BTCUSD - Trend reversal signal just by 3 candlesticks!
As a trader or trader wannabe, this is an important lesson that goes a long way. Trust me, it may sound simple but it actually took me a long time to grasp the full concept and then apply it in my trading.
This is BTC on the weekly time frame, if you are scalping the market or even just day trading, you don't really need to take reference with this time frame. Large time frame such as Weekly and Monthly are mainly used for position trading and intraday movement don't really affect this type of trading. What confuses me at the beginning was the expectation as to when price movement will occur. Has it even happen to you somebody tells you that you are trading on the wrong time frame?
So back to BTC , which enjoy such a good bull run from April to end May, a series of long green candles. On 27 May close, we see a small skinny candle, yes traders should know this is called a candle. What this tells me is the sellers are coming in and buyers are being challenged. One way of intepreting the psychology of those traders that bought BTC at say $5000: "Come on, price is already so high! Shouldnt we be thinking of taking profit already?" Hence, a is an indication of indecision in the market and there is no clear direction.
Let's look at the next candle that closed on 3 June, a convincing Red Candle. Not only is this candle long, it also has no upper tail and look where it closes, covering the whole candle. This is a clear signal that the Bears won and the "Big Picture" (Weekly Time frame) uptrend has ended. Having said that, do I just go in blindly and short BTC? Of course not, there are much to it in trading and alot depends on your trade portfolio and objectives. I am ready for the next move, have you plan out yours? :)
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