- Always wait for the daily closing of the candle to determine the next movements.
- Lows are determined by rising candles, while highs are determined by falling candles.
- A penetrating bullish candle closure on a formed low, the return can be between 30% – 50% of the candle.
- A rising candlestick closure with little volume in a formed low, the return can be between 100% – 140% of the candle.
- Diagonals should be drawn above each high and low formed during the move.
- When the trend accelerates, the price will not touch the support diagonally and will form a new trend angle to be plotted, if the new support is broken, we should expect a retracement to the previous trend angle.
- Patterns can also be imperfect in their shapes, however, a proper count of highs and lows allows you to keep reading the price.
- A high formed by a long wick is a sign of a high taken offer, the price can start to form a rising wedge or fall drastically.
- A minimum formed by a long wick is a sign of a strong area of demand taken, the price can start to form a falling wedge or rise dramatically.
- If the high range of a pattern is exceeded by the closing of a candle, the price will continue to rise to a new zone of supply, if the subsequent retreat remains above that range, the chances of continuing upwards are very high.
3 useful tips when deciding to do an operation:
- Never forget that the odds of a long trade being a winner increase when your entry is as close to the demand zone as possible.
- Don’t make your entry immediately when the price reaches a demand zone, always expect the price to form an HL above the previous low, if the price action does not show a reversal pattern, the price will not go up.
- Never forget to place your stop losses, they allow you to save time and adjust your loss tolerance based on the risk level of the current scenario.
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