As a price action trader, I only hunt few candles on the chart to jump in the market, and this candle is one of them. i personally call it that because it typically shows the hesitation between buyers and sellers during the session that it's formed, so in this article will show you the way how to trade it perfectly.
before we get into this you must know that not all " indecision candles" are trade-able, therefore, you have to locate the best level to catch them that will give you higher profit with lower risk possible.
and to do so, you have to master how to locate the support and resistance levels perfectly, because this type of hesitation is more likely to happen on those levels, and that indicates that we might see a reversal at this point.
without further ado, let's see how to trade this piece of art;
1- after you place your support and resistance on the chart, wait for the market to reach those levels, and stop tracking the market.
if you're a price action trader, then you already know you should do that. However, a lot of them get dragged by their emotions and start making random entries, crossing fingers hoping the market goes their way. so wait for the market till it goes to your levels.
2- when you see an indecision candlestick has formed ( in this example at a resistance area). that indicates that the buyers kinda losing interest in buying at this level and therefore the sellers may take an action at this point. However, THIS IS NOT CONFIRMED.
candlesticks, in general, tells what already has happened to the market, not predicting the next movement of the market and that a lot of traders don't recognize this concept.
with that being said, we need a confirmation that shows sellers intention to acquire the market at this point. which lead us to step 3
3- a close below the lowest low of the indecision candlestick as our gate/entry to short the market.
because we said previously that this specific candle shows the hesitation between the buyers and sellers, a close below this candle refers to the end of this hesitation and a clear vision that the sellers are in control now.
4- the stop-loss order generally has to be above the resistance area, and with that candle it has to be few pips above the higher wick of the candlestick as it's shown in the example.
5- using the role of alternation ( which I'm going to write another article about it) we place our take-profit order, or to make it simpler to you, put your TP order in this case at the previous low ( trough).
6- the most important thing now after knowing where are your entry, SL and TP, is to measure the risk/reward ratio before you enter the market.
the whole idea of trading, in general, is to catch trades with the lowest risk possible and aim for more profits. and as you can see on the chart, the profit was almost triple the risk. and that was a good entry position to take.
hope you find this technique is helpful, will be posting different candlesticks types to trade with on a weekly basis.
before we get into this you must know that not all " indecision candles" are trade-able, therefore, you have to locate the best level to catch them that will give you higher profit with lower risk possible.
and to do so, you have to master how to locate the support and resistance levels perfectly, because this type of hesitation is more likely to happen on those levels, and that indicates that we might see a reversal at this point.
without further ado, let's see how to trade this piece of art;
1- after you place your support and resistance on the chart, wait for the market to reach those levels, and stop tracking the market.
if you're a price action trader, then you already know you should do that. However, a lot of them get dragged by their emotions and start making random entries, crossing fingers hoping the market goes their way. so wait for the market till it goes to your levels.
2- when you see an indecision candlestick has formed ( in this example at a resistance area). that indicates that the buyers kinda losing interest in buying at this level and therefore the sellers may take an action at this point. However, THIS IS NOT CONFIRMED.
candlesticks, in general, tells what already has happened to the market, not predicting the next movement of the market and that a lot of traders don't recognize this concept.
with that being said, we need a confirmation that shows sellers intention to acquire the market at this point. which lead us to step 3
3- a close below the lowest low of the indecision candlestick as our gate/entry to short the market.
because we said previously that this specific candle shows the hesitation between the buyers and sellers, a close below this candle refers to the end of this hesitation and a clear vision that the sellers are in control now.
4- the stop-loss order generally has to be above the resistance area, and with that candle it has to be few pips above the higher wick of the candlestick as it's shown in the example.
5- using the role of alternation ( which I'm going to write another article about it) we place our take-profit order, or to make it simpler to you, put your TP order in this case at the previous low ( trough).
6- the most important thing now after knowing where are your entry, SL and TP, is to measure the risk/reward ratio before you enter the market.
the whole idea of trading, in general, is to catch trades with the lowest risk possible and aim for more profits. and as you can see on the chart, the profit was almost triple the risk. and that was a good entry position to take.
hope you find this technique is helpful, will be posting different candlesticks types to trade with on a weekly basis.