Now let’s apply what we’ve learned regarding each candle holder patterns and s/r. Points A through H on the chart below square measure samples of however we tend to mix our information of candles and s/r to higher understand however worth behaved within the past and the way it would behave within the future so we will properly predict its movements and cash in on them by candle holder analysis.
We’ll take away a lot of deeply into candle holder patterns and candle holder analysis at a later date. the concept now's to
review what we’ve coated up to now on candlesticks and s/r, demonstrate however we tend to apply these ideas and
give you a style of things to return.
Here’s an outline on a running basis…..
A. June 21–22: The try of long higher wicks (a candle holder pattern called a “tweezers tops” pattern that we’ll cowl later) showed sturdy resistance level around one.4400 caused by marketing pressure from some combination of these United Nations agency were long the try taking profits and short sellers gap new positions.
The June one4–15 candle holder analysis shows previous resistance around 1.4400. spherical numbers have a psychological charm as natural purchase or sell points, therefore bound spherical numbers tend to become vital s/r points.
B. June 23: the shortage of abundant higher wick tells US that costs largely fell from the beginning of the day. The long lower wick indicates that the try managed to recover over 1/2 its losses before the official shut of
the day’s commerce in big apple. The lower wick shows sellers tested all the manner right down to around one.4130 before patrons stepped in and short sellers took profits. think about the long lower wick as a blind man’s
cane, looking for obstacles.
C. June 23–26: This one.4130 terms was tested on a daily basis as marketing continued , however this level command firm. The June 24 (Friday) candle’s lower gap and even longer red body shows continued firm marketing pressure, however the roughly equal higher and lower wicks replicate some indecision regarding however low to travel. The June twenty six (Monday) candle may be a tiny light-weight grey (this would be shown in red) body with tiny wicks, which means worth direction was largely straight down however with weakening marketing pressure. This weakening marketing pressure was confirmed by the rally the followed.
D. June 27: candle holder analysis shows a powerful reversal as costs rebounded off this terms. The long dark grey (this would be shown in green) body shows decisive client management, with costs closing close to the highest of the day’s vary and it “engulfs” or swallows the previous 2 days’ losses. Such candles square measure known as “bullish engulfing” patterns as a result of they virtually devour and recoup the previous days’ losses.
E. June 30: Long higher wick once more serves sort of a blind man’s cane striking associate obstacle because the market gropes around to find near-term resistance. Combined with the short dark grey (green) body close to the lowest of the daily worth vary, which implies there was very little gain loss on the day, suggests the uptrend is weakening, as so it had been, as shown by the reversal that shortly followed.
F. July 3–4: Taking these a pair of daily candlesticks along, we tend to see that the market opened on top of the
1.4550 resistance level doubly however couldn’t advance. On July fourth, when six straight days of gains and currently failing to interrupt through resistance for the second straight day, marketing begins and drives worth lower, as those that bought earlier sell and take profits and “short sellers” begin marketing the EURUSD try in hopes of cashing in on shopping for it back at a lower cost later.
We’ll make a case for trading shortly.
Later, we’ll additionally learn that this type of candle, with atiny low body, very little or no higher wick, and a comparatively long lower wick may be a signal that worth may fall, that is, a “bearish” sign, once it happens throughout associate uptrend
and is confirmed by successive candle closing lower (as was the case on July 6th). It’s known as a “hanging man.” Its long lower wick, flat-top by atiny low body, combined with a lower march on successive candle, presents associate intuitively clear image of the market rejecting higher costs.
G. July 12: this can be basically constant type of candle holder analysis as on legal holiday (F); but, throughout a downtrend (and particularly when associate eight-day long downtrend and shut at what was sturdy long support around one.4000), this can be thought-about a symptom that worth may reverse direction and move higher. Or to use commerce jargon, it’s a “bullish reversal sign”, known as a hammer, as sellers probe lower support however patrons send sellers withdrawing and recover most of the day’s (or the other period’s) losses. In alternative words, this
long lower shadow may be a graphic image of
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