Higher Probability Entries Using Candlesticks
In our live webinar sessions each day we emphasize taking trades in the direction of the Daily trend as they will be the trades with a higher probability of success.
Simply because a trader sees a trading signal to take a trade against the trend, does not mean they should take it. Ideally, in an uptrend traders should only be looking for signals to buy the pair.
A good example of this is shown on the 4 hour chart of the NZDUSD pair below…
A Shooting Star candle, as seen above, at the top of a bullish move signals a reversal in price action…in other words, a move to the downside. When checking the Daily chart of this pair, however, there is a strong uptrend that is in place. Hence, a trader would ignore this “counter trend” signal.
The blue Bullish Engulfing candle on the chart, however, signals taking a buy position. In this instance the trader would take the trade since it signals a higher probability trade…one in the direction of the overall trend.
Once the Bullish Engulfing candle closes, the trader would enter the trade at the open of the next candle with a stop below the lower wick of Bullish Engulfing Candle.
If you are a live client and want to learn more about Candlestick interpretation, click HERE for access to our Trading Course. When prompted for a username and password, put in your live account login credentials and scroll down to the section on Candlesticks.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.