Hello everyone. Today we’re going to review. A strategy based on the candlestick patterns. And many of the more basic strategies that we are covered in these in these videos. It’s a strategy that focuses. In trading to two to extremes, extreme trends some more or less by turning looking. Four ways to identify to identify is when is the right point when the trench will turn and on the opposite the braver you’re not really looking for any strategy to identify and actually two. Find a point where the trend is going to completely reverse and looking for 200 how many people move. Not really what you’re trying to find is if you’re trying to look for the start from the point the actual point where we.But a trend that may be may start to worsen or at least make a correction. But given that you follow basic risk management principles in the context of risk walked. Then we are not looking to make to trade weekly David chart’s working for him in mathematics.
So the first step in order to implement this strategy will be to identify trends. So when you look at this chart I prepared by Charles the first chart is up for our top dollar yen. If you look at this chart you see that fear. We’re trading sideways, but more or less. We are also you’re also creating lower highs and lows you can see here Heidi and a lower high lower high and lower high. Again, it’s more. It’s not really a very steep downturn, but still as long as we’re creating lower highs here and here lower to lows you see over a low second there for the low then we are looking. For four of them, we are identified as a mild, mild downtrend the second. The second thing that we’re looking here or let’s say indicator is if you start to look. A that more focused on specific segments of price action.
So for example, you can, you can see here that we had the side effect. You had sideways trading and then from here. This is an important lever and the one on my fork you can see this they fell down and fell. Hundred and fifty people to the downside very quickly in let’s say for half of a trading day. And then here this is the kind of thing that we’re looking for. So we’re falling here I mean you’re falling down. Now you’re looking for a point where the price is going to reverse and beginning to see a correction. Obviously in this example shows that we had a very, very big correction actually almost created you high here. But at this point we’re only looking for this scandal which is a key it’s a hammer candlestick. A pattern which means that the body. Which means that the open is higher than the I’m sorry the Close is higher than the open and not just that, but actually the price of this kind of open that the price started pushing lower. And then before that the Candlestick was actually formed be closed be closed near highs and he had thought he had a hammer hammer Candlestick property. It’s a bullish Candlestick pattern. And it usually is a signal that the downtrend is finished or is close to be finished since the bulls are regaining control. So this will be actually the most important part of the strategy as soon as you have estimates you have this this candle and you may want to enter a long train if you want to have a confirmation to information indicators to look out for first one if you have like if you can identify this report. And I would like to be clear, I don’t find this trend line here. Then you can see that the event below the trend line, but close to be close above this is usually a very bullish sign. And so you saw a push higher the and the second one nation indicate there will be that candle after the hammer candle. It’s a bickering like it’s here. It means that the bulls are now fully in control and we may see. Olek like higher. Here you can also see the same thing this is even a better example. From the same chart. So we had that big fall from Montejano 940 run or 740. It’s a 200 person small you can see. Consequent red or red candles and then you see here. Perfect example of the hammer, you down, down long beat down you can see that being open tomorrow 770 and then pushed for the Slover. But we actually closed near the high and then we created a hammer which pushed the price higher than it actually surpassed to be close. This optimistic pushed a couple of hundred or higher. The second extreme now on the other side is a shooting star. So we have a hammer and we are turning bullish side and we have a shooting sort of on the side of a very second story. So shooting star wasn’t just a shooting star here. This candle here. Ideally the scandal here would be a red candle. But as long as we have a long way to the upside and be closed neater or closer to the downside than actually shooting star I get validation when we have a huge horizontal or resistance here. You see that we had to touch second touch third touch and then time try to. Go about. This trend line and Cleve stops about this horizontal resistance. We actually were rejected because at one point, obviously we traded summer here. So let’s say 10 people above this line and then reject that and push back venti 5 pips over each immediately put additional pressure for doubles.
And of course here also we have a second edition indicated that set our red red candle and nowhere if you are entering your trade youth you sell this scandal here to read one.
You put your stock above above the previous high and then you can go and look for a first first report live on the BBC for horizontal support and hundreds more than ever.
So this will be the perfect trader trading the shooting star if you want to talk about risk reward. So you were selling 128 85 let’s say, and your stock should be 129 this scheme thirty 35 pips and you’re stuck take the profit will be. Running 10 to 15 which mean that you’ll be 35 people in order to make at least 60 pips. If not, even higher if you want to really push and look for four of the top 200 M.A. So it’s extremely productive strategy. It’s very Goosens you can define your stop loss you’re playing against that. The previous hints to us from being Canada opens. You put your Stop-Loss about the scandal and then you’ll look down for first in you show of support and you can take your property same here.
You put your stocks below the low and then you can for example here in this particular case, you would have bought the price here and then and you actually you can take profits you either. This trend line to now access resistance. Obviously we had a big gap. So there are some also fundamental factors here. But even without it this will be for probably finish the time move higher.
The post Hammer and Shooting Star Strategy FINAL appeared first on The Diary of a Trader.
No comments:
Post a Comment