Candlestick Patterns For Easy Money: Forex Strategies In San Francisco

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Candlestick Patterns For Easy Money: Forex Strategies In San Francisco – With so many ways to trade currencies, choosing common methods can save time, money, and effort. By fine-tuning common and simple methods, a trader can develop a complete trading plan using patterns that occur regularly and are easy to spot with practice. Head and Shoulders, Candlestick and Ichimokuforex patterns provide visual cues on when to trade. While these methods can be complex, there are simple methods that take advantage of the most commonly traded elements of each pattern.

While there are a number of chart patterns of varying complexity, there are two common chart patterns that appear regularly and represent a relatively simple method of trading. These two patterns are head and shoulders and the triangle.

Candlestick Patterns For Easy Money: Forex Strategies In San Francisco

Candlestick Patterns For Easy Money: Forex Strategies In San Francisco

The H&S pattern can be a top formation after an uptrend or a bottom formation after a downtrend. A topping pattern is a price high followed by a retracement, a higher price high, a retracement, and then a lower low. The bottoming pattern is a low (the “shoulder”), a retracement followed by a lower low (the “head”), and a retracement followed by a higher low (the second “shoulder”) (see below). The pattern is complete when the trend line (“neckline”) connecting the two highs (bottom pattern) or two lows (topping pattern) of the pattern breaks.

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This pattern is tradable as it provides an entry level, a stop level and a profit target. In the image above you can see a daily chart of EUR/USD and an H&S bottom pattern that has occurred. The entry occurs at 1.24 when the “neck line” of the pattern is broken. The stop can be placed below the right shoulder at 1.2150 (conservative) or below the head at 1.1960; The latter exposes the trader to more risk, but there is less chance of being stopped before the profit target is reached.

The winning target is determined by adding the height of the formation to the breakout point. In this case, the profit target is 1.2700-1.1900 (approximately) = 0.08 + 1.2400 (this is the breakout point) = 1.31. The profit target is marked by the rightmost square, where the market moved after the breakout.

Triangles are very common, especially in short-term time frames. Triangles occur when prices converge and the highs and lows narrow into an increasingly narrow price range. They can be symmetrical, ascending or descending, but for trading purposes there are minimal differences.

The table below shows a symmetrical triangle. It is tradable because the pattern provides an entry, stop and profit target. The entry occurs when the perimeter of the triangle is penetrated – in this case upwards, creating the entry 1.4032. The stop is the low of the pattern at 1.4025. The profit target is determined by adding the height of the pattern to the entry price (1.4032). The pattern height is 25 pips giving a profit target of 1.4057 which was quickly met and surpassed.

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Candlestick charts provide more information than line, OHLC or area charts. Because of this, candlestick patterns are a useful tool for measuring price action on all time frames. Although there are many candlestick patterns, there is one that is particularly useful in forex trading.

An engulfing pattern is a great trading opportunity as it is easy to spot and price action indicates a strong and immediate directional change. In a downtrend, a real body of an up bar completely engulfs the real body of the previous down bar (bullish engulfing). In an uptrend, a real body of a down bar will completely engulf the real body of a previous up bar (bearish engulfing).

The pattern is highly tradable as the price action indicates a strong reversal as the previous candle has already fully reversed. The trader can participate in the beginning of a potential trend and implement a stop at the same time. In the chart below, we see a bullish engulfing pattern that signals the formation of an uptrend. Entry is the open price of the first bar after pattern formation, in this case 1.4400. Stop will be placed below pattern low at 1.4157. There is no clear profit target for this pattern.

Candlestick Patterns For Easy Money: Forex Strategies In San Francisco

Ichimoku is a technical indicator that overlays the price data on the chart. While patterns are not that easy to spot in the actual Ichimoku plot, when we combine the Ichimoku cloud with price action, we see a pattern that is common. The Ichimoku cloud consists of former support and resistance levels that are combined into a dynamic support and resistance area. Simply put, when the price action is above the cloud, it is bullish and the cloud acts as a support. When the price action is below the cloud, it is bearish and the cloud acts as resistance.

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The “cloud” bounce is a common continuation pattern. However, because the cloud’s support/resistance lines are much more dynamic than traditional horizontal support/resistance lines, it offers entries and stops not typically seen. By using the Ichimoku cloud in trending environments, a trader is often able to capture much of the trend. In an uptrend or downtrend, as illustrated below, there are multiple opportunities for multiple entries (pyramid trading) or trailing stop levels.

In a decline that began in September 2010, there were eight potential entries where price climbed into the cloud but the other side failed to break through. Entries could be made if the price breaks back below (out of) the cloud, confirming that the downtrend is still ongoing and the retracement is complete. The cloud can also be used as a trailing stop, with the outer border always acting as a stop.

In this case, as price falls, so does the cloud – the outer band (top for downtrends, bottom for uptrends) of the cloud is where the trailing stop can be placed. This pattern is best used on trend-based pairs, which generally includes the USD.

There are several trading methods, all of which use price patterns to find entry and stop levels. Forex chart patterns, which include head and shoulders charts and triangles, provide entries, stops and profit targets in a pattern that is easy to spot. The engulfing candlestick pattern provides insight into trend reversal and possible participation in this trend with a defined entry and stop level.

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The Ichimoku Cloud Bounce allows participation in long trends through the use of multiple entries and a progressive stop. As a trader progresses, they may begin to combine patterns and methods to create a unique and customizable personal trading system.

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Candlestick Patterns For Easy Money: Forex Strategies In San Francisco

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What could possibly be more important to a technical Forex trader than price charts? Forex charts come standard with candlesticks, which are very different from the more traditional bar chart and the more exotic Renko charts. These forex candlestick charts help clarify a forex trader’s perception of price action — allowing them to form opinions on trends, determine entries and more.

All forex traders should be familiar with forex candlesticks and what they mean. After traders learn how to analyze forex candlesticks, they often find that they can identify many different types of price action far more efficiently than they can with other charts. The added benefit of forex candlestick analysis is that the same method is applicable to candlestick charts for all financial markets.

Candlestick Patterns For Easy Money: Forex Strategies In San Francisco

There are three specific points that make up a candlestick: the opening, the closing, and the wick. The candle turns green/blue (the color depends on the chart settings) when the close price is above the open price. The candle turns red when the closing price is below the opening price.

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