DOGS Main Trend. Tactics of Working on Risky Crypto 03 2025Logarithm. Time frame 3 days. Tactics of working on super-risky cryptocurrencies of low liquidity, which are always sold (without loading the glass), by the creators of “nothing”. In order to increase sales, of course, when they rationally reverse the trend and make pumps at a large % and marketing positive news "have time to buy". On such assets with such liquidity, “killed faith” (at the moment), and control of the emission in “one hand” it is not difficult. Something like in BabyDOGE.
On such assets you should always remember:
1️⃣ allocate a certain amount for work in general on such assets from the deposit as a whole.
2️⃣ distribute money (potential reversal and decline zones) from this allocated amount to each similar asset in advance.
3️⃣ diversify similar assets themselves (5-10 cryptocurrencies), understanding that sooner or later they will scam. The scam of one of them should not be reflected significantly on the balance of the pump/dump group of low liquidity. It is impossible to guess everything that does not depend on you, and it is not necessary. Your miscalculations (what does not depend on you) are smoothed out by your initial trading plan and risk control, that is, money management (money management).
4️⃣ Set adequate goals. Part of the position locally trade 40-80% (not necessary, but this sometimes reduces the risk).
5️⃣ Work with trigger orders and lower them if they did not work and the price falls.
6️⃣ Remember that in consolidation and cut zones in assets of such liquidity, stops are always knocked out, so the size of the stop does not really matter. It will be knocked out, especially before the reversal.
7️⃣ Before the reversal of the secondary trend, as a rule, they first do a “hamster pump” by a conditionally significant %, when everyone is "tired of waiting". They absorb all sales. Then the main pumping without passengers by a very large % takes place to form a distribution zone. As a rule, it will be lower than the pump highs, that is, in the zone when they are not afraid to buy, but believe that after a large pump, the highs will be overcome significantly.
8️⃣ Remember that assets of such liquidity decrease after listings or highs by:
a) active hype, bull market -50-70%
b) secondary trend without extraordinary events -90-93%
c) cycle change -96-98% or scam, if it is a 1-2 cycle project (there is no point in supporting the legend, how it is easier to make a candy wrapper from scratch without believing holders with coins).
9️⃣In the capitulation zone, there can be several of them depending on the trend of the market as a whole and rationality, the asset is of no interest to anyone. Everyone gets the impression that everything is a scam. That is, on the contrary, you need to collect the asset, observing money management, that is, your initial distribution of money and the risk that you agreed with in advance. As a rule, in such zones people "give up" and abandon their earlier vision.
🔟 After the entire position is set (pre-planned, according to your money management), stop and do not get stuck in the market and news noise. Wait for your first goals.
Remember, people always buy expensive, and refuse to buy cheap ("it's a scam", they try to "catch the bottom"), when "the Internet is not buzzing". This all happens because there is no vision, and as a consequence, no tactics of work and risk control . Many want to guess the “bottom”, or “maximums”, and refuse to sell when they are reached. The first and second are not conditionally available, on assets of such liquidity and emission control. But, there are probabilities that you can operate and earn on this, without getting stuck in the market noise. And also in the opinions of the majority (inclination to the dominant opinion and rejection of your plan and risk control), from which you must fence yourself off.
Most people, immersed in market noise and the opinions of others , choose for themselves the price movement, which is beneficial to them at the moment , and to which they are inclined, but do not provide themselves with the tactics of work. This is a key mistake, and the main manipulation that the conditional manipulator achieves, who, by the way, is sometimes not on the asset, to form an opinion and, as a consequence, the actions of the majority.
Because, in essence, most people do not have the tactics of work. Where the news FUD (inclination to the dominant opinion), “market noise” (cutting zones and collecting liquidity), the opinion of the majority, is directed, that is what they are inclined to.
When the price goes in the other direction, it is disappointment.
If these are futures — liquidation of the position. Zeroing out due to greed.
If this is spot — "proud random holders" , without the ability to average the position (no money), to reduce the average price of the position set as a whole, and as a result increase the % of profit in the future.
A trading plan and risk control are the basis, not guessing the price movement. If you do not have the first “two whales” of trading in your arsenal, then you have nothing. It doesn't matter how much you guess the potential movement, as the outcome of such practice is always the same, and it is not comforting.
Community ideas
Gann Trading Strategy | Predict Market Highs & Lows with Gann.Gann Trading Strategy | Predict Market Highs & Lows with Gann Trading Strategy
In this video we will unlock historical secrets of Sacred Geometry and how they apply to financial markets through W.D. Gann's Time & Price concepts. This video explores the deep connection between natural mathematical principles, the Golden Ratio (0.618), Fibonacci levels, and market structure—all rooted in ancient sacred geometry used in art, architecture, and astronomy.
Markets are not random; they follow universal laws found in nature, human anatomy, and celestial movements. Gann discovered that time and price cycles repeat in predictable patterns, allowing traders to anticipate reversals with precision. This video will guide you through how to use these ancient principles in modern trading.
What You'll Learn in This Video:
✅ Understanding Gann’s Time & Price Geometry – The foundation of market movements
✅ Golden Ratio & Fibonacci Trading – How 0.618, 0.786, and 1.618 shape market trends
✅ The ABCD Pattern in Trading – How to use structured price action setups.
Discover the hidden connections between Sacred Geometry, W.D. Gann’s Time & Price principles, and financial markets in this powerful Gann trading lesson. Markets are not random; they move according to natural laws, mathematical ratios, and planetary cycles—the same principles found in ancient architecture, astronomy, and human biology. Gann’s work revealed that time and price must synchronize for major market reversals, and by understanding these patterns, traders can anticipate key turning points with accuracy. This lesson will dive deep into Gann’s geometric approach, the Golden Ratio (0.618), Fibonacci levels, and structured price action setups, all of which play a crucial role in market movements.
THE IMPORTANCE of Multiple Time Frame Analysis in Forex Gold
In my daily posts, I quite frequently use multiple time frame analysis.
If you want to enhance your predictions and make more accurate decisions, this is the technique you need to master.
In the today's post, we will discuss the crucial importance of multiple time frames analysis in trading the financial markets and forex gold in particular.
1️⃣ Trading on a single time frame, you may miss the important key levels that can be recognized on other time frames.
Take a look at the chart above. Analyzing a daily time frame, we can spot a confirmed bullish breakout of a key daily resistance.
That looks like a perfect buying opportunity.
However, a weekly time frame analysis changes the entire picture, just a little bit above the daily resistance, there is a solid weekly resistance.
From such a perspective, buying GBPUSD looks very risky.
2️⃣ The market trend on higher and lower time frames can be absolutely different.
In the example above, Gold is trading in a bullish trend on a 4h time frame.
It may appear for a newbie trader that buyers are dominating on the market. While a daily time frame analysis shows a completely different picture: the trend on a daily is bearish, and a bullish movement on a 4H is simply a local correctional move.
3️⃣ It may appear that the market has a big growth potential on one time frame while being heavily over-extended on other time frames.
Take a look at GBPJPY: on a weekly time frame, the market is trading in a strong bullish trend.
Checking a daily time frame, however, we can see that the bullish momentum is weakening: the double top pattern is formed and the market is consolidating.
The sentiment is even changing to a bearish once we analyze a 4H time frame. We can spot a rising wedge pattern there and its support breakout - very bearish signal.
4️⃣ Higher time frame analysis may help you to set a safe stop loss.
In the picture above, you can see that stop loss placement above a key daily resistance could help you to avoid stop hunting shorting the Dollar Index.
Analyzing the market solely on 1H time frame, stop loss would have been placed lower and the position would have closed in a loss.
Always check multiple time frame when you analyze the market.
It is highly recommendable to apply the combination of at least 2 time frames to make your trading safer and more accurate.
❤️Please, support my work with like, thank you!❤️
I am part of Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analysis.
About the Volume OBV indicator...
Hello, traders.
If you "Follow", you can always get new information quickly.
Please click "Boost" as well.
Have a nice day today.
-------------------------------------
I think TradingView is attractive because users can create charts as they want.
However, since the number of indicators that can be added to the chart is limited depending on the plan, you have to add indicators that fit your plan.
As a result, I ended up integrating multiple indicators into one indicator.
-
The HA-MS indicator in this chart is a public indicator.
If you search the Internet, you can find detailed explanations on how to interpret the OBV indicator.
I expressed it as follows to make this interpretation method more realistic.
The body color of the candlestick is indicated by the 4-stage OBV indicator.
The OBV indicator is distinguished in the same way as the Price Channel indicator.
You can interpret it like the Bollinger Band.
That is, if the middle line that divides 2 and 3 rises by more than 3, you can interpret that the buying force is increasing.
1: It means below the lower line of the Price Channel and is indicated in dark red.
If you enter this section, there is a high possibility of a sharp decline.
You should check the support and resistance points because it is likely to stop falling soon and rise to 2.
2: It means between the lower line and the middle line of the Price Channel and is indicated in red.
This section is likely to show a weak downward sideways movement.
Therefore, if it rises from 1->2, there is a possibility of a short rise. However, if it fails to rise to 3, it is likely to fall back to 1, so it is recommended to make short trades.
3: It means between the middle line and the upper line of the Price Channel and is displayed in green.
This section is likely to show a weak upward sideways movement.
If it rises from 2 -> 3 and shows a sideways movement, you should focus on finding a buying point.
4: It means above the upper line of the Price Channel and is displayed in dark green.
If it enters this section, there is a high possibility of a sharp rise.
Since it is likely to stop rising soon and fall to 3, you should check the support and resistance points.
-
What we should pay attention to is when it changes from 1 -> 2, 4 -> 3.
As explained above, 1 is a section located below the lower line of the Price Channel, so there is a high possibility of a sharp fall.
4 is a section located above the upper line of the Price Channel, so there is a high possibility of a sharp rise.
Therefore, you can proceed with an aggressive buy when it changes from 1 -> 2, and you can proceed with a sell when it changes from 4 -> 3.
In the case of futures, it can be used as reference information for entering and liquidating LONG and SHORT positions.
-
They say that the only things you need on a chart are price and trading volume.
However, it is not easy to interpret this in reality.
To compensate for this, we hid the colors of the existing candles and displayed them in 4 stages of OBV so that you can intuitively see which stage the current price is at.
-
Thank you for reading to the end.
I hope you have a successful transaction.
--------------------------------------------------
Enhance Your Trading with Dual MACD OverlaysBy using two MACD overlays—one based on the current timeframe and another on a higher timeframe—you gain a more comprehensive view of market momentum. This approach helps identify short-term opportunities while aligning trades with the broader trend, reducing false signals. As seen in my chart, combining multiple MACD perspectives can improve decision-making and trade timing.
Try it out and refine your strategy with better trend confirmation!
SMART MONEY FOOTPRINT ON NIFTY CHART, REVERSAL SIGN APPEAR ?Today on 21/03/2025 with upward rally, on hourly chart I found similarity or smart money footprint (sign of weakness) at the time of closing bell same as (sign of strength) on 28 February 2025. what was that? Let's try to Dig....
previous days when market was forming lower low, that was downtrend look at the time on 28 February 2025 that was 14.15 pm on hourly chart an ultrahigh volume rejection candle appear which volume was around164 M. thereafter short seller trapped to see big red candle and market move toward upward.
:
:
Today on 21/03/2025 also market gave a rejection candle on hourly chart with around 164 M ultrahigh volume Exact at 14:15 Pm so conclusion is that market may give correction after trapping Buyers or it may go downtrend again if fundamental don't support.
what is similarity?
: Same Time 14:15
: Same Volume
: same Candle body Size
: appear after strong moment
REVERSAL INDICATION:
Nifty may Facing resistance of downtrend channel on Daily Chart.
Away from 50 EMA on hourly chart.
Smart money Ultra High volume on Rejection candle indicating selling zone there
:
SO, INVESTOR NO NEED TO TRAP TO JUST SEE NEXT BIG GREEN CANDLE
Machine Learning Algorithms for Forex Market AnalysisMachine Learning Algorithms for Forex Market Analysis
Machine learning is transforming the currency trading landscape, offering innovative ways to analyse market trends. This article delves into how machine learning algorithms are reshaping forex trading. Understanding these technologies' benefits and challenges provides traders with insights to navigate the currency markets potentially more effectively, harnessing the power of data-driven decision-making.
The Basics of Machine Learning in Forex Trading
Machine learning for forex trading marks a significant shift from traditional analysis methods. At its core, machine learning involves algorithms that learn from and provide signals based on data. Unlike standard trading algorithms, which operate on predefined rules, these algorithms adapt and improve over time with exposure to more data.
Machine learning forex prediction algorithms analyse historical and real-time market data, identifying patterns that are often imperceptible to the human eye. They can process a multitude of technical and fundamental factors simultaneously, offering a more dynamic approach to analysing market trends.
This capability can allow traders to make more informed decisions about when to buy or sell currency pairs. The increasing availability of market data and advanced computing power has made machine learning an invaluable tool in a trader's arsenal.
Types of Machine Learning Algorithms in Forex Trading
In the realm of forex trading, various machine-learning algorithms are utilised to decipher complex market patterns and determine future currency movements. These algorithms leverage forex datasets for machine learning, which encompass historical price data, economic indicators, and global financial news, to train models for accurate analysis.
- Support Vector Machines (SVMs): SVMs are particularly adept at classification tasks. In forex, they analyse datasets to categorise market trends as bullish or bearish, helping traders in decision-making.
- Neural Networks: These mimic human brain functioning and are powerful in recognising subtle patterns in market datasets. They are often embedded in forex forecasting software to determine future price movements based on historical trends and fundamental data.
- Linear Regression: This straightforward approach models the relationship between dependent and independent variables in forex data. It's commonly used for its simplicity and effectiveness in identifying trends.
- Random Forest: This ensemble learning method combines multiple decision trees to potentially improve analysis accuracy and reduce overfitting, making it a reliable choice in the forex market analysis.
- Recurrent Neural Networks (RNNs): Suited for sequential data, RNNs can be effective in analysing time-series market data, capturing dynamic changes over time.
- Long Short-Term Memory (LSTM) Networks: A specialised form of RNNs, LSTMs are designed to remember long-term dependencies, making them effective tools for analysing extensive historical forex datasets.
Benefits of Machine Learning in Forex Trading
Machine learning offers significant advantages for forex analysis. Its integration into forex prediction software may enhance trading strategies in several key ways:
- Real-Time Data Analysis: Algorithms excel in analysing vast amounts of real-time data, which is crucial for accurate forex daily analysis and prediction.
- Automated Trading: These algorithms automate the buying and selling process, which may increase efficiency and reaction speed to market changes.
- Enhanced Market Understanding: It helps in dissecting historical market data, providing a deeper understanding for informed decision-making.
- Accuracy in Analysis: Software powered by machine learning offers superior analysis abilities, leading to potentially more precise and timely trades.
- Risk Reduction: By minimising human error and maintaining consistency, machine learning may reduce trading risks, contributing to a safer trading environment.
Challenges and Limitations
Machine learning in currency trading, while transformative, comes with its own set of challenges and limitations:
- Data Quality and Availability: Accurate machine learning analysis depends on large volumes of high-quality data. Forex markets can produce noisy or incomplete data, which can compromise the reliability of the analysis and signals.
- Complexity and Overfitting: Developing effective algorithms for forex trading is complex. There's a risk of overfitting, where models perform well on training data but poorly in real-world scenarios.
- Interpretability Issues: Machine learning models, especially deep learning algorithms, can be "black boxes," making it difficult to understand how decisions are made. This lack of transparency can be a hurdle in regulatory compliance and trust-building.
- Regulatory Challenges: Currency markets are heavily regulated, and incorporating machine learning must align with these regulatory requirements, which can vary significantly across regions.
- Cost and Resource Intensive: Implementing machine learning requires significant computational resources and expertise, which can be costly and resource-intensive, especially for smaller trading firms or individual traders.
The Bottom Line
Machine learning represents a paradigm shift in forex trading – it may offer enhanced analysis accuracy and decision-making capabilities. While challenges like data quality, complexity, and regulatory compliance persist, the benefits of advanced algorithms in understanding and navigating market dynamics are undeniable. For those looking to trade forex, opening an FXOpen account could be a step towards a wide range of markets, lightning execution and tight spreads.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Hidden Forces: Decoding Buyer & Seller Activity on ChartsTotal Volume vs. Volume Delta: The total volume on the chart includes both buys and sells, making it less useful for analysis. Volume Delta, however, shows whether buyers or sellers dominated within a candle.
A green Delta candle means more aggressive retail buying; a red one means more retail selling. This helps analyze market sentiment beyond price movement.
Price & Delta Relationships:
1. Price and Delta move together → Organic movement, likely driven by retail.
2. Delta moves, but price doesn’t → Retail is heavily biased in one direction, absorbing limit orders. Possible smart money trap.
3. Price moves, but Delta doesn’t → Retail didn’t participate in the move. Lack of belief or failed market-making attempt.
4. Price moves against Delta → Strong indication of market manipulation. Large players using aggressive strategies against retail.
Market Manipulation & Smart Money:
* Whales leverage retail psychology and order flow to position themselves.
* Retail often gets caught in fake moves, unknowingly providing liquidity to big players.
Final Thought: By analyzing Delta and price movement together, we can spot hidden large buyers and sellers and understand market dynamics beyond surface-level price action.
How the Hammer Chart Pattern Signals a Market ComebackHello, Traders! 👋🏻
Let’s be honest — wouldn’t it be great if the market had clear signs that screamed, “Hey! The downtrend is over!”? Well, sometimes, it hints. One of those signals is the hammer candlestick pattern — a small but mighty formation that can indicate a shift in momentum.
But before you grab a hammer and start breaking things when the market dips, let’s talk about what this pattern really means. Is it a bullish hammer pattern, or is the market just playing games with your emotions? Let’s dive in.
What Is a Hammer Candlestick Pattern?
The hammer pattern is a single candlestick formation that typically appears after a downtrend. It has a small body and a long lower wick, showing that sellers tried to push the price lower but failed, as buyers stepped in and drove the price back up.
Imagine the market trying to take prices to new lows, but buyers show up and say, “Nope, not today!” That’s the essence of the hammer candle pattern — a potential sign of strength and reversal.
Key Features of the Hammer Pattern Candlestick:
✔ Small Candle Body at the Top.
✔ Long Lower Wick (at Least Twice the Size of the Body).
✔ Little to No Upper Wick.
✔ Appears After a Downtrend.
Sounds easy to spot, right? Well, not so fast. Sometimes, what looks like a hammer chart pattern might just be a random bounce. Context is everything.
The Inverted Hammer Pattern: A Bullish Twist
If the hammer candlestick pattern is the market’s way of pushing back against bears, its upside-down cousin—the inverted hammer candlestick pattern — is just as enjoyable.
The inverted hammer pattern looks like, well, a hammer flipped upside down. It has a small body at the bottom with a long upper wick, signaling that buyers attempted to push the price higher but didn’t fully succeed — yet.
While it still suggests a possible reversal, the inverted hammer pattern isn’t as strong as a regular hammer because it shows some hesitation from buyers. Think of it as the market raising its hand and saying, “I might be ready to reverse… but let’s wait and see.”
Why Do Traders Love the Hammer Trading Pattern?
Well, besides the fact that it looks kind of cool on a chart, it’s a psychological shift. It shows that buyers are fighting back, and if the momentum continues, a trend reversal could be on the horizon.
But here’s the catch — one hammer candle pattern doesn’t guarantee anything. Markets love to trick traders, and sometimes, a hammer pattern candlestick is just a temporary bounce before the trend continues downward.
So, next time you see a hammer chart pattern, ask yourself:
❓ Is This Really a Reversal, or Is the Market Just Messing With Me?
❓ Is There Enough Volume To Support a Strong Move?
❓ Are Other Indicators Confirming the Shift in Momentum?
Final Thoughts
The hammer trading pattern is one of those setups that traders love for its simplicity and reliability. But like any other pattern, it’s not a magic bullet — it’s a clue. And trading is all about putting the clues together to get the full picture.
So, the next time you see a hammer pattern candlestick, take a deep breath, check the context, and don’t rush into trades. After all, even the most substantial hammer won’t help if you’re trying to nail down the wrong trend.
What’s your experience with the hammer candlestick pattern? Let’s discuss it below!
How to Actually Do Backtesting?Welcome back guys, I’m Skeptic!
Today, I’m gonna break down one of the most important and fundamental skills every trader needs: Backtesting .
Backtesting is the very first step on your trading journey and probably the most crucial one. It’s all about putting your theoretical knowledge and trading plan to the test by evaluating them against historical market data. The goal? To see whether your strategy actually works — with what win rate, R/R ratio , and more.
But here’s the problem: many traders do it wrong. They end up getting unreliable results, which leads to self-doubt when it comes to forward testing. The real issue is not your strategy but how you conduct your backtest.
Let’s dive into the complete process! 💪
🛠️ Tools You Need
To start backtesting, you’ll need some software that supports the replay feature, allowing you to move through historical data as if it were live.
The best platforms for this are TradingView and MetaTrader . Personally, I use TradingView because it’s super intuitive and has great backtesting capabilities.
Also, make sure to choose appropriate timeframes for backtesting that align with your strategy.
🕰️ Choosing Market Conditions:
You need to backtest your strategy in all types of market conditions:
Uptrend
Downtrend
Range-bound
High Volatility
🚀 Step-by-Step Backtesting
1.Choose the Timeframe:
Make sure your backtesting timeframe matches your strategy’s timeframe. For example, if your strategy works on the 4H chart, don’t backtest on the 1H chart.
2.Select Your Strategy:
Stick to your written trading plan without improvising.
3.Pick the Asset Pair:
Test on at least three different pairs or assets (e.g., EUR/USD, XAU/USD, GBP/NZD) to get diverse results.
4.Define Entry and Exit Rules:
Clearly specify your entry, stop loss, and target levels. Never change these rules mid-backtest, even if it seems illogical. In real trading, you won’t have the luxury of endless contemplation.
🎯 Running the Backtest
Use the Replay Tool to move through historical data.
Never peek at the future price movement. If you accidentally see it, restart from a different point.
Open a minimum of 30 positions for each market condition (e.g., uptrend, downtrend, range).
Record each trade in a spreadsheet (Excel, Google Sheets, etc.) with the following columns:
Date
Time
Entry strategy
Stop loss
Target
Result (profit/loss as R/R ratio)
Exit time
📊 Analyzing Your Results
After completing your backtest, it’s time to analyze the data. Key metrics to focus on include:
R/R Ratio
Win Rate (%)
Drawdown (%)
Losing Streaks
Position Frequency
🚩 Common Mistakes to Avoid
Inconsistent Strategy: Changing your rules during backtesting is a no-go. Stick to the plan.
Incomplete Testing: Don’t cut corners and always aim for a substantial number of trades.
Ignoring Market Conditions: Make sure your strategy is tested in all four market scenarios.
Lack of Patience: Just because the first few trades are losses doesn’t mean the strategy is a failure. Sometimes, a losing streak can be followed by a winning trade that covers it all.
💡 Conclusion
Backtesting is the beating heart of any trader’s skill set. It builds confidence and lays the foundation for a profitable strategy. If you found this tutorial helpful, give it a boost and share it with your fellow traders. Let’s grow together, not alone!
And as Freddie Mercury once said:
We are the champions, my friends! :)🏆
Happy trading, and see you in the next analysis! 💪🔥
Engulfing Candles: The Power ShiftIf there’s one candle pattern that represents an immediate shift in balance between buyers and sellers it is the engulfing candle.
Today we take a deep dive into some of the key nuances of this pattern and explain how context and confirmation are essential elements to making this pattern a useful tool in your trading toolkit.
Understanding the Engulfing Pattern
The Engulfing candle pattern occurs when a single candlestick completely engulfs the body of the previous candle. In a bullish engulfing, a large bullish candle fully covers the smaller previous bearish candle, while in a bearish engulfing, a large bearish candle engulfs the previous bullish one.
Within the space of a signal candle, the market has completely erased the previous candles price action and sometimes multiple prior candles price actions. This step change in momentum, is why it is often known as the ‘power shift pattern’ – when it is identified correctly can represent a key inflection point.
Bullish Engulfing: A bullish engulfing suggests that after a period of selling, buying pressure has taken over, overpowering the bears in one strong move. This may indicate a potential reversal, from a bearish trend to a bullish one.
Bearish Engulfing: A bearish engulfing indicates that after a period of buying, selling pressure has overwhelmed the bulls. This could signal a shift from an uptrend to a downtrend.
Example: Nvidia Daily Candle Chart
In this example, we see bullish and bearish engulfing candles form at the parameters of a range that formed on Nvidia’s daily candle chart.
Past performance is not a reliable indicator of future results
The Importance of Location and Context
Like any chart pattern, the Engulfing candle is most effective when it occurs in the right context. Its location is crucial to its reliability. Trading the pattern within a range or consolidation zone can be misleading, as there may not be a clear prevailing trend for the pattern to reverse.
For a bullish engulfing to be meaningful, it should ideally appear near a key support level, where buyers are likely to step in. In contrast, a bearish engulfing is more reliable when it appears near a key resistance level, where selling pressure may be about to take control.
In short, location is everything. An engulfing pattern at a support or resistance level holds more weight than one formed in the middle of a range or without a clear market direction.
Example: USD/CAD Daily Candle Chart
In this example, we see small bearish engulfing candles form within a consolidation range. These are not significant signals as the location and context is sub-optimal. We then see a large engulfing candle form at the parameter of resistance – creating a clear bearish signal.
Past performance is not a reliable indicator of future results
Confirmation: The Next Candle is Key
A major element to watch for with the Engulfing candle is confirmation. The next candle after the engulfing one should trade in the direction of the engulfing candle.
For a bullish engulfing, the next candle should ideally close above the high of the engulfing candle. This confirms that the buying momentum is likely to continue.
For a bearish engulfing, the next candle should ideally close below the low of the engulfing candle. This suggests that selling pressure is likely to persist.
Without this confirmation, the pattern can be less reliable, and the initial move may not hold. The following candle helps validate whether the momentum shift is real or just a short-term fluctuation.
Stop Placement
Stop placement is a crucial aspect of trading the Engulfing pattern. Stops should generally be positioned just beyond the high or low of the engulfing candle, depending on the direction of the trade.
For a bullish engulfing, place the stop below the low of the engulfing candle to allow for some movement without being stopped out prematurely.
For a bearish engulfing, place the stop above the high of the engulfing candle to protect against any potential reversal or false breakouts.
Placing stops in these locations helps manage risk while giving the trade enough room to develop, without exposing the position to unnecessary losses.
The Engulfing Pattern Across Timeframes
One of the advantages of the Engulfing candle is its versatility. It can be used effectively on any timeframe, from short-term intraday charts to long-term daily or weekly charts.
On shorter timeframes, the Engulfing pattern may act as a signal for intraday trades, indicating a quick shift in momentum.
On longer timeframes, the pattern could signal a larger, more sustained trend change, suggesting a longer-term move in the market.
Regardless of the timeframe, the Engulfing candle remains an important pattern because it highlights a significant change in market sentiment, whether on a micro or macro scale.
Final Thoughts
The Engulfing candle is an effective pattern for identifying a shift in market momentum, either from bullish to bearish or vice versa. However, its effectiveness is heavily influenced by location and confirmation. When the pattern forms at a key support or resistance level and is followed by confirmation from the next candle, it can offer valuable insight into where the market may be headed. By combining these elements with good stop placement, traders can better manage risk and increase the reliability of the signals this pattern provides.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Revenge Trading vs. Roaring Comeback: How to Tell the Difference“I’m going to get even with the market and I’m going to get even today!” We’ve all been there. You take a loss—maybe a small one, maybe an account-crushing one—and something inside you snaps.
Logic leaves the chat, and a new trader takes over: the vengeful, angry version of you who’s out to "get back" at the market.
Welcome to the world of revenge trading, where decisions are fueled by frustration, and the market does what it always does: punishes impatient and emotional traders.
But what if there’s a better way? What if instead of spiraling into self-destruction, you could channel that energy into a thoughtful and strategic comeback? That’s the difference between revenge trading and a true trader’s rebound. Grab your hot coffee and let’s talk about it.
💥 Revenge Trading: The Fastest Way to Financial Self-Sabotage
Revenge trading isn’t a trading strategy—it’s an emotional response masquerading as a quick-witted reaction. The thought process goes like this: "I just lost money. I need to make it back—fast."
So you double down, size up, stretch out the leverage ratio and ignore your usual risk management rules. Maybe you trade assets you don’t even understand because the price looks juicy. Maybe you jump into a leveraged position without a stop loss because, hey, you’re in it to win it. What could go wrong?
Everything. Everything can go wrong.
Revenge trading is the financial equivalent of trying to punch the ocean. The market doesn’t care that you’re mad. It doesn’t owe you a winning trade. And when you start making impulsive decisions, the only thing that may get hurt is your trading mindset.
📢 Signs You’re Revenge Trading
You’re taking trades you wouldn’t normally take.
You’re increasing position sizes irrationally.
You’re ditching risk management (stop losses, position sizing, logic, etc.).
You feel desperate to "make it back"—right now.
You’re ignoring your trading plan, assuming you had one to begin with.
Recognizing these signs is the first step to stopping the cycle. But avoiding revenge trading is only half of the battle—you need to know how to stage a real comeback.
🦁 Staging the Roaring Comeback
A roaring comeback isn’t about making back your losses in one dramatic trade. It’s about recalibrating, reassessing, and regaining control. Here’s how traders who actually recover from losses do it:
📌 Recognize the Signs Early
If your heart rate spikes and your fingers are itching to “fix” a bad trade immediately, stop. That’s not a setup. That’s an emotional reaction.
📌 Set Daily Loss Limits
If you hit your max loss for the day, you’re done. No exceptions. Your best decision at that point is to fight another day with a clear head.
📌 Step Away from the Screens
Revenge trading thrives on impulsivity, and the best way to kill that impulse is to take a break. Go outside. Breathe. The market isn’t going anywhere. Now touch that grass.
📌 Post-Loss Review: What Actually Happened?
Was the loss due to a bad strategy, poor execution, or just market randomness? Pull up your trading journal ( you do keep one, right ?) and break it down.
📌 Reaffirm Your Strategy (Tweak if Necessary)
If your loss came from a solid trade setup that just didn’t work, then there’s nothing to change. If it came from a mistake, figure out how to prevent that mistake from repeating.
📌 Reduce Risk for the Next Trades
After a loss, the worst thing you can do is over-leverage. Instead, cut your position size and take smaller, high-probability trades to rebuild confidence. Howard Marks, a firm believer in market psychology, always reminds investors that the biggest risk is emotional overreaction. Stay disciplined.
📌 Trust the Process
The best traders understand that one trade does not define them. They trust their system, stick to their edge, and take losses as part of the game. Trading is a long-term play, not a single battle to be won or lost.
💚 Turning Losses into Lessons
Losses are tuition fees for the market’s greatest lessons. Every great trader has taken hits—what separates them from the rest is how they respond. The thing is this can happen anywhere—from an ill-fated trade in the crypto market (it’s wild out there) to an account-battering reaction to anything that pops out of the earnings calendar .
How do you deal with a trading loss? And when’s the last time you had to stiffen that upper lip and make your comeback? Share your experience in the comments!
A Triple Top Pattern: Signals and StrategiesA Triple Top Pattern: Signals and Strategies
Traders are always on the lookout for reliable analysis tools that can help them make informed trading decisions. One such tool is the triple top trading pattern. It is a bearish reversal formation that can help traders identify potential trend reversals and take advantage of market opportunities.
In this FXOpen article, we will explore what the triple top pattern is, what it indicates, and how to identify it on price charts. Keep reading to find examples that will help you understand how to use it in a trading strategy.
What Is a Triple Top Pattern?
A triple top is a technical analysis pattern that signals a potential reversal in a trend. Is the triple top bullish or bearish? It’s a bearish formation. The pattern occurs when the price of an asset hits the same resistance level three times, failing to break above it on each occasion. This indicates that buyers are losing strength and sellers are starting to dominate the market. It is often seen after a sustained uptrend.
Identifying a triple top involves spotting three distinct peaks at roughly the same price level, separated by two troughs. The peaks are formed when the price hits resistance but fails to push through, while the troughs occur when the price retraces after each failed attempt.
To confirm a valid triple top, the peaks should be close in height, and the troughs should create a roughly horizontal neckline. The pattern is confirmed when the price breaks below the neckline, signalling that sellers have overtaken buyers.
Triple Top Chart Pattern Trading Strategy
Once traders have identified the triple top formation, they can use various trading strategies to take advantage of it. However, there are common rules that are used as the basis:
- Entry: Traders enter a short position when the price breaks below the neckline, which is the level that connects the two troughs that separate the peaks. This level is a critical support level, and when it is broken, it confirms the triple top candlestick pattern and indicates that the trend is reversing.
- Stop Loss: To manage risk, traders place a stop-loss order above the neckline. If the price starts to rise again, the stop-loss order will limit potential losses. The theory states that traders can place a stop-loss on the neckline. However, the price often retests the support level after a breakout, so the risk of an early exit rises.
- Take Profit: There are several ways of determining a profit target. The most common technique is to measure the distance between the tops and bottoms and subtract it from the triple top breakout point.
Another strategy is to identify the target based on the closest support levels. However, this may limit potential returns if the support is too close to the entry point. Therefore, traders sometimes use trailing stops to lock in potential profits as the price continues to fall.
Trading Example
In the chart above, the price formed the triple top. We could have entered a short position once the price broke below the neckline and closed it either at the point equal to the distance between the peaks and the neckline or at the closest support level, as the levels are almost equal. However, selling volumes were low (1) at the breakout level, so we could have expected an upcoming bullish reversal. Therefore, we wouldn’t have kept the position beyond the initial take-profit target.
How Traders Confirm the Triple Top
To confirm the triple top pattern and ensure its validity, traders use a combination of technical tools and indicators. These help confirm that the trend is indeed reversing and not just experiencing a temporary pullback. Here are the key methods traders use:
- Neckline Break. The most important confirmation comes when the price breaks below the neckline, which is the horizontal level connecting the lows between the peaks. A clean break suggests a stronger reversal.
- Volume Analysis. Volume plays a crucial role in confirming the triple top. Traders look for a surge in selling volume when the price breaks the neckline. If the volume is low during the breakout, the pattern may not be reliable, and a bullish reversal could follow.
- Momentum Indicators. Traders often use momentum indicators like the Stochastic Oscillator or Moving Average Convergence Divergence (MACD). When these indicators show bearish divergence, it signals a potential downward reversal. A negative crossover in the MACD or Stochastic adds further confirmation.
- Retest of Neckline. Sometimes, after breaking the neckline, the price may retrace and retest this level as resistance. A failed retest, where the price does not move back above the neckline, confirms that sellers are in control.
Triple Top vs Triple Bottom
It is important to distinguish between the triple top and the triple bottom chart patterns, as the former is the bearish setup, while the latter is a bullish reversal formation. The triple bottom setup forms when the price hits a particular support level three times and fails to break through it. It suggests that the sellers have lost their strength, and the buyers are starting to take control. The bottoms are separated by two peaks, which occur when the price retraces some of its gains from the support level.
Traders use the same principles to trade the triple bottom as they would the triple top but vice versa. They enter a long position when the price breaks above the neckline and set a stop-loss order below it. The take-profit target might equal the distance between bottoms and peaks or be set at the closest resistance level.
Triple Top Challenges
While the triple top pattern is a valuable tool for spotting reversals, it has its limitations. Traders should be aware of the following challenges:
- False Breakouts. The price may break below the neckline only to quickly reverse back, leading to a false signal. This can cause traders to enter losing positions if they act too quickly without further confirmation.
- Extended Sideways Movement. Sometimes, the price can stay near the neckline after a breakout, leading to indecision and uncertain market behaviour. This sideways movement can make it difficult to determine if the trend has truly reversed.
- Retests Leading to Reversals. After the initial breakout, the price may retest the neckline and move back above it, invalidating the triple top pattern. Traders need to be cautious and set appropriate stop-loss orders to help potentially mitigate risk.
Final Thoughts
The triple top pattern offers traders a powerful tool for identifying potential market reversals. However, it’s crucial to confirm the pattern and integrate it with other forms of analysis to avoid false signals. Ready to put these insights into action? Open an FXOpen account today, and trade with a broker offering tight spreads, low commissions, and advanced trading platforms.
FAQ
What Does a Triple Top Mean in Trading?
The triple top pattern meaning refers to a bearish reversal formation indicating a potential end to an uptrend. It forms when the price reaches the same resistance level three times without breaking through, suggesting weakening buying momentum and increasing selling pressure. This pattern signals that the asset's price may soon decline.
How Do You Confirm the Triple Top Pattern?
To confirm a triple top pattern, traders watch for a decisive break below the neckline, which connects the lows between the peaks. Increased trading volume during the breakout strengthens the confirmation, indicating strong seller interest. Technical indicators like the Stochastic Oscillator showing bearish divergence can provide additional validation.
Is a Triple Top Bullish?
No, a triple top is not bullish; it is a bearish reversal pattern. It signifies that the asset's price has repeatedly failed to surpass a resistance level, indicating diminishing upward momentum. Traders see this as a cue to consider short positions or to exit existing long positions.
Is a Triple Top Stronger Than a Double Top?
A triple top is generally considered stronger than a double top pattern because the price has failed to break resistance three times instead of two. This extra failed attempt reinforces the strength of the resistance level and increases the likelihood of a significant reversal. However, both patterns are important and should be analysed with other market factors.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Trading Miscalibration: Crypto Aims Too High, FX Aims Too LowI was thinking about something fascinating—the way traders approach different markets and, in my opinion...
One of the biggest mistakes traders make is failing to calibrate their expectations based on the market they’re trading.
📌 In crypto, traders dream of 100x gains, refusing to take profits on a 30-50% move because they believe their coin is going to the moon.
📌 In Forex and gold, the same traders shrink their expectations, chasing 20-30 pip moves instead of riding 200-500 pip trends.
Ironically, both approaches lead to frustration:
🔴 Crypto traders regret not taking profits when the market crashes.
🔴 FX and gold traders regret not holding longer when the market runs without them.
If you want to be a profitable trader, you must align your strategy with the reality of the market you’re trading.
________________________________________
Crypto: Stop Aiming for the Moon—Trade Realistic Outcomes
Crypto markets are highly volatile, and while 10x or 100x gains can happen, they are rare and unpredictable. However, many traders have been conditioned to expect extreme returns, leading them to ignore solid 30-50% gains—which are already fantastic trades in any market.
🔴 The Problem: Holding Too Long & Missing Profits
Many traders refuse to take profits on a 30-50% move, convinced that a 10x ride is around the corner. But when the market reverses, those unrealized gains disappear—sometimes turning into losses.
🚨 Frustration:
"I was up 50%, but I got greedy, and now I’m back to break-even—or worse!"
✅ The Fix: Take Profits at 30-50% Instead of Waiting for 10x
✔️ Take partial profits at key resistance levels.
✔️ Use a trailing stop to lock in gains while allowing for further upside.
✔️ Understand that even professional traders take profits when they’re available—they don’t blindly hold for the next 100x.
📉 Example:
If Bitcoin jumps 30% in a month, that’s already a massive move! Instead of waiting for 200%, a disciplined trader locks in profits along the way. Similarly, if an altcoin is up 50% in two weeks, securing profits makes sense—instead of watching it all disappear in a market dump.
________________________________________
FX and Gold: Stop Thinking Small—Aim for Big Market Trends
On the other hand, when it comes to Forex and gold, many traders shrink their expectations too much. Instead of capturing multi-hundred-pip moves, they settle for 20-30 pip scalps, constantly entering and exiting the market, exposing themselves to unnecessary whipsaws.
🔴 The Problem: Exiting Too Early & Missing Big Trends
Unlike crypto, where traders hold too long, in FX and gold, they don’t hold long enough. Instead of riding a 200-500 pip move, they panic-exit for a small profit, only to watch the market continue without them.
🚨 Frustration:
"I closed at 30 pips, but the market kept running for 300 pips! I left so much money on the table!"
✅ The Fix: Target 200-500 Pip Moves Instead of Scalping
✔️ Focus on higher timeframes (4H, daily) for clearer trends.
✔️ Set realistic yet ambitious targets —200-300 pips in Forex, 300-500 pips in gold.
✔️ Use a strong risk-reward ratio (1:2, 1:3, even 1:5) instead of taking premature profits.
📉 Example:
• If EUR/USD starts a strong downtrend, why settle for 30 pips when the pair could drop 250 pips in a week?
• If gold breaks a major resistance level, a move of 300-500 pips is entirely possible—but you won’t catch it if you exit at 50 pips.
________________________________________
Why Traders Fail to Calibrate Properly
So why do traders fall into this misalignment of expectations?
1️⃣ Social Media & Hype Culture – Crypto traders are bombarded with "to the moon" narratives, making them feel like 30-50% gains are not enough. Meanwhile, in Forex, traders get stuck in a scalping mindset, thinking that small, frequent wins are the only way to trade.
2️⃣ Fear of Missing Out (FOMO) vs. Fear of Losing Profits (FOLP)
• In crypto, FOMO keeps traders holding too long. They don’t want to miss "the big one," so they refuse to take profits.
• In FX and gold, fear of losing small profits makes traders exit too soon. They don’t let trades develop because they fear a pullback.
3️⃣ Misunderstanding Market Structure – Each market moves differently. Crypto is highly volatile but doesn’t always go 10x. Forex and gold move slower but offer consistent multi-hundred-pip trends. Many traders don’t adjust their strategies accordingly.
________________________________________
The Solution: Align Your Strategy with the Market
🔥 In crypto, don’t wait for 10x— start taking profits at 30-50%.
🔥 In FX and gold, don’t settle for 30 pips—hold for 200-500 pip moves.
By making this simple mental shift, you’ll:
✅ Trade smarter, not harder
✅ Increase profitability by targeting realistic moves
✅ Reduce stress and overtrading
________________________________________
Final Thoughts: No More Frustration!
The calibration problem leads to frustration in both cases:
⚠️ Crypto traders regret not taking profits when the market crashes.
⚠️ FX and gold traders regret not holding longer when the market trends.
💡 The solution? Trade according to the market's behavior, not emotions.
Liquidity Grab eurusd Supply & Demand Zones:
🔻 A major supply zone (resistance) is marked above 1.09618, where institutional selling pressure may appear.
🔹 A demand zone (support) is established below 1.09064, providing potential entry opportunities.
📈 Trading Plan & Targets:
✅ Expecting a bullish move from the demand zone as price reacts positively.
🎯 Target 1: 1.09064 – Mid-level liquidity area.
🎯 Target 2: 1.09618 – Major resistance & supply zone.
📌 Smart Money Concept (SMC):
🔹 Price is forming a liquidity sweep before a potential bullish push.
🔹 The structure suggests an accumulation phase, with a breakout confirmation above key levels.
💡 Key Takeaways:
🔹 Bullish bias unless price invalidates the demand zone.
Trading Is Not Gambling : Become A Better Trade Part IOver the last few weeks/months, I've tried to help hundreds of traders learn the difference between trading and gambling.
Trading is where you take measured (risk-restricted) attempts to profit from market moves.
Gambling is where you let your emotions and GREED overtake your risk management decisions - going to BIG WINS on every trade.
I think of gambling in the stock market as a person who continually looks for the big 50% to 150%++ gains on options every day. Someone who will pass up the 20%, 30%, and 40% profits and "let it ride to HERO or ZERO" on most trades.
That's not trading. That's flat-out GAMBLING.
I'm going to start a new series of training videos to try to help you understand how trading operates and how you need to learn to protect capital while taking strategic opportunities for profits and growth.
This is not going to be some dumbed-down example of how to trade. I'm going to try to explain the DOs and DO N'Ts of trading vs. gambling.
If you want to be a gambler - then get used to being broke most of the time.
I'll work on this video's subsequent parts later today and this week.
I hope this helps. At least it is a starting point for what I want to teach all of you.
Get some.
#trading #research #investing #tradingalgos #tradingsignals #cycles #fibonacci #elliotwave #modelingsystems #stocks #bitcoin #btcusd #cryptos #spy #gold #nq #investing #trading #spytrading #spymarket #tradingmarket #stockmarket #silver
Stop chasing 20-30 pips if you want to become profitableOne of the biggest obstacles for traders who want to become consistently profitable is the mindset of chasing small 20-30 pip moves.
While it may seem appealing to enter and exit trades quickly for immediate profits, this strategy is often inefficient, risky, and unsustainable in the long run. Here’s why you should change your approach if you want to succeed in trading.
________________________________________
1. Trading Costs Eat Into Your Profits
When you target small moves, you need to open and close many trades. This means that spreads and commissions will eat up a significant portion of your profits. If you have a spread of 2-3 pips (depending on the pair) and you’re only aiming for 20-30 pips per trade, a consistent percentage of your potential gains is lost to execution costs.
________________________________________
2. High Risk Compared to Reward
A smart trader focuses on a favorable risk-reward ratio, such as 1:2, 1:3 or even 1:4. When you chase just 20-30 pips, your stop-loss has to be very tight, making you highly vulnerable to the normal volatility of the market. An unexpected news release or a liquidity spike can stop you out before the price even reaches your target.
________________________________________
3. You Miss Big Moves and Real Opportunities
Professional traders focus on larger trends and significant price movements of hundreds of pips. The market doesn’t move in a straight line; it goes through consolidations, pullbacks, and major trends. If you’re busy trading short-term 20-30 pip moves, you’ll likely miss the big trends that offer more sustainable profits and better risk management.
________________________________________
4. Increased Stress and Emotional Trading
Short-term trading requires constant monitoring and quick decision-making. This increases your level of stress and negative emotions like fear and greed, leading to costly mistakes. In the long run, this trading style is mentally exhausting and difficult to sustain.
________________________________________
How to Change Your Approach to Become Profitable
✅ Think in terms of larger trends – Focus on 200-300+ pip moves instead of small fluctuations.
✅ Aim for a strong risk-reward ratio – Look for setups with at least 1:2 risk-reward to maximize your profits.
✅ Use higher timeframes – Charts like 4H or daily provide clearer signals and reduce market noise.
✅ Be patient and wait for the best setups – Don’t enter trades just for the sake of activity; wait for high-probability opportunities.
Geopolitical Analysis and Impacts on Currency Markets
Hello, my name is Andrea Russo and today I want to talk to you about how recent geopolitical news is impacting the Forex market, analyzing the main currency pairs and providing a detailed technical picture.
Current Geopolitical Context
This week, the geopolitical landscape has been characterized by a series of significant events. Among them, tensions between the United States and Russia have dominated the scene, with a phone call between Donald Trump and Vladimir Putin that has opened up the possibility of a negotiation in Ukraine. However, the situation on the ground remains critical, with Russian forces advancing in several Ukrainian regions2. Furthermore, uncertainty over gas supplies in Europe has led to significant volatility in energy markets, with the price of gas falling by 3%.
Impacts on the Forex Market
Geopolitical tensions have had a direct impact on the Forex market, influencing volatility and capital flows. For example:
EUR/USD: The pair has been showing a bearish trend, influenced by economic uncertainty in Europe and the strength of the dollar as a safe haven.
USD/JPY: The dollar has gained ground against the yen, thanks to the perception of economic stability in the United States.
GBP/USD: The British pound has been under pressure due to concerns about economic growth in the United Kingdom.
Technical Analysis
A technical analysis of the major currency pairs reveals the following trends:
EUR/USD: Technical indicators suggest a "sell" position, with key support at 1.0832 and resistance at 1.0862.
USD/JPY: The pair is showing "buy" signals, with an uptrend supported by resistance at 148.09.
GBP/USD: Indicators are mixed, with resistance at 1.2944 and support at 1.2920.
Conclusion
Geopolitical dynamics continue to play a crucial role in determining the movements of the Forex market. Investors should carefully monitor global developments and use technical tools to make informed decisions. The current volatility offers opportunities, but also requires careful risk management.
I hope this analysis has been useful to you in better understanding the connections between geopolitics and Forex. Stay tuned for more updates!
Best GOLD XAUUSD Consolidation Trading Strategy Explained
In article , you will learn how to identify and trade consolidation on Gold easily.
I will share with you my consolidation trading strategy and a lot of useful XAUUSD trading tips.
1. How to Identify Consolidation
In order to trade consolidation, you should learn to recognize that.
The best and reliable way to spot consolidation is to analyse a price action.
Consolidation is the state of the market when it STOPS updating higher highs & higher lows in a bullish trend OR lower lows & lower highs in a bearish trend.
In other words, it is the situation when the market IS NOT trending.
Most of the time, during such a period, the price forms a horizontal channel.
Above is a perfect example of a consolidation on Gold chart on a daily.
We see a horizontal parallel channel with multiple equal or almost equal highs and lows inside.
For a correct trading of a consolidation, you should correctly underline its boundaries.
Following the chart above, the upper boundary - the resistance, is based on the highest high and the highest candle close.
The lowest candle close and the lowest low compose the lower boundary - the support.
2. What Consolidation Means
Spotting the consolidating market, it is important to understand its meaning and the processes that happen inside.
Consolidation signifies that the market found a fair value.
Growth and bullish impulses occur because of the excess of demand on the market, while bearish moves happen because of the excess of supply.
When supply and demand find a balance, sideways movements start .
Look at the price movements on Gold above.
First, the market was rising because of a strong buying pressure.
Finally, the excess of buying interest was curbed by the sellers.
The market started to trade with a sideways range and found the equilibrium
At some moment, demand started to exceed the supply again and the consolidation was violated . The price updated the high and continued growth.
Usually, the violation of the consolidation happens because of some fundamental event that makes the market participants reassess the value of the asset.
At the same time, the institutional traders, the smart money accumulate their trading positions within the consolidation ranges. As the accumulation completes, they push the prices higher/lower, violating the consolidation.
3. How to Trade Consolidation
Once you identified a consolidation on Gold, there are 2 strategies to trade it.
The resistance of the consolidation provides a perfect zone to sell the market from. You simply put your stop loss above the resistance and your take profit should be the upper boundary of the support.
That is the example of a long trade from support of the consolidation on Gold.
The support of the sideways movement will be a safe zone to buy Gold from. Stop loss will lie below the support zone, take profit will be the lower boundary of the resistance.
AS the price reached a take profit level and tested a resistance, that is a short trade from that.
You can follow such a strategy till the price violates the consolidation and establishes a trend.
The market may stay a very extended period of time in sideways, providing a lot of profitable trading opportunities.
What I like about Gold consolidation trading is that the strategy is very straightforward and completely appropriate for beginners.
It works on any time frame and can be used for intraday, swing trading and scalping
❤️Please, support my work with like, thank you!❤️
I am part of Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analysis.