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Thread: Another view in understanding more about Candlestick patterns / Chart patterns

  1. #1
    Trader ara's Avatar
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    Another view in understanding more about Candlestick patterns / Chart patterns

    Hello guys, today I made this article relating to candlestick patterns / chart patterns. I took this topic based on my personal observations.

    As we know there are tons of candlestick patterns and chart patterns, we can find lots of articles related to this on the internet. Here I will not discuss candlestick patterns and chart patterns in general, because maybe you already know about it, and also you can find it in another articles, or on Google.

    Here I will talk about how to understanding candlesticks even further, certainly based on personal observation. So if you have your own view of candlestick / chart patterns, please share here.

    Example:

    My observation of engulfing candlestick patterns, if we double the time frame, then engulfing candlesticks will become a pinbar.



    From the image above, bullish engulfing on H1 will be a bullish pinbar/ hammer on H2.
    This will also apply to other time frames, for example .... engulfing on M15 is pinbar on M30.

    Conclusion:
    A engulfing is a pinbar if we double the time frame. But the a pinbar is not always a engulfing if we divide the time frame.
    Example : engulfing on H1 is a pinbar on H2, but a pinbar on H1 is not always a engulfing on M30.

    Benefits:
    If you find a pinbar (near support / resistance), then you can check at a lower time frame (time frame divided by 2). If it is engulfing, then it is a good signal to enter the market.
    Example : If you find a bullish pinbar on H1 (near support/resistance), you check on M30, if you see a bullish engulfing on M30, then it's a good signal to open buy. This is just like a double confirmation signals.

    Okay, that's only one of my observation, if you have your own observation related to candlesticks and charts, please share here.

    I try not to leave this thread and will be updated every time as long as I have free time.

    Best of luck, have a nice day, happy trading, and so on and so forth

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  2. #11
    Trader ara's Avatar
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    Quote Originally Posted by Killer_Queen View Post
    another example of chart patterns, i suppose because each breakouts and reversals can be analyzed by drawing the lines and this requires nothing but only focus on watching market chart. i also draw these lines to mark where i want to enter and place my stops to avoid unexpected things from market. so far trading with this method is very satisfying for me as we both using the similar ways of analysis, without indicators.
    When traders are familiar with chart patterns without indicators, they will always be comfortable while still using price action without indicators. And I think all traders will do that when they already have enough experience and are tired of searching trading strategies using various combinations of indicators, finally starting learning price action trading and always thinking simple in analyzing the market without indicators. Maybe that will be experienced by all beginners in the next stage after having a lot of experience.

    This time I will share (for beginners) how to hold and add positions several levels based on signals at different time frames.

    Hold and add multi-level positions
    Beginners, they will usually feel fear when they have a running profit position, they often close profit positions in a hurry, but they dare to let loss positions thousands of pips without cut loss.

    Another case is, they dare to do averaging in a state of loss, but do not dare to do averaging in a state of profit. Why? I don't know, it's just a reality that I also felt when I was a beginner.

    Here I will share how to hold profit positions and add new positions according to the signals we find at different time frames.

    Suppose I'll trade on eur/usd. I will use Daily time frame in analyze the chart and determine a support and resistance. Then I will use lower time frame for entry confirmation, m15 to daily time frame. I don't use m1 time frame.

    1. Check on the daily time frame, I see the market is in the consolidation area, mark high and low as the support and resistance.



    2. Switch to M5 time frame to find entry confirmation, I get a sell signal for entry short. Entered 1st sell.



    3. Switch to M15 time frame to see the pattern on this time frame. I see the signal for entry short again in this time frame. Entered 2nd sell.



    4. Swith to m30 time frame, to see the pattern on this time frame. There are signal for short entry too in this time frame at the same time with M15. So I just need to hold my poitions.



    5. Switch to H1 time frame, see the pattern on this time frame, There are signal for short entry too in this time frame at the same time with M15 and M30. So I just need to hold my positions.



    6. Switch to H4 time frame to see the pattern on this time frame, there are a signal on this time frame for short entry. Entered 3rd SELL



    7. Finally switch to Daily time frame to see the pattern on this time frame, there are a signal on this time frame for short entry. Entered 4th SELL



    8. Just hold and wait until the price touch the target point near support level. Be a wise to put stop loss for each positions. Or can use trailing stop or moving stop manually.



    Viewing on H1 time frame


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    Last edited by ara; 09-13-2018 at 03:50 AM. Reason: add new images

  3. #12
    Trader layigold's Avatar
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    You have really done a nice job here and I must give you a thumb up for that . I have been able to learn one or two things from your thread here though I am a price action trader myself but I do not despise the ideas my colleague traders have to offer. How you check through different time frames to look for trading opportunities is in deed eye opening and I am sure that the risk must be well managed on each position added . I will even prefer to move the stop loss as the trade runs in favor to lock in some profits

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  4. #13
    Trader Batavia's Avatar
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    a good thread from TS, price action is a type of technical analysis that is very popular and widely used by forex traders and which I know about price action there are two types that are candle pattern and chart pattern and as forex traders we should learn both, i use this and not use indicator and only use fibonacci. i depend on price action and fibo.

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  5. #14
    Trader Azis Muslim's Avatar
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    Quote Originally Posted by ara View Post
    Beginners, they will usually feel fear when they have a running profit position, they often close profit positions in a hurry, but they dare to let loss positions thousands of pips without cut loss.

    Another case is, they dare to do averaging in a state of loss, but do not dare to do averaging in a state of profit. Why? I don't know, it's just a reality that I also felt when I was a beginner.
    Holding our trades longer will gonna takes much more than just simple understanding, really not compatible to beginners so it is often to see them make mistakes and close their trades earlier. Holding our trades with the help of candlestick patterns and combine them with support resistance is a great strategy and less frustrating because we do not need to watch over different indicators but simply through different time frames but stick to the same strategy.

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  6. #15
    Trader ara's Avatar
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    Quote Originally Posted by Batavia View Post
    a good thread from TS, price action is a type of technical analysis that is very popular and widely used by forex traders and which I know about price action there are two types that are candle pattern and chart pattern and as forex traders we should learn both, i use this and not use indicator and only use fibonacci. i depend on price action and fibo.
    Yes I think so, there are two types which usually been used for price action trading, candlestick pattern and chart pattern, learning market analysis using candlestick pattern and chart pattern is the simplest way in my opinion. But sometimes there are people who only understand the form of candlestick pattern and chart pattern in theory without understanding it in reality.

    Quote Originally Posted by Azis Muslim View Post
    Holding our trades longer will gonna takes much more than just simple understanding, really not compatible to beginners so it is often to see them make mistakes and close their trades earlier. Holding our trades with the help of candlestick patterns and combine them with support resistance is a great strategy and less frustrating because we do not need to watch over different indicators but simply through different time frames but stick to the same strategy.
    Based on my personal experience when I was a beginner, I honestly couldn't hold the position too long because of excessive fear.

    Candlestick patterns can be different at one time

    Have you ever seen a bearish candlestick pattern at a low time frame, but at the same time you see a bullish candlestick pattern at a high time frame?
    Example: Suppose you find a bullish pinbar pattern in H1 time frame (eur/usd), but when you move to H4, you see a bearish engulfing pattern in H4. (This is just an example), this is not impossible and often happens.

    So what's the right one? Which should we follow?
    The answer is nothing wrong between them, we can follow them with different targets.
    We can put buy to follow bullish H4 pattern with 100 pips target point (for example), and put sell to follow bearish H1 pattern with 20 target point (for example).

    The thing we have to understand is: The market is bumpy, the big trend in the low time frame does not mean the trend is in the high time frame too, it could even only be a correction in the high time frame. So both are correct depending on our target point.

    But what if we find 2 different patterns in the same time frame? Is that possible?
    Yes of course that is a possible thing if we watch 2 different broker charts with different server time.
    Have you ever opened two charts from different brokers at a time? Do you ever find different candlestick patterns from them? (in low time frames of course).
    Yes sometimes we can watch different candlestick patterns at once on 2 different brokers (same trading instrument).

    Because candlestick pattern depends on the opening price and closing price. The first thing we have to understand is about this.

    Example: Suppose there are 3 traders doing scalping (m5) at 3 different brokers with difference server time of each brokers.
    And at one time they found a signal at resistance level, they got a different signal each others.



    Trader A opens a long position as a signal to break out.
    Trader B does nothing, waits for the next one.
    Trader C opens short positions as a signal of reversal or pullback.

    It is possible, and in fact was so.
    The reason is because those three brokers have different time servers.
    Let's move to a lower time frame, in the form of a chart.





    Conclusion: Trading is about volume and time (based on my point of view). What should we do as a trader? Of course we can't do anything related to volume, but we can use the time, we can wait for the right moment to enter the market to make profit, and "patience" is related to time.

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  7. #16
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    I think you are talking about the candlestick types and its chart patterns. To understand the market chart patterns we must understand its types which are help us to enter and exit into a trade on time. Only learning of these chart patterns is not enough for us we must work with these patterns on demo trading account to get experience with these patterns then we can use them in trading and make easily profit from this business.

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  8. #17
    Trader Killer_Queen's Avatar
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    Quote Originally Posted by ara View Post
    When traders are familiar with chart patterns without indicators, they will always be comfortable while still using price action without indicators. And I think all traders will do that when they already have enough experience and are tired of searching trading strategies using various combinations of indicators, finally starting learning price action trading and always thinking simple in analyzing the market without indicators. Maybe that will be experienced by all beginners in the next stage after having a lot of experience.
    seems legit to me but i do not put a little time frame such as m5 to confirm my trading signal or to place the entry because candlestick patterns will never work in small time frames but only show us false alarm, or temporary. the rest of your explanation is completely detailed which i also come up with that mind and work that way with my strategy. more or less, it is technical analysis we are doing and we sure get the best result from the things we understand a lot.

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  9. #18
    Trader layigold's Avatar
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    Checking multiple time frames as a price action trades would help you make a valid judgement and conclusion . If you really understand what this thread talks about , you will agree with my point here . What you see on lower time frames is simply summarized in higher time frames and with that you can easily take a reasonable guess of what price may do but you will need to manage the risks of trading properly since you know that anything can happen in forex trading

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  10. #19
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    layigold, multiple time frames are best for our understanding but it not means we use it always, we need to check all time frame but place order where we are sure, its not about analysis but its about our signal validity, if we are using smaller time frame its validity will be less time, if we are using higher time frame its validity will for higher time frame, so its on trader how and what he is doing,for better trading we need to be good trader and we need to check all factors which can save us and can make us able to earn

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  11. #20
    Trader Sascha's Avatar
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    Quote Originally Posted by naeem555 View Post
    layigold, multiple time frames are best for our understanding but it not means we use it always, we need to check all time frame but place order where we are sure, its not about analysis but its about our signal validity, if we are using smaller time frame its validity will be less time, if we are using higher time frame its validity will for higher time frame, so its on trader how and what he is doing,for better trading we need to be good trader and we need to check all factors which can save us and can make us able to earn
    i use multiple time frames always because that's how i got my conclusion of analysis which coming from different time frames. i won't do any trade when i can't find any explanation from one or more time frames that's not supporting my strategy. for some traders this looks so tiring to do and i admit it is. but since i always willing to do anything necessary then i don't mind to get tired all the time because of analyzing market since it's my job as a forex trader.

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