Believe it or not, there are only three types of candles that can occur on a chart:
- (Candle Type 1)
- Up or Down Bar (Candle Type 2)
- Bar (Candle Type 3)
A Type 1 represents a balance in the market between buyers and sellers. The next candle after a Type 1 candle can often predict a future move. The longer timeframes are more dominate than the shorter timeframes.
This chart uses a simple indicator that I have programmed called 'Candle Type' to get a trader thinking only about the three candle types. The link to this Pine Script is here:
The script is free and is in the public script list on Tradingview.
There is no need to use lagging indicators in trading such as SMAs and other indicators that are calculated using historical prices. They may work from time to time because large groups of other traders will be using them. However, generally lagging indicators will not work all the time or will work until they don't. analysis is much more simplified.
The analysis of strikes at the heart of real trading. That is, the battle between buyers and sellers that are working with different time horizons against each other.
This form of trading can be further researched on Twitter using the hashtag #TheStrat