The most important candle on the chart

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The most important candle on the chart is the Hammer or long-wicked candle. It has many more names like Hanging Man, Gravestone or the Doji Family and surely there are more names. I don't care all the names, because they all say the same: it is a sign of weakness or strength. In channels often understood as stop-hunting, it is a sign that big traders took their profits and/or switched their positions or an aggressive trader from a higher tf is coming in e.g. by limit orders. In every case the trend or movement turns in the opposite direction. This is a strong reaction of the market and always is worth to take a deeper look why the market reacts here. Many unexperienced traders would say that it is very subjective what you see. They couldn't be more wrong. Many big traders use the same tools and see the same signs. The more experienced the traders are, the more their analyses look alike. When you aren't sure yet, look for alternatives (additional confirmations) and you will find them often very quickly. As example when you see a long wick the market hit an S/R zone and is rejected. You can also look for Double Top/Bottom or for Trend Lines. As mentioned, when more traders take their profits or come in Volume must raise. When you are more into momentum indicators you will often find divergences. You see, the list is long and the more alternatives you find, the more traders there are who have the same opinion as you and the more likely the market will turn.


What you shouldn't do is to put your SL right below the Low or above the High of the Hammer. This is Kindergarten and then you call it stop-hunting or think the market wanted to diddle you. I don't recommend you to omit a SL, but set it more widely or use a fix SL with a certain amount. When you are already in, wait till the candle closes. When more long-wicked candles are formed, they call it "hammering out the bottom/top". The more candles there are, the stronger is the sign. Otherwise, when a candle closes below the (lowest) Hammer-Low or above the (highest) Hammer-High, close your position. The reversal pattern became a continuation pattern. I don't talk about 1 or 2 ticks, it should close visible under Low or over High. Don't get angry, you lost only a few pips and often the continuation of the trend will swipe away your loss right away.


So, it's on you to go through the charts and look for candles with long wicks. Don't care the exact relation of wick and body of a candle. You will quickly understand what a 'long wick' is.


Re: The most important candle on the chart

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The Art of Trading the professional way is to find important Sup/Res zone or lines and see how the market reacts to them. The more and more popular Market or Volume Profile can help to find them and to understand why the market reacts there and with some experience to set SL and TP. Price often runs from VAL to VAH or res versa or breaks out and runs back to VAH/VAL. POC are often points where the market stopps.



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