Let's continue the lecture having a look at the second part of the chart. We have here a very strong
green candle, probably there has been a news at this point that also helped the price to go higher.
And actually you can see that the price hit the top of the channel before going back, forming this upper
shadow.
What happens next?
We have a red candle and a small green candle
that has the same shape of a shooting star,
even if it doesn't appear at the end of the uptrend because it is at a lower price. There isn't a clear
signal at this point that sellers are taking control.
Going on, we see that there are around five, six candles that express indecision after the strong
up move.
This candle can be considered as a master candle.
I draw the lines and you can see that it is bigger than all the following candles.
We have one, two, three, four, five, six, seven, eight. So seven candles with the eighth candle that is breaking
the high-low range of the master candle.
So this is a continuation pattern and we can expect the price to go higher.
So I'm going to cancel these two lines and we can see what happens after this continuation pattern.
The price actually goes higher as I expected
and it is trading near the top of the channel,
so the uptrend is quite strong at the moment.
Then we have this candle that may be considered as a long-legged doji, even if it has a small real
body,
so the price doesn't close exactly at the opening level,
but anyway the logic behind it is the same. It is quite easy to see that buyers and sellers were fighting
a lot and the price closes almost at the opening price. The following session is a bullish candle that
confirms that buyers are still on the market, pushing the price higher.
So the market continues to trade near the top of the up-channel.
Then there's a gap low
and we have a very rare pattern that we have also studied during the course, that is the Harami pattern.
I'm not going to consider this pattern, but at least I can say that with this gap low,
I want to monitor carefully what happens in the next sessions.
There is this long red candle that leaves no doubt:
the price is starting to go down.
This is also confirmed by the next candle,
that is another long red candle.
Let's go on to check what happens next on the market.
The price seems to go a bit higher even if there is no strong move,
actually you can see that here we have other candles that express indecision.
This is also normal we are in the middle of the up-channel,
so it's not a good idea to open here long positions
and it's not convenient to open short positions.
Of course if I still have my long positions I can decide to keep them because we are still in an uptrend.
But maybe we are in a retracement phase and the price is going down to the bottom of the channel.
The retracement seems to be real because after a short period, where the price goes up, there's another
strong red candle that forms another bearish engulfing pattern that pushes the price down.
So at this point I expect that the price continues to go down to reach the bottom of the channel.
Then we have alternate candles.
We have a small red candle, a green candle then another red candle followed by another green candle.
And then we have a doji.
So in this phase I'm not getting something significant from the market I'm not getting any strong signal
to place my long trade.
Then there are two red candles that push the price down to the bottom of the channel. You can see that
this shadow hits the bottom of the channel.
This is a good price to open a long position,
but of course I want to wait for a signal
and, unfortunately, all the following candles are not strong enough to let me think that buyers are taking
control of the market again.
So I wouldn't open any long trade at this point,
I can't see any good reason except for the up-channel. Going on, we can see that the price goes up again.
There hasn't been any clear signal to buy the couple,
but most of the candles are green and they are also quite strong.
So the price continues to follow the uptrend.
Here we have a tweezers top with the second candle that is also a doji.
So this is a double bearish signal and it actually worked because the retracement starts right after
the combination of bearish patterns. Then the price starts to go up again, heading to the top of the
channel. At the end of the chart,
we have two candles that can be considered shooting stars, especially the second one because it has a very
very small lower shadow.
So we are at the top of the channel and we have two shooting stars.
I would take my profit from my long positions and check what happens next because these two patterns
are warning me that sellers are starting to step into the market and a retracement may start very
soon. So we can go on and we can see that actually the price goes down and there are two long red candles
with the first one that also forms a bearish engulfing pattern. After the pattern,
we have another strong red candle, so the analysis was correct.
The price is going to the bottom of the channel again.
Then we have two small candles, another red candle that pushes the price even lower, then other three small
candles,
another one here and then the price goes definitely down, reaching the bottom of the channel.
This is not a surprise,
we were expecting the price to reach the bottom.
Also you can notice that there is a master candle here,
even if this shadow is going lower than the bottom level.
But the logic is still the same.
You can see that after this candle that continues to push the price down,
there is a period of indecision with candlesticks with a very small real body.
Then there is a red candle and another red candle that breaks the high-low range formed by the master
candle.
I delete these two lines and we can see the end of this chart with today's candle, that is still going
on.
For now, it looks like a doji, a long-legged doji to be more accurate. If it is closing like this,
I'm going to consider a long position.
I'm always happy when I find a good signal that also gets along with the main trend on the market.
So I will have the chance to buy at the bottom of this up-channel. So I know I've been a bit repetitive
in this video,
this is also because we have sometimes found the same pattern like the bullish or bearish engulfing pattern,
that is quite common in situation of a clear trend.
But this was necessary.
I want you to turn your brain on
when you analyze the market. Many traders just have a quick look at the chart and say: "oh there is
an uptrend,
the moving average is like this,
the stochastic oscillator is like this,
so everything is fine."
and in 20 seconds they have already analyzed the chart.
I will never stop saying this:
Forex trading is a real and a serious business.
You will not make any money opening the chart for 20 seconds and use a pre-determined scheme without applying
yourself.
So I hope you are still focused after this long analysis because we are approaching the part of the
course where we will see how to open a trade using different methods and different indicators.
So excited to get there.