21. How to trade a double top in Forex Part 2
Video 2 of 2 - In this Forex trading course video we discuss how to
trade the double top pattern. Instructions are provided on entry and
exit points and also where to put your stop loss.
Candlestick Charting - Vol 15 - Evening Star
Libraries: MQL5 Wizard - Candlestick Patterns Class
newdigital, 2013.09.14 19:53
The Evening Star Pattern is a bearish reversal pattern, usually occuring at the
top of an uptrend. The pattern consists of three candlesticks:
The first part of an Evening Star reversal pattern is a large bullish green
candle. On the first day, bulls are definitely in charge, usually new highs were
The second day begins with a bullish gap up. It is
clear from the opening of Day 2 that bulls are in control. However, bulls do not
push prices much higher. The candlestick on Day 2 is quite small and can be
bullish, bearish, or neutral.
Generally speaking, a bearish candle on Day 2 is a stronger sign of an
impending reversal. But it is Day 3 that is the most significant
Day 3 begins with a gap down, (a bearish signal) and
bears are able to press prices even further downward, often eliminating the
gains seen on Day 1.
The chart below of Exxon-Mobil (XOM) stock shows an example a Evening Star
bearish reversal pattern that occured at the end of an uptrend:
Day 1 of the Evening Star pattern for Exxon-Mobil (XOM) stock above was a strong
bullish candle, in fact it was so strong that the close was the same as the high
(very bullish sign). Day 2 continued Day 1's bullish sentiment by gapping up.
However, Day 2 was a Doji, which is a candlestick
signifying indecision. Bulls were unable to continue the large rally of the
previous day; they were only able to close slightly higher than the open.
Day 3 began with a bearish gap down. In fact, bears took hold of Exxon-Mobil
stock the entire day, the open was the same as the high and the close was the
same as the low (a sign of very bearish sentiment). Also, Day 3 powerfully broke
below the upward trendline that had served as support for XOM for the past week. Both the
trendline break and the classic Evening Star pattern gave traders a signal to
sell short Exxon-Mobil stock.
23. How to trade a double bottom in Forex Part 2
In this 2nd part of the double bottom series we learn how to trade the
double bottom pattern. By now we know how to identify it so in this
video we will go through the details you need to know when trading it.
With a risk/reward ration of 1:1 this is a great pattern to trade.
Candlestick Charting - Volume 16 - Morning Star
newdigital, 2013.09.18 12:41
The Morning Star Pattern is a bullish reversal pattern, usually occuring at the
bottom of a downtrend. The pattern consists of three candlesticks:
The first part of a Morning Star reversal pattern is a large bearish red
candle. On the first day, bears are definitely in charge, usually making new
The second day begins with a bearish gap down. It
is clear from the opening of Day 2 that bears are in control. However, bears do
not push prices much lower. The candlestick on Day 2 is quite small and can be
bullish, bearish, or neutral (i.e. Doji).
Generally speaking, a bullish candle on Day 2 is a stronger sign of an
impending reversal. But it is Day 3 that holds the most significance.
Day 3 begins with a bullish gap up, and bulls are able to
press prices even further upward, often eliminating the losses seen on Day 1.
The chart below of the S&P 400 Midcap exchange traded fund (MDY) shows an
example a Morning Star bullish reversal pattern that occured at the end of a
Day 1 of the Morning Star pattern for the Midcap 400 (MDY) chart above was a
strong bearish red candle. Day 2 continued Day 1's bearish sentiment by gapping
down. However, Day 2 was a Doji, which is a candlestick
signifying indecision. Bears were unable to continue the large decreases of the
previous day; they were only able to close slightly lower than the open.
Day 3 began with a bullish gap up. The bulls then took hold of the Midcap 400
exchange traded fund for the entire day. Also, Day 3 broke above the downward
trendline that had served as resistance
for MDY for the past week and a half. Both the trendline break and the
classic Morning Star pattern gave traders a signal to go long and buy
the Midcap 400 exchange traded fund.
Ichimoku Breakouts and Bounces
In this video we will discuss trading Kumo Breakouts, Kumo Bounces, Kijun Bounces and Kijun Breaks.
How I Trade Breakouts
Indicators: TrendLine Touch Alert
newdigital, 2013.10.24 09:01
Simple Way to Trade Trendline Breakouts
Step 1. - Locating the Trendline
As a review, a trendline is a line connecting two or more lows or two or
more highs, with the lines projected out into the future. Traders than
look at these projected lines and look for future prices to react around
Step 2. – Wait For a Confirmed Breakout
Next, we need to see how the price reacts to the projected trendline.
There are two potential outcomes when price comes into contact with a
So we wait to see if the price does in fact break through the price. But
we aren’t ready to place a trade just because the price breaks through
the trendline. We need to wait and see if the current candle closes
beyond the trendline. We require a candle to close beyond the trendline
to confirm the breakout. This is a very important rule.
Check out the chart above depicting a trendline on a current USD/JPY
Hourly chart. There were two times in the past week where this trendline
was broken, but look what happened. They were false breakouts. Sellers
were not able to keep the price down below the trendline and both
potential breakout candles closed above the trendline. Had we sold at
either of those two opportunities, we would have been crushed two times
in a row. Something we definitely want to avoid.
So even though it is tempting to get immediately into a trade as price
breaks a trendline in real-time, you would be susceptible to false
breaks. Patience is a virtue.
Step 3. Set Up The Trade
Remember the first image I showed you of the GBP/USD Hourly chart? Let’s
go back to that example because it actually ended up producing a near
perfect breakout setup. Soon after that snapshot was taken, the GBP/USD
fell and broke through our trendline with authority. A very short time
after that, the Hourly candle closed below the trendline and confirmed
the breakout as well. Once this happened, it was time to get to work to
setup this trade.
There are 3 things we needed to do to execute this breakout trade:
There is a saying that goes “What once was resistance, can later become
support. And what once was support, can later become resistance.” This
is the mantra we rely on when setting an Entry order near the original
trendline. We are looking for price to retrace back to the point of
support/resistance it just broke through, and then continue back into
the direction of the original breakout. Take a look at how the trade was
Our Entry order to Sell was placed a couple pips below the trendline,
our Stop Loss was set several pips above the trendline (approx.. 15 pips
from our Entry) and our Limit was set twice as far as our stop (approx.
30 pips from our Entry). Within the next hour, the price retraced back
to the original trendline, and then move back in the direction of
original breakout, exactly what we wanted.
So to recap, we were able to enter into a trade on a confirmed breakout,
we were able to get in at a much more favorable price than entering the
break in real-time, and we were able to set an extremely tight stop
(read: lower our risk) beyond what should be a valid resistance level.
As it turned out, this particular trade was a success, but that
doesn’t mean every trade will be a winner. However, you should take
comfort in the fact that as long as you are using a 1:2 risk/reward
ratio, you only need to be correct 33% of the time to break even. If you
are right more than 33% of the time, you should be a profitable trader
in the long run with this strategy.
Trendline breaks can be tricky to trade, but hopefully this article gave
you a clear approach to mastering them. We've learned that you should
always wait for confirmation of a break by requiring the current candle
to close. We also learned placing our Entry order near the trendline
will give us a better entry price and reduce our risk by allowing a
tighter Stop. Setting our Limit as least twice as far as our Stop should
also help shift the odds in our favor. Good luck with your trading!
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