STEP BY STEP APPLICATION

This lesson reviews what has been schooled up to the current purpose regarding candle holder analysis and support and resistance levels by taking you, step by step, through a true historical EUR/USD candle holder chart.

LESSON QUIZ

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1. whether or not A worth are A KEY PSYCHOLOGICAL LEVEL DEPENDS UPON:

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STEP BY STEP APPLICATION - TEXT VERSION

Now you are trying to use what you’ve learned regarding candles and support/resistance.

Here’s the chart we tend to simply saw.

Applying SR And Candlesticks Application Part1 twenty four one

What happened to the EUR/USD when the indecisive doji of July 25th?

Consider the subsequent evidence:

The EUR/USD had 5 straight days of gains, the last 3 with increasing strength.

Looking at the month lined by this daily chart, this indicant of one.4409 has served as near-term resistance as a result of observing the left, middle, and much right sides of the chart, the combine has already failing double before to form a sustained move higher than it.

The current indicant of one.4409 is actually an equivalent as one.4400. 

It is necessary to recollect that spherical numbers tend to function natural support/ resistance as a result of humans ar psychologically wired to suppose in terms of spherical numbers. The a lot of zeros, the a lot of psychologically vital the amount.

July twenty five (I) shows a doji candle, a classic sign of indecision.

For the sake of simplicity, let’s ignore the general pessimistic basic factors that were behind the July worth declines, and simply specialise in the proof on the chart.

So, what does one suppose happened? does one suppose the combine finished the day higher, lower, or the same?

Write down your answer, and embrace your reasons.

Here’s what very happened:

Applying SR And Candlesticks Application Part1 twenty four two

If you thought the worth would pull back, you were right. In Figure three.6, when the undecided doji, the combine created a head-fake higher and force back (note the two candles that follow I).

We’ll speak a lot of later regarding these “false breakouts,” why they happen, and what you'll do to guard yourself against being fooled by them.

Ideally, your reasons ought to have gone one thing like this.

The combine was at a major near-term resistance level and was showing indecision. The a lot of seemingly move may be a pullback as traders United Nations agency bought at lower costs take profits from the previous solid run higher. Markets expect some pullback, therefore unless new optimistic news arrives, the component of self-fulfilling prophecy operates.

INSTRUCTOR'S NOTES

This lesson aims to continue the previous lesson’s demonstration of candle holders and S/R by talking through however S/R affected the progress of a real-life candlestick chart.

Do not be disquieted if you discover this lesson confusing or arduous to know. It contains heaps of latest info, and it's not necessary that you just learn any new ideas at this stage.