could occur. Sounds like some kind of voodoo magic, huh? “I will cast the evil spell of the Marubozu on you!” Fortunately, that’s not what it means.

Marubozu means there are no shadows from the bodies. Depending on whether the candlestick’s body is filled or hollow, the high and low are the same as its open or close. Check out the two types of Marubozus in the picture below. A White Marubozu contains a long white body with no shadows. The open price equals the low price and the close price equals the high price . A Black Marubozu contains a long black body with no shadows. The open equals the high and the close equals the low . This is a very bearish candle as it shows that sellers controlled the price action the entire session. It usually implies bearish continuation or bearish reversal. Doji candlesticks have the same open and close price or at least their bodies are extremely short. A doji should have a very small body that appears as a thin line. Prices move above and below the open price during the session, but close at or very near the open price.

Neither buyers nor sellers were able to gain control and the result was essentially a draw. There are FOUR special types of Doji candlesticks. The length of the upper and lower shadows can vary and the resulting forex candlestick looks like a cross, inverted cross or plus sign. The word “Doji” refers to both the singular and plural form. When a Doji forms on your chart, pay special attention to the preceding candlesticks. If a Doji forms after a series of candlesticks with long hollow bodies (like White Marubozus), the Doji signals that the buyers are becoming exhausted and weakening. In order for price to continue rising, more buyers are needed but there aren’t anymore! Sellers are licking their chops and are looking to come in and drive the price back down. If a Doji forms after a series of candlesticks with long filled bodies (like Black Marubozus), the Doji signals that sellers are becoming exhausted and weak. In order for price to continue falling, more sellers are needed but sellers are all tapped out! Buyers are foaming in the mouth for a chance to get in cheap. While the decline is sputtering due to lack of new sellers, further buying strength is required to confirm any reversal. In the next following sections, we will take a look at specific Japanese candlestick pattern and what they are telling us. Hopefully, by the end of this lesson on candlesticks, you will know how to recognize different types of forex candlestick patterns and make sound trading decisions based on them.

Download Best Forex Candlestick Patterns indicator mt4. Candlestick patterns indicators guide you about candle next target in term of analysis. Candlestick pattern chart is most power idea for trading and play key role in turning points in any market pair. You also can understand complete about candlestick chart pdf for more details with trading role and daily market trend analysis in Forex. Candlestick reversal patterns forex with indicator for bullish and bearish you can trad easily with short pips target. With candlestick indicators you can trad any broker any time frame in mt4 after candle template activation in chart. If you want to understand complete trend bullish and bearish candlestick patterns then download candle pattern indicator. Bullish and bearish candlestick patterns forex explained. Bearish candlesticks or bullish candlesticks just simple you can indicate with arrow indicator. You need just download file zip and install own mt4 with complete template.

If candle show you green color in chart that means bullish power and same if candle show you red colore that means bearish. Candlestick analysis forex you can simple just follow indicator point and trad. For long term candle trading must choose Day trad time frame and for scalping candle pattern you can choose short term like m15 or M30 time frame. I am share with you some candle pattern name and type:- Bullish and bearish Harami Candlestick Pattern. This is live example of Harami candlestick patterns with Bullish trend arrow appear in down line. For bullish arrow appear in down and after that market move next target. This harami candle show upper shadow and long lower shadow with short body pattern. This harami candle mostly appear in Uk market session opening time. Engulfing candlestick pattern indicator. The engulfing candlestick patterns also call reversal pattern means that work great on market reverse point. Mostly bearish engulfing in downtrend show downtrend market point as normal. This patterns forex candle appear and downtrend end and indicate clear uptrend next target with green line arrow in down bottom. Bullish & bearish Piercing Candlestick Pattern.

This candlestick pattern consist of two downside gap for bullish and bearish trading with piercing. You can trad with new York market close trad with this forex trading candlestick patterns. Candlestick bullish reversal patterns give you clear market trend with long term trading. Doji and Shooting Star Candlestick Pattern. For trading candlestick patterns you can use Doji pattern with long term in asia market session entry point. With Doji candlestick pattern show you bearish pattern candle for long term trad with strong down direction. You can All major pair like eurusd and other for doji candle stick Forex pattern. Check here above doji pattern indicator arrow for sell trading with 100 pips market target. Best Forex Candlestick Patterns Rules. There is not any hard rule for following candle stick pattern strategy you need to just wait and action on time for best trad entry point. For bull and bears candle stick you need to take action after waiting in any currency or gold trading pairs.

If you want uk market trad session then must follow market open gap session time before any trad entry point. For 100 pips target you need to check day time frame in any broker platform mt4 for trading. For Shooting Star Candlestick Pattern check out this arrow in above picture all forex candle pattern give you market buy or sell entry point with complete buy or sell trading in gold pair and some other. Forex candlestick pattern indicator you can download here and upload in mt4 with system and follow also remember rule in trad time. You can also check latest forex price action indicator and binary option strategy with indicator system. Forex Pops Download forex free trading system and indicators. Most Profitable Forex Grid Trading System Strategy Download free. Grid Trading Strategy The foreign exchange grid gadget has grow to be quite famous among buyers as it’s smooth to visualise. However, it’s far crucial to understand that there’s no guarantee. Understanding is energy – manual grid trading strategy in case … Download London Forex Candle Breakout Hedging EA (Expert advisor) Free. Forex breakout EA : A breakout method can supplement other trading patterns and offer diversification.

Big breakouts are “occasion driven” in that they regularly show up around the release of critical facts. Minor breakouts, candle breakout ea which can be … Most Accurate Easy Binary options Balanced System (Trading indicator) Binary options system Many binary alternatives buyers got began trading within the foreign exchange markets. They shifted to binary due to the fact the mechanics of trading were less complicated, no longer due to the fact the evaluation became any … 7 Best Binary options no repaint indicator 95 Accurate Download Free. Binary options indicator 95 accurate In these days’ publish excellent binary alternatives indicator ultimate trend indicators. We are able to do a brief evaluation about remaining fashion signals and the way you can use it to increase the possibilities of … Best Forex Ultimate trend Signals V3 indicator mt4 Download free. Ultimate trend signals mq4 Last trend indicators let you find dependable alerts but you ought to use it correctly. This tool includes numerous ultimate trend signals mt4 signs and while they may be in convergence you’ll get a powerful sign … Download ipanel buy sell Forex trend MT4 Latest indicator free. ipanel trend indicator displays the trends from stoch, RSI, CCI, MACD, EMA1 and EMA2 technical indicators throughout the 1 min, 5min, 15 min, 30 min, 1 hour and 4 hour forex charts in one easy-to-examine change box. Up arrow means superb … Download Best Advanced Camarilla Pivot Points mt4 indicator Free.

Advanced camarilla mt4 I used to apply the standard pivot factors calculations for a long term. But i used to be never glad with them due to the fact the pivot lines were too a long way apart to be … 10 Best Forex Advanced Japanese Candlesticks Patterns cheat sheet. Forex candlestick patterns cheat sheet Expertise candlestick patterns are going a long way beyond just remembering and recognizing positive formations. In our forex pro path, forex candlestick patterns cheat sheet pdf you may examine the whole thing approximately price motion trading … Download Best Forex Candlestick Patterns indicator mt4. Candlestick patterns indicators guide you about candle next target in term of analysis. Candlestick pattern chart is most power idea for trading and play key role in turning points in any market pair. You also can understand complete about candlestick chart … Top (non repaint chart indicator mt4) for buy or sell with trend market. Today i will share with you non repaint forex indicator that work all mt4 brokers. You will get all setup non repaint indicator with complete template. Forex scalping non repaint indicator for best day trading euro pairs. I want to … Chart Basics (Candlesticks) 2.1 Level 1 Forex Intro 2.2 Level 2 Markets 2.3 Level 3 Trading. 5.1 Short Term 5.2 Medium Term 5.3 Long Term. Now that you have some experience and understanding in currency trading, we will starting discussing a few basic tools that forex traders frequently use. Due to the fast paced nature and leverage available in forex trading, many forex traders do not hold positions for very long. For example, forex day traders may initiate a large number of trades in a single day, and may not hold them any longer than a few minutes each.

When dealing with such small time horizons, viewing a chart and using technical analysis are efficient tools, because a chart and associated patterns can indicate a wealth of information in a small amount of time. In this section, we will discuss the "candlestick chart" and the importance of identifying trends. In the next lesson, we'll get into a common chart pattern called the "head and shoulders." (Day trading could be your cup of tea; you might want to read How To Set A Forex Trading Schedule .) While everyone is used to seeing the conventional line charts found in everyday life, the candlestick chart is a chart variant that has been used for around 300 years and discloses more information than your conventional line chart. The candlestick is a thin vertical line showing the period's trading range. A wide bar on the vertical line illustrates the difference between the open and close. The daily candlestick line contains the currency's value at open, high, low and close of a specific day. The candlestick has a wide part, which is called the "real body". This real body represents the range between the open and close of that day's trading. When the real body is filled in or black, it means the close was lower than the open. If the real body is empty, it means the opposite: the close was higher than the open.

Just above and below the real body are the "shadows." Chartists have always thought of these as the wicks of the candle, and it is the shadows that show the high and low prices of that day's trading. When the upper shadow (the top wick) on a down day is short, the open that day was closer to the high of the day. And a short upper shadow on an up day dictates that the close was near the high. The relationship between the day's open, high, low and close determine the look of the daily candlestick. The chart above is an example of a one-month candlestick chart of the popular EURUSD pair. Forex traders will analyze these charts closely to identify changes in momentum and After studying this type of chart, it becomes apparent that there is a wealth of information displayed on each candlestick. At just a glance, you can see where a currency's opening and closing rates, its high and low, and also whether it closed higher than it opened. When you see a series of candlesticks, you are able to see another important concept of charting: the trend. (For a more in depth analysis, check out The Art of Candlestick Charting .) Forex Training Group. Knowing when to enter the market is one of the most important skills in Forex trading. We should aim to hop into emerging trends as early as possible in order to catch the maximum price swing. One of the best ways to do this is by predicting potential reversals on the chart. In this lesson, we will discuss some of the top Forex reversal patterns that every trader should know.

What are Forex Reversal Patterns. Chart patterns can represent a specific attitude of the market participants towards a currency pair. For example, if major market players believe a level will hold and act to protect that level, we are likely to see a price reversal at that level. Forex reversal patterns are on chart formations which help in forecasting high probability reversal zones. These could be in the form of a single candle, or a group of candles lined up in a specific shape, or they could be a large structural classical chart pattern. Each of these chart formations has a specific reversal potential, which is used by experienced traders to gain an early edge by entering into the new emerging market direction. Types of Reversal Chart Patterns. There are basic two types of trend reversal patterns; the bearish reversal pattern and the bullish reversal pattern. The Bullish reversal pattern forecasts that the current bearish move will be reversed into a bullish direction.

The bearish reversal pattern forecasts that the current bullish move will be reversed into a bearish direction. Top Candlestick Reversal Patterns. We will start with four of the most popular and effective candlestick reversal patterns that every trader should know. Doji Candlestick Pattern. The Doji candle is one of the most popular candlestick reversal patterns and it’s structure is very easy to recognize. First, the Doji is a single candle pattern. The Doji candle is created when the opening and the closing price during a period are the same. In this manner, the Doji candle has no body and it looks like a cross. The Doji can appear after a prolonged price move, or in some cases when the market is very quiet and there is no volatility. In either case, the Doji candle will close wherever it has opened or very close to it. The Doji candlestick is typically associated with indecision or exhaustion in the market. When it forms after a prolonged trend move, it can also provide a strong reversal potential. The candle represents the inability of the trend riders to keep pressuring the price in the same direction.

The forces between the bears and the bulls begin to equalize and eventually reverse direction. In the case above, you see the Doji candle acting as a bearish reversal signal. Notice that the price action leading to the Doji candle is bullish but the upside pressure begins to stall as evidenced by the Doji candle and the two candles just prior to the Doji candle. After the appearance of the Doji, the trend reverses and the price action starts a bearish decent. Hammer Shooting Star Candlestick Patterns. The Hammer candlestick pattern is another single candle which has a reversal function. This candle is known to have a very small body, a small or non-existent upper shadow, and a very long lower shadow. The Hammer pattern is only considered a valid reversal signal if the candle has appeared during a bearish trend: This sketch shows you the condition you should have in order to confirm a Hammer reversal. It should be noted that the hammer candle itself could be bullish or bearish and this wouldn’t change its function. There are four similar variations of the Hammer candle, depending on the trend and the candle’s structure: In the first two cases, you have a bearish trend, which reverses to a bullish price move. The difference between the two candles is that in the second case the long wick it positioned in the opposite direction and this formation is called an Inverted Hammer. In the second two cases we have a bullish trend which turns into a bearish trend. If the long shadow is at the lower end, you have a Hanging Man. If the long shadow is at the upper end, you have a Shooting Star.

In all four cases it doesn’t matter whether the reversal candle is bullish or bearish. This doesn’t change its function. Now let’s approach a Shooting Star example: The chart above shows you a Shooting Star candle, which is part of the Hammer reversal family described earlier. The shooting star candle comes after a bullish trend and the long shadow is located at the upper end. The shooting star pattern would signal the reversal of an existing bullish trend. Engulfing Candlestick Pattern. The next pattern we will discuss is the Engulfing pattern. Note that this is a double candle pattern. This means that the formation contains two candlesticks. The engulfing formation consists of an initial candle, which gets fully engulfed by the next immediate candle. This means that the body of the second candle should go above and below the body of the first candle. There are two types of Engulfing patterns – bullish and bearish. The bullish Engulfing appears at the end of a bearish trend and it signals that the trend might get reversed to the upside. The first candle of the bullish Engulfing should be bearish. The second candle, the engulfing candle, should be bullish and it should fully contain the body of the first candle.

The characteristic of the bearish Engulfing pattern is exactly the opposite. It is located at the end of a bullish trend and it starts with a bullish candle, whose body gets fully engulfed by the next immediate bigger bearish candle. Take a moment to check out this Engulfing reversal example below: This chart shows you how the bullish Engulfing reversal pattern works. See that in our case the two shadows of the first candle are almost fully contained by the body of the second candle. This makes the pattern even stronger. We see on this chart that the price reverses and shoots up after the Bullish Engulfing setup. Trading Rules for Reversal Candle Formations. To trade reversing candles, you should remember a few simple rules regarding trade entry, stop loss placement, and take profit. We will go this in the following section: The confirmation of every reversal candle pattern we have discussed comes from the candle which appears next, after the formation. It should be in the direction we forecast. After this candle is finished, you can enter a trade. In the Bullish Engulfing example above, the confirmation comes with the smaller bullish candle, which appears after the pattern. You can enter a long trade at the moment this candle is finished.

This would be the more conservative approach and provide the best confirmation. Aggressive traders may consider entering a trade when the high of the prior bar is taken out (in case of a bullish reversal pattern) or when the low of the prior bar is taken out (in case of a bearish reversal pattern). Never enter a candlestick reversal trade without a stop loss order. You should place a stop order just beyond the recent swing level of the candle pattern you are trading. So, if you trade long, your stop should be below the lowest point of your pattern. If you are going short, then the stop should be above the highest point of the pattern. Remember, this rule takes into consideration the shadows of the candles as well. The minimum price move you should aim for when trading a candle reversal formation is equal to the size of the actual pattern itself. Take the low and the high of the pattern (including the shadows) and apply this distance starting from the end of the pattern. This would be the minimum target that you should forecast. If after you reach that level, you may decide to stay in the trade for further profit and manage the trade using price action rules. Top Reversal Chart Patterns. Now let’s switch gears and talk a bit about some classical chart patterns that have a reversal potential. Two of the most popular and effective among this class would include the Double Top Double Bottom formation and the Head and Shoulder pattern. Double Top and Double Bottom.

We will start with the Double Top reversal chart pattern. The pattern consists of two tops on the price chart. These tops are either located on the same resistance level, or the second top is a bit lower. The double top pattern typically looks like the letter “M”. The Double Top has its opposite, called the Double Bottom. This pattern consists of two bottoms, which are either located on the same support level, or the second bottom is a bit higher. The double bottom pattern typically looks like the letter “W”. These patterns are known to reverse the price action in many cases. Let’s see the Double Top formation on a price chart: Notice we have a double top formation and that the second top is a bit lower than the fist top. This is a usual occurrence with a valid Double Top Pattern. The confirmation of the Double Top reversal pattern comes at the moment when the price breaks the low between the two tops. This level is marked with the blue line on the chart and it is called a trigger or a signal line.

The stop loss order on a Double Top trade should be located right above the second top. The Double Top minimum target equals the distance between the neck and the central line, which connects the two tops. The Double Bottom looks and works absolutely the same way, but everything is upside down. Thus, the Double Bottom reverses bearish trends and should be traded in a bullish direction. The Head and Shoulders pattern is a very interesting and unique reversal figure. The shape of the pattern is aptly named because it actually resembles a head with two shoulders. The pattern forms during a bullish trend and creates a top – the first shoulder. After a correction, the price action creates a higher top – the head. After another correction, the price creates a third top, which is lower than the head – the second shoulder. So we have two shoulders and a head in the middle. Of course, the Head and Shoulders reversal pattern has its upside down equivalent, which turns bearish trends into bullish. This pattern is referred to as an Inverted Head and Shoulders pattern. Now let me show you what the Head and Shoulders formation looks like on an actual chart: In the chart above we see price increasing just prior to the head and shoulders formation. This is an important characteristic of a valid head and shoulders pattern. The confirmation of the pattern comes when the price breaks the line, which goes through the two bottoms on either side of the head.

This line is called a Neck Line and it is marked in blue on our chart. When the price breaks the Neck Line, you get a reversal trading signal. This is when you would want to initiate a trade to the short side. You should put your stop loss order above the last shoulder of the pattern – the right shoulder. Then you would trade for a minimum price move equal to the distance between the top of the head and the Neck Line. The Inverted Head and Shoulders pattern is the upside down version of the Head and Shoulders. The pattern comes after a bearish trend, creates the three bottoms as with a Head and Shoulders and reverses the trend. It should be traded in the bullish direction. Forex Reversal Strategy. When using a reversal trading system, it is always a good idea to wait for the pattern to be confirmed. I will present some confirmation ideas for you to apply when trading trend reversals in Forex.

In the following chart example, I will illustrate five reversal trades for you. The image above is the H4 chart of the USDJPY Forex pair for Sep, 2016. The chart shows 5 potential trades based on a reversal trading strategy using candlestick and chart patterns. Each of the trades is marked with a black number at the opening of the trade. The first trade comes when we get a small Hammer candle, which gets confirmed by a bullish candle afterwards. Note that after the confirmation candle, price quickly completes the minimum target of the pattern. Then we see a big Hanging Man candle (because it comes after an increase), but the following candle is bullish, which provides no reversal confirmation. Therefore, this pattern should be ignored. Soon the price action creates a Head and Shoulders pattern. At the top of the last shoulder we see another Hanging Man pattern, which this time gets confirmed and completed. This is another nice trading opportunity.

The stop loss order should be located above the top of the upper shadow of the Hanging Man. This trade could actually be extended by the confirmation of the big Head and Shoulders pattern. Simply hold the Hanging Man trade with the same stop loss order until the price action moves to a distance equal to the size of the Head and Shoulders structure as calculated by the measured move. You can close the trade after the target is completed at the end of the big magenta arrow. The price then consolidates and creates a Double Bottom pattern – another wonderful trading opportunity. You can buy the USDJPY when the price breaks the magenta horizontal trigger line. Your stop should be located below the second bottom of the pattern as shown on the image. You hold the trade until the size of the pattern is completed. The price action reverses afterwards and starts a bearish move. On the way down we see a Hammer candle in the gray rectangle. However, the next candle after the Hammer is bearish, which does not confirm the validity of the pattern.

For this reason, this Hammer candle should be ignored. The next trading opportunity comes after an upward price swing. In the last blue rectangle you see a Shooting Star candle pattern with a very big upper shadow. This increases the reliability of the pattern. You could open a short trade when the next bearish candle completes to confirm the shooting star pattern, or if you want a more aggressive entry, you could have entered short when the low of the shooting star candle was taken out. The stop loss order should be placed above the upper shadow of the candle. Then you would want to hold the trade for at least the minimum price move equal to the size of the Shooting Star. Forex reversal patterns are on chart candlestick formations of one or more candles or bigger chart patterns which forecast price reversals. Every chart pattern has a mass sentiment component that can help a trader in gauging potential price swings. There are two types of reversal chart patterns: Bullish Reversal Chart Patterns – reverse the bearish move and starts a bullish move Bearish Reversal Chart Patterns – reverse the bullish move and starts a bearish move The top candlestick reversal patterns are: Doji – The price closes wherever it has opened and creates a candle with no body. Hammer – It has a small body, one big shadow and another small shadow. There are four variations of the Hammer candle depending on the previous trend and the position of the candle. Engulfing – It consists of two candles – a small candle and another candle, whose body fully engulfs the body of the first candle. There is a bullish and a bearish Engulfing.

The top reversal chart patterns are: Double Top – The price creates two tops on approximately the same resistance level. The price is likely to start a bearish move afterwards. The opposite equivalent of this pattern is the Double Bottom. Head and Shoulders – The price creates a top, a higher top, and a lower top afterwards. The price is likely to start a bearish move afterwards. The opposite equivalent of this pattern is the Inverted Head and Shoulders. When using a Forex reversal strategy you would want to open a trade when you get a pattern confirmation and to hold for at least the minimum price projection based on the structure of the pattern. Take Your Trading to the Next Level, Accelerate Your Learning Curve with my Free Forex Training Program. Forex Trend Scanner Forex Trading Strategy. The Forex Trend Scanner forex trading strategy is designed to meet with the demands of today’s currency traders. Trends are quickly spotted, and the strategy takes into account basic indicators, thereby eliminating fear and uncertainty that an investor might likely harbor while trading. Chart Setup.

MetaTrader4 Indicators: ForexTrendScanner. ex4 (default setting), ForexForecaster. ex4 (default setting), Forex-MT4-Trend-Indicator. ex4 (default setting) Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day. Recommended Trading Sessions: Any. Currency Pairs: Any pair. Download. Buy Trade Example. Strategy. Long Entry Rules. Enter a buy order if the following indicator or chart pattern gets displayed: If the blue upward pointing arrow and the candle like bodies of the Forex-MT4-Trend-Indicator custom indicator is spotted on the activity chart (refer to Fig. 1.0), price is said to be on its way up i. e. a bullish signal.

If lime filled candlesticks of the ForexTrendScanner. ex4 custom indicator opens and closes, a buy trigger is instructed on the ensuing candlestick. If the mostly green line of the ForexForecaster. ex4 custom indicator hovers above the 0.00 level as seen on Fig. 1.0, the market sentiment is said to be bullish, thus a buy alert. Stop Loss for Buy Entry: Place stop loss 2 pips below immediate support. Exit StrategyTake Profit for Buy Entry. Exit or take profit if the following rules or conditions takes center stage: If the red downward pointing arrow and candle like bodies of the Forex-MT4-Trend-Indicator custom indicator realign to stay above price bars, an exit or take profit will suffice. If the red or maroon filled candlesticks of the ForexTrendScanner. ex4 custom indicator is seen during a buy alert, an exit or take profit is welcomed. If the line (possibly red) of the ForexForecaster. ex4 custom indicator breaks below the 0.00 level, we say price is somewhat driving lower, hence an exit or take profit will do. Sell Entry Rules. Take up sell position(s) if the following holds true: If the red downward pointing arrow and the candle like bodies of the Forex-MT4-Trend-Indicator custom indicator is spotted on the activity chart usually placed above price bars (refer to Fig. 1.1), price is said to be on its way down i. e. a bearish signal.

If red filled candlesticks of the ForexTrendScanner. ex4 custom indicator opens and closes, a sell trigger is instructed on the ensuing candlestick. If the mostly red line of the ForexForecaster. ex4 custom indicator hovers below the 0.00 level as seen on Fig. 1.1, the market sentiment is said to be bearish, thus a sell trigger. Stop Loss for Sell Entry: Place stop loss 2 pips above immediate resistance. Exit StrategyTake Profit for Sell Entry. Exit or take profit if the following takes center stage: If the blue upward pointing arrow and candle like bodies of the Forex-MT4-Trend-Indicator custom indicator realign to stay below price bars, an exit or take profit will suffice. If the lime or green filled candlesticks of the ForexTrendScanner. ex4 custom indicator is seen during a sell alert, an exit or take profit is welcomed. If the line (possibly green) of the ForexForecaster. ex4 custom indicator breaks above the 0.00 level, we say price is somewhat driving higher, hence an exit or take profit will suffice. Sell Trade Example. Free Download. About The Trading Indicators.

Simple Renko Arrows Forex Trading Strategy. The currency market in most cases offers us little time to think through our decisions, considering the speed at which prices are being filled. Traders remain on the lookout for opportunities they can capitalize on and make profits. This is attainable only when you have a reliable trading strategy, and we have developed one you can obviously try out. Let’s take a look at the Simple Renko Arrows forex trading strategy to see how it really pans out on the activity chart and how you can make money of it. Chart Setup. MetaTrader4 Indicators: tipu_renko. ex4 (Input Variable Modified; Renko Mark=Arrows), fouraverage-indicator. ex4 (default setting) Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day. Recommended Trading Sessions: Any (London, New York, Tokyo) Currency Pairs: Any pair. Download. Buy Trade Example. Strategy. Long Entry Rules. Initiate a buy entry if the following indicator or chat pattern gets displayed: If the lime histograms of the fouraverage-indicator. ex4 gets aligned above the 0.00 level within its indicator window, while a corresponding lime upward pointing arrow also forms below price bars (refer to Fig. 1.0), a buy signal is said to be in place. If the dodger blue upward pointing arrow of the tipu_renko.

ex4 custom indicator forms on the activity chart as shown on Fig. 1.0, price is said to be pushed somewhat higher i. e. a signal to buy the designated currency pair. Stop Loss for Buy Entry: Place stop loss 3 pips below short-term support. Exit StrategyTake Profit for Buy Entry. Exit or take profit if the following rules or conditions takes precedence: If while a buy signal is running, the fouraverage-indicator. ex4 histogram turns red and gets positioned below the 0.00 level, while a corresponding red downward pointing arrow also forms above the candlesticks, an exit or take profit is recommended in this case. If the tomato downward pointing arrow of the tipu_renko. ex4 custom indicator is seen on the activity chart as depicted on Fig. 1.0, it is a trigger to exit or take profit at once. Sell Entry Rules. Enter a sell order if the following holds sway: If the red histograms of the fouraverage-indicator. ex4 gets aligned below the 0.00 level within its indicator window, while a corresponding red downward pointing arrow also aligns above price bars as shown on Fig. 1.1, a sell signal is said to be in place. If the tomato downward pointing arrow of the tipu_renko. ex4 custom indicator forms on the activity chart as depicted on Fig. 1.1, price is said to be pressured lower i. e. a trigger to sell the designated forex pair. Stop Loss for Sell Entry: Place stop loss 3 pips above short-term resistance. Exit StrategyTake Profit for Sell Entry. Exit or take profit if the following takes center stage: If during a sell signal the fouraverage-indicator.

ex4 histogram readjusts to lime above the 0.00 level, while a corresponding lime upward pointing arrow take shape below price bars, an exit or take profit is duly advised. If the dodger blue upward pointing arrow of the tipu_renko. ex4 custom indicator gets aligned below the candlesticks as illustrated on Fig. 1.1, it is a trigger to exit or take profit at without delay. Sell Trade Example. Free Download. About The Trading Indicators. The fouraverage-indicator. ex4 is a brand new forward-looking trend indicator designed by ExcStrategy team and it uses adaptive four-level averaging. It is a quite powerful and efficient adaptive tool designed to fit into changing market conditions.



Articles:

  • Forex currency trading chart arrows above and below candlestick