There are 4 steps to reading price action: 1. Observing how prices moved in the past 2. Observing how prices are moving now, in relation to the past 3. Predicting where prices are not likely to go next 4. Considering the possibilities of where prices may go next The first two steps require us to…
Reversal candlestick psychology is one of the reasons why reversal patterns are such effective predictors of price reversals. Here’s why: In the above diagram, the bullish engulfing pattern has formed and the market is now moving up. The previous sellers (from the bearish candlestick) are now sitting on paper losses, and will be looking to…
This is a simple yet effective method of identifying where a ready pool of buyers and sellers are in the market. Did you know that a single candlestick (on its own) is by its nature, an area of support/resistance? Let’s take the example of a bull candle: A bull candle tells us there is a…
If you’re been following so far, this next question should be easy for you to answer. What does this situation tell you about where the market price is more likely to be headed? Up or down? Take a moment to think about your answer based on the concepts we’ve covered. .. Ready for the answer?…
While a single candlestick helps us identify the strength of a price move, a group of candlesticks helps us understand the context of that price move. Allow me to illustrate this with a question: If we look at this single candlestick, we might say that the market is bullish. However, if we take a step…
In the world of finance, economic indicator releases are highly-anticipated events that are closely watched by the professionals. You should avoid trading during these periods (especially if you’re new), as they involve macroeconomic topics that most beginner traders are unfamiliar with. Important: All types of technical analysis (including candlestick analysis) is likely to be ineffective…
This is one of the most important concepts candlestick analysis, so pay close attention… Now, what is price momentum? Price momentum is an approximation of the strength of a price move. As a start, we can gauge the momentum of a candlestick by the length of the real body: • The longer the real…
If you’re new to candlesticks, here’s a quick primer: What’s a candlestick? A candlestick is a graphical summary of market price movements within a period of time. It can represent price movements that occurred over a period of 1 minute; 5 minutes; 15 minutes; 30 minutes; 1 hour; 4 hours; 1 day; 1 week; or…
Candlestick analysis is how you’ll gather evidence to support your trading decisions. This article is to teach you to understand and appreciate the ongoing “story” of the market, and to identify the evidence you need to make effective trading decisions. Once you understand how to properly interpret candlesticks, you’ll be able to enter and exit…
Being a trader is very much like being a detective. Imagine you’re a detective who’s trying to solve a murder case… what’s the first thing you’ll have to do? You’ll have to conduct a general survey of the crime scene, question the witnesses and try to determine the motives of the suspects. This will give…