Knowing your Candlesticks formations is one of the most important aspects of Forex Trading. By looking at these simple patterns we can easily discern whether the market is going to change to a different signal or whether it will continue on its way. The importance of these signals to me is even more important if they appear on a support or resistance area, in fact i will ignore candlestick patterns between these two areas which means I eliminate the chance of false signals immensely. While there are so many candlestick patterns out there, the below four I find work the best. In fact i call them the best of the best because these 4 signals are the best for changing a market trend thus allowing us a chance at getting into a powerful trend change right at the beginning. This essentially allows us to get more pips rather than relying on lagging indicators for such signals.
When looking at any form of price action in the market the first aspect a trader wants to do is detect the support and resistances on the chart. To do so follow my other post on this here. Then I wait for price to get to one of these important areas. On a support line I look for bullish candlestick patterns to enter a trade and at a resistance area I look for bearish candlestick patterns to enter a trade. By following this simple rule it allows me to bag a lot of pips with little risk and with clear direction. While price can still go against you when these signals are printed in general, I find that the amount of right signals far outweighs the wrong ones.
Bullish Candlestick Patterns
Bearish Candlestick Patterns
And lastly to top off how these types of formations which can be seen often on a Forex Chart, let’s take a look at the screenshot below as one example.
As you will see this is a bullish signal, the bullish pin passes through the identified support line seen on the chart and then it is thrown back above the line.
Thus giving it more weight and conviction. What one could do after seeing this signal is to place a buy stop order directly a few pips above the close of the pin candle. That way only if the price keeps moving ( most likely ) in the desired direction does the order open. Of course entry example above would depend on other examples as well such as trend and what potential reward existed as well from signal zone..
For a complete overview of how to trade with Candlesticks and Price Action and how to identify whether or not the price action is worth trading then I would recommend checking out the Premium Training at the Website.