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Candlestick Trading Strategy 1.0

The Candlestick Trading Strategy is based on price action where, we look for one specific candle from four perspectives.

Overall the candlestick trading strategy includes the following:

1- Understanding of candlestics

2- 50 SMA

3- 200 SMA

4- MACD (not a must)

5- Horizontal lines and trend lines

Let’s start with the candlestick. We will be looking for one specific candlestick in both bullish and bearish market and will aim for trend continuation and correction/reversal entries.

We will call this specific candle a “Sword Candle“,  which means the candle needs to have a long shadow, a small body and a small shadow from the other end.


The following are the structures that we will look for:

In bullish market

Condition 1:

Both 50 and 200 SMAs are sloping upwards or 1 of the SMAs slope upwards and the other one is flat. It is important to make sure that neither of the SMAs is showing downwards.

Condition 2:

It is preferable to see the candles above both of the SMAs

Condition 3:

The body of the candle can be maximum 20% of the total size of the candle (top to bottom)

Reversal Candlestick formation:

 

The sword candle needs to show upwards. The long shadow of the candle needs to be up and the short shadow down.

Short targets will be at 61.8% and 38.2% Fibonacci retracement zones. as per the video

Continuation candlestick formation:

The sword candle needs to show downwards. The long shadow of the candle needs to be at the bottom and the short shadow must be at the top.

Long targets will be as much as 1.5 times of the total size of the previous wave as per the video

In bearish market

Condition 1:

Both 50 and 200 SMAs are sloping downwards or 1 of the SMAs slope down and the other one is flat. It is important to make sure that neither of the SMAs is showing up.

Condition 2:

It is preferable to see the candles below both of the SMAs

Condition 3:

Candle structure similar to bullish version

Reversal Candlestick formation:

The sword candle needs to show down. The long shadow of the candle needs to be down and the short shadow up.

Long targets will be at 61.8% and 38.2% Fibonacci retracement zones. as per the video

Continuation candlestick formation:

The sword candle needs to show up. The long shadow of the candle needs to be at the top and the short shadow must be at the bottom.

Short targets will be as much as 1.5 times of the total size of the previous wave as per the video.

This is the introduction to the Candlestick Trading Strategy.  The next session will add more details to the strategy.

Sign up for Candlestick Trading Strategy 2.0 live webinar now.

 

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