Trend from the open candlestick trading
Although it is not a common thing among Forex traders, it is possible to detect a trend from the open candlestick trading.
But this is recommended for experienced traders since the trader has to take too many factors into consideration.
From an open candlestick, the trader can only scalp.
And the trader should place a trade at the beginning of the formation of the candlestick or
just after a very short while once the candlestick begins to form.
When scalping, you place a buy order if the trend of the open candlestick is bullish and a sell order
when the trend of the open candlestick is bearish.
Reversal day candlestick trading
It is very rare for the trend of the market prices to be continuous throughout the day.
Usually, in a day, the trend will have several reversals which the trader should be able to recognize.
A reversal is a movement in the opposite direction of the main trend of the market prices.
For example, you may have a bullish trend and then a hammer forms followed by candlesticks
that take a downward trend for a short period before resuming their bullish (upward) trend.
However, the trader should be very careful to distinguish trade reversals from a change of the trend.
There are some types of candlesticks like the Morning Star, Abandoned Baby, Dragonfly Doji
Doji Star and hammer among much more than point to trend reversals.
Common trend pattern candlestick trading
In candlestick trading, the common trend pattern is easily recognizable since it entails the formation of several candlesticks
in a certain trend. The trend can either be bullish (upward) or bearish (downward).
For example, the trader may observe the formation of candlesticks within a duration of 12 hours in an upward trend,
which becomes a sign that there is a probable bullish trend. The vice versa is also applicable.
However, to observe a common trend pattern, it is advisable for the trader to analyze data (candlesticks) over a long duration of time.
This will give a more precise insight into the type of trend pattern of the market prices.
Signs of strength candlestick trading
When using the candlestick trading strategy,
the trader has to be aware of the signs of the strength of the patterns or trend,
which is depicted by the types of the formed candlesticks.
There are various signs or pointers to the strength of a trend using the candlestick trading pattern.
Below are some but not all of these signs:
i.The formation of a long bullish candlestick that is followed by small candlesticks which form a brief
downtrend without exceeding the low of the first candlestick. Then, if the fifth bullish candlestick closes at a new high
it is an automatic sign that a bullish mood has resumed.
ii.Formation of an Evening Star, which is a small candlestick that gaps upward, showing
indecisiveness between buyers and sellers and pointing to a potential trend reversal.
If a bearish candlestick form, then it is a sign of a strong bearish trend.
iii.The formation of a long bearish candlestick, which is followed by small candlesticks that form a brief uptrend
without exceeding the high of the first candlestick. If a fifth bearish candlestick closes at a new low it a sign of a bearish trend.
Two legged candlestick trading
The two legged candlestick trading is considered one of the easiest to use and profitable trading strategies.
In a short explanation, the two-legged candlestick trading involves counting two legs.
Each leg is divided into two sections; an upward moving part and a downward moving part.
In counting the two legs, the trader has to count all the four sections of the two legs (because each leg has two sections).
For example, the trader may notice a downward trend of candlesticks followed by the formation of a hammer which implies a
change of direction
(this is counted as the first section of the first leg). Then after changing the direction,
several candlesticks are formed in an upward direction followed by the formation of a hammer
(this implies the second section of the first leg). Then the trader should wait for a similar pattern of
candlestick formation for the second leg to be completed.
The trader can then place a trade after the second leg.
However, the two-legged pullbacks that follow strong momentum are best for better quality setups.
But very strong trends usually have single leg pullbacks and the trader should just be patient and
allow himself or herself to miss the trades until there is a two-legged pullback.