Inside a Candle: How to Read Hidden Order Flow Without a DOM
Difficulty: 🐳🐳🐳🐋🐋 (Intermediate+)
This article is for traders who want to understand the “story” behind a candle’s shape — and learn to spot aggressive buying/selling, absorption, and traps without needing footprint or order book tools.
🔵 INTRODUCTION
Most traders see candles as static shapes — green or red, big or small. But each candle is a battlefield of orders . Even without access to a DOM or volume footprint, you can still extract valuable information from just the candle's body, wick, and context .
🔵 ORIGINS: WHERE CANDLESTICKS COME FROM
Candlestick charts trace back to 18th-century Japan, where rice traders needed a way to visualize price movements over time. A legendary trader named Munehisa Homma , who traded rice futures in Osaka, is credited with developing the earliest form of candlestick analysis.
Homma discovered that price wasn’t just driven by supply and demand — but also by trader psychology . He created visual representations of market sentiment by tracking:
The opening and closing price of rice
The highest and lowest price reached during the session
This system became known as the “Sakata rules,” and it laid the foundation for many patterns still used today — such as Doji, Engulfing, and Marubozu.
Western traders only began using candlesticks widely in the 1990s, when analyst Steve Nison introduced them to the broader financial world through his book Japanese Candlestick Charting Techniques.
Today, candlesticks remain one of the most powerful and intuitive ways to visualize order flow, momentum, and market psychology — even without a Depth of Market (DOM) or depth of book.
In this article, you’ll learn how to read hidden order flow by analyzing:
Wick length and positioning
Body-to-range ratios
Candle clustering and sequences
🔵 HOW A CANDLE FORMS
Before you can read a candle, you need to understand how it comes to life . A single candle represents the full auction process during its time window.
Here’s how it builds, step by step:
Candle opens — this is the open price .
As price moves up during the session → the high] updates.
As price moves down → the low] updates.
The final traded price when the time closes → this becomes the close price .
The wick = price areas that were tested but rejected
The body = where the majority of aggressive trades occurred
If buyers push price up quickly but sellers slam it down before the close — the candle will have a long upper wick and close near the open, revealing seller absorption.
Understanding this flow helps you recognize traps, fakeouts, and reversals in real time.
🔵 CANDLE BODY: WHO'S IN CONTROL
The body of the candle reflects the result of the battle between buyers and sellers. A wide body with minimal wicks means dominance and commitment.
Big body, small wick → clear conviction
In an uptrend: buyer aggression
In a downtrend: panic or aggressive selling
Small body, long wicks → indecision, absorption, or trap
Often appears near tops/bottoms
Indicates both sides were active but neither won clearly
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🔵 WICKS: THE SHADOWS OF REJECTION
Wicks are not just “leftovers” — they show where price was rejected after being tested.
Long upper wick = seller presence or absorption at highs
Long lower wick = buyer defense or trap spring
Double wick = liquidity sweep / false breakout
Use wick direction to spot:
Failed breakouts
Smart money traps
Exhaustion candles
🔵 HIDDEN ORDER FLOW PATTERNS
1️⃣ Absorption Candle
A large wick with little movement afterward — shows that big orders absorbed market pressure.
2️⃣ Trap Candle
A candle that sweeps above/below a key high/low and closes opposite — classic smart money fakeout.
3️⃣ Imbalance Candle
Large-bodied candle that closes near the high/low with no wick on the other end — implies one-sided aggression (and often leaves an imbalance).
🔵 CLUSTERING & SEQUENCES MATTER
Never read a candle alone. The sequence of candles tells the full story:
3+ rejection wicks near resistance? Liquidity building before breakout or trap
Bearish engulfing after long upper wick = smart money selling into retail buying
Tight-range dojis + volume spike = compression before expansion
Context + volume + structure = hidden flow decoded.
🔵 PUTTING IT TOGETHER: A REAL EXAMPLE
Price breaks above previous high
Candle closes with long upper wick and smaller body
Next candle opens, dumps fast, leaving imbalance behind
Buyers trapped — move likely to continue down
This is how you read order flow from candle anatomy .
🔵 TIPS FOR MASTERY
Use a lower timeframe (1M–5M) to see microstructure
Watch how wicks behave near S/R or OBs
Confirm with volume spikes or delta-style indicators
Use replay mode to slow down the story and study cause/effect
🔵 CONCLUSION
Every candle is a message. You don’t need expensive tools to read order flow — just your eyes, context, and curiosity.
Learn to see candles not as symbols, but as evidence of behavior . Absorption, imbalance, and traps are all visible if you look closely.
Chart Patterns
Wedge Pattern: A Key to Trend Reversals and Continuations📈 Wedge Pattern: A Key to Trend Reversals and Continuations
A wedge pattern is a technical chart formation that signals a potential reversal or continuation in the market. It’s formed when price moves between two converging trendlines — either sloping upward or downward — creating a narrowing range over time.
There are two main types of wedge patterns:
🔻 Falling Wedge (Bullish)
Formed during a downtrend or as a correction in an uptrend.
Characterized by lower highs and lower lows, with the slope of the support line steeper than the resistance line.
Typically signals a bullish reversal as momentum builds for a breakout to the upside.
✅ Confirmation: Break above the resistance line with volume surge.
🔺 Rising Wedge (Bearish)
Appears during an uptrend or as a correction in a downtrend.
Shows higher highs and higher lows, but the support line is steeper than the resistance line.
Often leads to a bearish reversal, especially when volume declines into the pattern.
⚠️ Confirmation: Break below the support line with increasing volume.
🧠 Key Characteristics
Volume tends to decrease as the pattern forms, indicating a pause in momentum.
The breakout direction (up or down) determines whether it’s a continuation or reversal signal.
Wedges can appear on any time frame and are useful for both day traders and long-term investors.
📊 Trading Tip
Always wait for confirmation of the breakout before entering a trade. False breakouts can be common, especially in low-volume environments
Smart Liquidity in TradingIntroduction: What Is Smart Liquidity in Trading?
Liquidity is the backbone of financial markets—it refers to how easily assets can be bought or sold without causing drastic price changes. But as markets have evolved with the rise of algorithmic trading, decentralized finance (DeFi), and AI, a more sophisticated concept has emerged: Smart Liquidity.
Smart Liquidity isn’t just about having buyers and sellers in a market. It’s about efficient, dynamic, and intelligent liquidity—where technology, data, and algorithms converge to improve how trades are executed, how markets function, and how risks are managed. Whether in traditional stock markets, forex, or blockchain-based platforms, smart liquidity is now central to modern trading strategies.
Chapter 1: Understanding Traditional Liquidity
Before diving into smart liquidity, let's revisit the basics of traditional liquidity:
Bid-Ask Spread: A narrow spread indicates high liquidity; a wide one shows low liquidity.
Market Depth: The volume of orders at different price levels.
Turnover Volume: How frequently assets are traded.
Price Impact: How much a large order moves the price.
In traditional finance, liquidity providers (LPs) include:
Market makers
Banks and financial institutions
High-frequency trading firms
Exchanges
Liquidity ensures:
Stable pricing
Smooth trade execution
Lower transaction costs
Chapter 2: The Evolution Toward Smart Liquidity
What Changed?
Algorithmic Trading: Algorithms can detect, provide, or withdraw liquidity in milliseconds.
Decentralized Finance (DeFi): Smart contracts offer on-chain liquidity pools without intermediaries.
AI & Machine Learning: Predictive models can identify where liquidity is needed or likely to shift.
Smart Order Routing (SOR): Optimizes trade execution by splitting orders across multiple venues.
These technologies gave rise to “smart liquidity,” where liquidity is not static but adaptive, context-aware, and real-time optimized.
Chapter 3: Components of Smart Liquidity
1. Liquidity Intelligence
Advanced analytics track:
Market depth across exchanges
Order flow trends
Latency and slippage statistics
Arbitrage opportunities
This helps institutions dynamically manage their liquidity strategies.
2. Smart Order Routing (SOR)
SOR systems:
Automatically split large orders across venues
Route based on fees, liquidity, latency, and execution quality
Reduce market impact and slippage
SOR is key in both equity and crypto markets.
3. Algorithmic Liquidity Providers
Market-making bots adjust quotes in real-time based on:
Volatility
News sentiment
Volume spikes
Risk exposure
They enhance liquidity without manual intervention.
4. Automated Market Makers (AMMs)
Used in DeFi:
No traditional order book
Prices determined algorithmically via a liquidity pool
Traders interact with pools, not people
Popular AMMs: Uniswap, Curve, Balancer.
Chapter 4: Use Cases of Smart Liquidity
1. HFT Firms and Institutions
Use predictive liquidity models
Deploy SOR to reduce costs and slippage
Balance exposure across markets
2. Retail Traders
Benefit from tighter spreads and faster execution
Use platforms with AI-driven order matching
3. Decentralized Finance (DeFi)
Anyone can provide liquidity and earn fees
Smart liquidity enables 24/7 trading with no intermediaries
New protocols optimize capital allocation via auto-rebalancing
4. Stablecoin & Forex Markets
Smart liquidity ensures 1:1 peg stability
Algorithms prevent arbitrage imbalances
Chapter 5: Key Metrics to Measure Smart Liquidity
Metric Description
Slippage Difference between expected and actual execution price
Spread Efficiency How close bid-ask spreads are to theoretical minimum
Fill Rate How much of an order is filled without delay or rerouting
Market Impact Price movement caused by a trade
Liquidity Utilization How efficiently capital is allocated across pairs/assets
Latency Time taken from order input to execution
These metrics help evaluate the quality of liquidity provided.
Chapter 6: Risks and Challenges of Smart Liquidity
Despite its benefits, smart liquidity isn’t perfect.
1. Flash Crashes
Caused by sudden withdrawal of liquidity bots
Example: 2010 Flash Crash in U.S. equities
2. Manipulation Risks
Predatory algorithms can spoof or bait other traders
"Liquidity mirages" trick algorithms
3. Smart Contract Failures (DeFi)
Vulnerabilities in AMMs can drain entire liquidity pools
Hacks like those on Curve and Poly Network show smart liquidity can be fragile
4. Impermanent Loss (DeFi)
LPs may lose value if asset prices diverge significantly
Complex math and simulations needed to manage it
5. Regulatory Uncertainty
Especially in crypto, regulators still debating on decentralized liquidity protocols
Conclusion
Smart liquidity represents the next evolution of market infrastructure. It's not just about having capital in the market—it's about how that capital moves, adapts, and executes.
From hedge funds deploying intelligent routing systems to DeFi users earning yields through AMMs, smart liquidity touches every corner of modern finance. As technology continues to mature, expect liquidity to become even more predictive, responsive, and intelligent—unlocking a new level of speed, precision, and access for traders around the world.
Determining HTF Bias For Next Candle (CRT)The image shows candlestick patterns for determining HTF bias for the next candle based on close and wick positions relative to price levels:
1. Close Above - Higher Price: White candle closing above a key level (bullish bias, suggests upward continuation).
2. Close Below - Lower Price: Black candle closing below a key level (bearish bias, suggests downward continuation).
3. Wick Above - Lower Price: Long upper wick rejected above a level (bearish bias, indicates seller control).
4. Wick Below - Higher Price: Long lower wick rejected below a level (bullish bias, indicates buyer support).
Chart Patterns - How to read them like a ProChart patterns are visual formations on price charts that help traders anticipate potential market movements.
These patterns fall into three main categories: bullish , bearish , and indecisive .
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1. Bullish Chart Patterns
Bullish patterns often signal that price is likely to move upward.
1.1 Bull Flag
* What it looks like: A sharp upward move followed by a small downward-sloping rectangle (the flag).
* Meaning: After a strong rally, the price consolidates briefly before continuing higher.
* Key insight: A breakout above the flag typically signals a continuation of the trend.
1.2 Pennant (Bullish)
* What it looks like: A strong upward move followed by a small symmetrical triangle.
* Meaning: Similar to the bull flag, but the consolidation takes a triangular form.
* Key insight: Once price breaks above the pennant, the uptrend often resumes.
1.3 Cup & Handle
* What it looks like: A “U”-shaped curve (the cup) followed by a small downward drift (the handle).
* Meaning: This pattern suggests a period of accumulation before price breaks higher.
* Key insight: A breakout above the handle signals the beginning of a new bullish leg.
1.4 Inverse Head & Shoulders
* What it looks like: Three low points, with the middle low being the deepest.
* Meaning: This reversal pattern appears after a downtrend and signals a potential change to an uptrend.
* Key insight: A breakout above the “neckline” confirms the reversal.
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2. Indecisive Chart Patterns
These patterns show market hesitation, where neither bulls nor bears are clearly in control.
2.1 Consolidation Channel
* What it looks like: Price moves within a horizontal channel.
* Meaning: Market is moving sideways with no strong trend.
* Key insight: A breakout in either direction often leads to a significant move.
2.2 Symmetrical Triangle
* What it looks like: Two converging trend lines forming a triangle.
* Meaning: This is a neutral pattern that can break out in either direction.
* Key insight: Traders wait for a breakout before taking a position.
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3. Bearish Chart Patterns
Bearish patterns signal a high probability of downward price movement.
3.1 Bear Flag
* What it looks like: A sharp decline followed by a small upward-sloping rectangle.
* Meaning: After a strong drop, price consolidates before continuing lower.
* Key insight: A breakout below the flag suggests a continuation of the downtrend.
3.2 Pennant (Bearish)
* What it looks like: A sharp downward move followed by a small symmetrical triangle.
* Meaning: Similar to the bear flag, but the consolidation takes a triangular form.
* Key insight: A breakout downward typically resumes the bearish trend.
3.3 Inverse Cup & Handle
* What it looks like: An upside-down cup with a small upward drift forming the handle.
* Meaning: Indicates weakness after an uptrend, often followed by a drop.
* Key insight: A break below the handle usually signals a strong bearish move.
3.4 Head & Shoulders
* What it looks like: Three peaks, with the middle one being the highest.
* Meaning: A classic reversal pattern that indicates a potential shift from an uptrend to a downtrend.
* Key insight: A break below the “neckline” confirms the bearish reversal.
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How to Use These Patterns
* Combine pattern recognition with support/resistance, volume, and indicators for stronger confirmation.
* Always wait for breakouts and avoid acting too early.
* Manage risk with stop-loss orders.
Fibonacci Arcs in Stock TradingFibonacci Arcs in Stock Trading
Fibonacci arcs, derived from the renowned Fibonacci sequence, offer a compelling blend of technical analysis and market psychology for traders. By mapping potential support and resistance areas through arcs drawn on stock charts, these tools provide insights into future price movements. This article delves into the practical applications of Fibonacci arcs in trading, their interplay with market psychology, and best practices for effective use.
Understanding Fibonacci Arcs
The Fibonacci arc indicator is a unique tool in technical analysis derived from the famed Fibonacci sequence. It’s crafted by drawing arcs at the key Fibonacci retracement levels - 38.2%, 50%, and 61.8% - from a high to a low point on a stock chart. Each curve represents potential support or resistance areas, offering insights into the stock’s future movements.
The art of arc reading, meaning interpreting these curves, is crucial for traders. When a stock approaches or intersects with an arc, it reflects a significant reaction level. For instance, if a stock price touches or nears an arc, it could face arc resistance, indicating a potential halt or reversal in its trend.
Applying Fibonacci Arcs in Trading
In the stock market, these arcs serve as a guide for traders seeking to anticipate future price movements. When applied correctly, they can provide critical insights into potential support and resistance levels. Here's a step-by-step look at how you may use them effectively:
- Identifying High and Low Points: Begin by selecting a significant high and low point on the stock's chart. In an uptrend, it’s the most recent swing high to a previous swing low, and vice versa. These are the anchor points.
- Drawing the Arcs: Once the points are selected, draw the arcs at the Fibonacci retracement levels of 38.2%, 50%, and 61.8%. They radiate from the chosen low point to the high point (or vice versa), cutting across the chart.
- Interpretation: Watch how the stock interacts with these lines. When the price approaches an arc, it might encounter resistance or support, signalling a potential change in trend or continuation.
- Timing Entries and Exits: Traders can use the arcs in the stock market as a tool to time their trading decisions. For instance, a bounce could be a signal to enter a trade, whereas the price breaking through might suggest it's time to exit.
Fibonacci Arcs and Market Psychology
The effectiveness of Fibonacci arcs in trading is deeply intertwined with market psychology. They tap into the collective mindset of traders, who often react predictably to certain price levels. The Fibonacci sequence, underlying this tool, is not just a mathematical concept but also a representation of natural patterns and human behaviour.
When a stock nears a curve, traders anticipate a reaction, often leading to a self-fulfilling prophecy. If many traders make an arc stock forecast, they might sell as the price approaches a certain point, causing the anticipated resistance to materialise. Similarly, seeing support at an arc can trigger buying, reinforcing the tool’s power.
This psychological aspect makes Fibonacci arcs more than just technical tools. They are reflections of the collective expectations and actions of market participants, turning abstract mathematical concepts into practical indicators of market sentiment and potential movements.
Best Practices
Incorporating Fibonacci arcs into trading strategies involves nuanced techniques for better accuracy and efficacy. Here are some best practices typically followed:
- Complementary Tools: Traders often pair this tool with other indicators like moving averages or RSI for a more robust analysis.
- Accurate Highs and Lows: It's best to carefully select the significant high and low points, as the effectiveness of the curves largely depends on these choices.
- Context Consideration: Understanding the broader market context is crucial. Traders usually use Fibonacci arcs in conjunction with fundamental factors to validate their analysis.
- Watch for Confluence: Identifying areas where Fibonacci levels converge with other technical signals can provide stronger trade setups.
- Practice Patience: Traders typically avoid making hasty decisions based solely on Fibonacci levels. It's usually better to wait to see additional confirmation from the price action.
Advantages and Limitations of Fibonacci Arcs
Fibonacci arcs are a popular tool in technical analysis, offering distinct advantages and some limitations in analysing stock movements. Understanding these can help traders leverage the tool more effectively.
Advantages
- Intuitive Nature: The Fibonacci sequence is a natural pattern, making the tool intuitive for traders to understand and apply.
- Dynamic Support and Resistance Levels: They provide dynamic levels of support and resistance, unlike static lines, adapting to changing market conditions.
- Versatility: Effective in various market conditions, the arcs can be used in both trending and sideways markets.
Limitations
- Subjectivity in Selection: The effectiveness largely depends on correctly identifying the significant high and low points, which can be subjective.
- Potential False Signals: Like all technical tools, they can generate false signals, especially in highly volatile markets.
- Requires Complementary Analysis: To maximise effectiveness, these curves are usually used alongside other technical indicators, as they are not infallible on their own.
The Bottom Line
Fibonacci arcs are invaluable tools in stock analysis, providing insights into market trends and potential price movements.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Trailing Stops:Let trades developTrailing stops are one of the most underused tools in a trader’s playbook. Most traders spend hours obsessing over entries, but then wing the exit or bail too early the moment a red candle appears. That’s where trailing stops come in. They give your trades room to breathe, while gradually reducing risk as price moves in your favour.
If you’ve ever caught a good move and felt unsure about how long to hold it, this one’s for you.
Here are three practical ways to trail your stop, stay in the trade, and help manage profitable trades objectively.
1. Trail Behind Structure
This is the simplest and most intuitive method. As the trade moves in your favour, you move your stop just behind the most recent swing high or low. In a long trade, that means raising your stop to sit just below the latest higher low. In a short, you drop it just above the most recent lower high.
This approach works best in clean, trending conditions. It gives the trade room to develop naturally without forcing you to guess the top. You won’t capture the absolute high, but you’ll often stay in the move longer than most.
It also keeps you in rhythm with the market. If the structure is broken, it’s a pretty good sign that the trend is changing or stalling and that’s a logical place to step aside.
Example:
Here’s a clean example of using structure to trail stops on a momentum trade. The entry came on a break and retest of resistance, with the initial stop placed just below the retest level. As the trade moved higher, a series of higher swing lows developed, providing clear reference points to adjust the stop.
It’s not designed to catch the exact top and that’s fine. The goal is to follow price action with minimal lag, using objective structure rather than guesswork.
EUR/USD Hourly Candle Chart
Past performance is not a reliable indicator of future results
2. Use Moving Averages
Trailing stops don’t have to follow every single swing. Sometimes, a smoother option is better, especially if you want to stay in a move that’s trending hard. That’s where moving averages come in.
A short-term exponential moving average like the 9 or 21 EMA can act as a dynamic trailing stop. As long as price remains above the average, the trend is intact and you stay in. If price closes below the EMA in a long trade, or you get a crossover in the opposite direction, that can signal an exit or at least a scale-down.
This method works best in fast, directional markets. It won’t suit every condition, but when the move is strong, letting a trade run along the moving average keeps things simple and stress-free.
Example:
In this short-term 5-minute chart example, the 21 EMA acts as a dynamic trailing stop. There are two common approaches. You can wait for a candle to close below the 21 EMA, or use a crossover trigger where the 9 EMA crosses under the 21 EMA. The choice depends on how tightly you want to manage the trade and how much room you are willing to give it.
S&P 500 5min Candle Chart
Past performance is not a reliable indicator of future results
3. Volatility-Based Stops (ATR)
When the market gets fast and messy, a fixed stop can either get hit too easily or feel too far away. That’s where volatility-based stops come in. The most common tool for this is the Average True Range (ATR).
Instead of using swing points, you trail your stop a set number of ATRs behind the current price. If ATR is rising, your stop gives the trade more room. If volatility shrinks, the stop tightens naturally. It’s an adaptive approach that works well in conditions where price is expanding or moving fast.
A popular setting is to use two times the current ATR value, but you can adjust it to suit your timeframe or risk tolerance.
Example:
This is a classic wedge breakout setup in gold. A trailing stop set at two times the ATR helps manage risk while giving the trade enough room to breathe. As price moves in your favour, the stop tightens automatically based on volatility. It’s worth remembering that trailing stops are only adjusted in one direction. Once set, they follow the move but are never loosened, which means the stop will eventually take you out as momentum fades or the market turns.
Gold Daily Candle Chart
Past performance is not a reliable indicator of future results
Decide on Your Technique BEFORE You Place the Trade
There’s no perfect way to trail a stop. Each method has its strengths. Structure-based stops keep you aligned with price action. EMAs are smooth and simple. ATR lets volatility do the work for you.
The most important thing is to make a decision before you place the trade. Know whether you’re using a manual swing method or a dynamic indicator. Know what would trigger a move in your stop, and what would keep it steady. Avoid changing the plan just because the trade gets emotional.
Trailing stops give you freedom. They let you step back, protect your capital and give your best trades a real chance to develop. Used properly, they enhance trade management consistency.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 85.24% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
HOW TO TRADE 'BIG CANDLE"This is an educational video showing a trade set up based on big candles.
This video is for information/education purpose only. you are 100% responsible for any actions you take by reading/viewing this post.
please consult your financial advisor before taking any action.
----Vinaykumar hiremath, CMT
Quick Lesson: How to Identify Trend ReversalKnowing when to enter the market can mean the difference between making a profit and incurring a loss. The chart above clearly compares two similar-looking scenarios with very different outcomes: the one you should aim for and the one you should avoid.
- On the left , we see a textbook example of a bullish reversal. After a significant downtrend, the market prints higher lows and begins forming an ascending support. This signals that selling pressure is fading and buyers are stepping in. Notably, there are usually lots of unfilled bags — latecomers who show strong demand below the current price level but never get their orders filled, and who then just hit the 'market buy' button, which adds fuel to the fire of pump.
- In contrast, the right side shows a very similar pattern — a downtrend followed by consolidation, but with crucial differences. Here, all prior liquidity zones have already been filled, meaning there is less incentive for buyers to support the price. The “same vector” suggests price action hasn’t changed direction, and a common short squeeze traps late buyers before resuming the decline. This is a common bull trap , where a temporary price pump gives false hope before another leg down.
To sum up , a REAL REVERSAL builds on structure, accumulation, and higher lows—whereas a FALSE BOTTOM is often characterized by brief rallies, exhausted liquidity, and no change in vector trend. Experienced traders wait for confirmation and accumulation before entering a position, not just a temporary pause in a downtrend.
ETH - BTC ETF News: What It Means for the Market+ China Rumors 🚨 ETH - BTC ETF News: What It Means for the Market + China Rumors 💥🌐
July just ended with a crypto bombshell 💣 — and the market is barely reacting.
Let’s break it down:
🧠 One part hard news.
🌀 One part geopolitical smoke.
🎯 All parts worth watching if you care about macro market shifts.
🏛️ SEC Approves Real BTC & ETH for ETF Flows (July 29)
Say goodbye to the cash-only ETF model.
The SEC now allows direct in-kind creation/redemption of Bitcoin and Ethereum in ETFs.
That means providers like BlackRock, Fidelity, VanEck can now use actual BTC/ETH, not just synthetic tracking.
✅ Bullish Impact:
💰 Real Spot Demand: ETF inflows = real crypto buying
🔄 Efficient Arbitrage: No middle step via cash = faster flows
🧱 TradFi + Crypto Merge: ETFs now settle with crypto — not just track it
🎯 Better Price Accuracy: Spot ETFs reflect true market value more cleanly
📉 The market reaction? Mild.
But don’t get it twisted — this is a structural reset, not a meme pump.
⚠️ But There’s a Bearish Angle:
🏦 Centralized Custody: Crypto now lives in Coinbase, Fireblocks vaults
⚠️ Network Risks: ETF performance now tied to ETH/BTC uptime
🧑⚖️ Regulatory Overreach: More hooks into validator networks, MEV relays
🌊 Volatility Risk: Panic redemptions = real BTC/ETH sold into open markets
Still, this is good news for Ethereum in particular.
Why? Because ETH isn’t just money — it’s infrastructure.
And now Wall Street is finally using it, not just watching it.
🇨🇳 And Then There’s China… Rumor or Tumor?
Crypto Twitter is swirling with unconfirmed whispers from July 29 that China may be prepping a major Bitcoin statement ahead of the BRICS summit.
But let’s be clear:
🚨 It’s a rumor. Or a tumor. 🧠
And like many tumors in crypto — there’s a 40% chance it brings bad news. 🤕
Still, here’s what’s being floated:
🧠 Speculations Include:
🔓 BTC re-legalization in “special finance zones” (HK-style)
🏦 BTC in national reserves (!)
🤖 CBDC integration or smart contract interoperability
⚒️ Return of official state-backed Bitcoin mining
🧯 But no official sources. Just geopolitics + timing.
China’s FUD/FOMO pattern is Bitcoin tradition — don’t get trapped by hopium.
But if even half of it is true... buckle up.
📈 Ethereum Leads the Charge — But Watch These Alts:
If ETFs go fully crypto-native, some sectors light up 🔥
🔹 1. Ethereum Layer 2s (ARB, OP, BASE)
→ ETF gas pressure = L2 scaling demand
🔹 2. DeFi Protocols (UNI, AAVE, LDO)
→ TradFi liquidity meets on-chain utility
🔹 3. ETH Staking Derivatives (LDO, RPL)
→ Institutions want yield = LSD narrative grows
🔹 4. Oracles (LINK)
→ ETFs need trusted on-chain data = Chainlink shines
🔹 5. BTC on ETH Bridges (ThorChain, tBTC)
→ If BTC flows into ETH-based ETFs, bridges light up
🚫 What I will Avoid:
❌ Memecoins – zero relevance to ETF flows
❌ GameFi – not part of TradFi’s roadmap
❌ Ghost Layer 1s – no users, no narrative, no pump
🧠 My Take:
ETH is building momentum toward $4,092 — the third breakout attempt on your 1-2-3 model.
🔥 The fuse is lit. Target? $6,036
Timing? Unknown. But structure is in place.
Meanwhile, Bitcoin Dominance is rising.
ETH is shining.
Solana — while powerful — continues paying the price for memecoin madness 💀
We’re entering a new phase — where ETFs settle with real crypto , China watches the stage, and macro money is warming up behind the curtain.
So stack smart.
Study the flows.
Don’t let silence fool you — the biggest moves come after the news fades.
One Love,
The FX PROFESSOR 💙
Disclosure: I am happy to be part of the Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analysis. Awesome broker, where the trader really comes first! 🌟🤝📈
Wedge Pattern — A Key to Trend Movements📐 Wedge Pattern — A Key to Trend Movements 📈
🔍 Introduction
The Wedge is a chart pattern that represents a phase of directional consolidation following a trending move. It can act as a continuation 🔄 or a reversal 🔃 signal, depending on the context. The structure consists of two converging trendlines, both sloping in the same direction.
🧩 Pattern Description
Unlike the Flag pattern 🚩, the Wedge has no flagpole and doesn’t depend on the direction of the previous move. The direction of the wedge body determines its type:
A falling wedge ⬇️ is bullish 🟢 (buy signal)
A rising wedge ⬆️ is bearish 🔴 (sell signal)
The breakout is the key point to watch. The two trendlines slope in the same direction but at different angles, causing them to converge. This reflects a loss of momentum ⚠️ and typically indicates that buyers or sellers are preparing to take control.
This pattern can act as:
A continuation signal 🧭 — appearing at the end of a correction
A reversal signal 🔄 — forming at the end of a strong trend
📉 Volume is usually low during the wedge and rises on breakout. A low-volume breakout increases the risk of a false breakout ❗. Often, price retests the breakout level 🔁, giving traders a second chance to enter.
🎯 Entry & Stop-Loss Strategy
📥 Entry: On breakout confirmation
🛑 Stop-loss: Below the pattern’s low (bullish) or above its high (bearish), or under/above the most recent local swing point
🎯 Target: Project the height of the widest part of the wedge from the breakout point. Alternatively, use key price levels 📊 or a trailing stop 🔂 to lock in profits.
💡 My Pro Tips for Trading the Wedge
✅ Pattern Criteria
Two converging trendlines ➡️➕➡️
Clearly defined structure ✏️
Prior trending move before the wedge 🚀
Low volume within the wedge 📉, high volume on breakout 📈
Retest of breakout level = confirmation 🔁
🔥 Factors That Strengthen the Signal
Breakout on strong volume 📊💥
Appears after an extended trend 🧭📉📈
More touches = stronger pattern ✍️
Breakout occurs close to the apex 🎯
⚠️ Factors That Weaken the Signal
Low volume on breakout 😐
Poorly defined trendlines 🫥
Few touches on lines
Early breakout (too far from apex) ⏱️
No prior trend / appears in a range-bound market 📏
✅ Examples of My Successful Wedge Trades
📸
❌Examples of Failed Wedge Overview
💥
💬 Do you use the wedge pattern in your trading?
It’s a powerful pattern, especially when confirmed by volume and market structure. Share your favorite wedge setups or ask questions below 👇👇
How Do Traders Use the Pivot Points Indicator? How Do Traders Use the Pivot Points Indicator?
Pivot points are a popular technical analysis tool for spotting areas where the price is expected to react, i.e. pause or reverse. Calculated using the previous day’s high, low, and close, they’re projected onto the current session to highlight potential support and resistance levels, especially useful for intraday traders.
Alongside stock charts, pivot point levels can be used in a wide variety of markets, including forex, commodities, and cryptocurrencies*. As a versatile indicator, pivot points also come in many different types. This article breaks down the definition of pivot points, the variations traders use, and how they can fit into a broader trading strategy.
A Deeper Look at Pivot Points
A common question in technical analysis is, “What is a pivot point?” Pivot points trading, or pivot point theory, is a popular technical analysis concept used in a range of financial asset classes, including stocks, currencies, cryptocurrencies*, and commodities. The indicator assists traders in gauging overall market trends and determining possible support and resistance barriers.
How to Read Pivot Points
The pivot point indicator is static—it’s an average of the high, low, and close prices from the previous trading day. It includes three levels: pivot point (P), support (S), and resistance (R). If the price is above the pivot point, it is supposed to target resistance barriers. Conversely, if it’s below the pivot, it could move to support levels. Thus, support and resistance levels serve as targets or stop-loss zones. They remain constant throughout the period, enabling traders to plan ahead.
In the EURUSD daily chart below, the price is trading above R2; therefore, market sentiment is assumed to be bullish. R3 indicates the next possible price target. Should a shift below P occur, bearishness arises, and S1 becomes the upcoming support level.
Pivots are widely used with trend indicators such as moving averages and Fibonacci tools. In the chart below, Fibonacci retracements could be used to identify intermediate levels of support and resistance within widely placed pivots.
How to Calculate Pivot Points?
There are four key types of pivots, including standard, Woodie’s, Camarilla, and Fibonacci. While there’s no need to use a pivot points calculator—they’re calculated automatically when implemented on a price chart—it is worth looking at their formulas to understand how they differ from each other.
Note the labels for the following formulas:
P = pivot point
H = high price
L = low price
C = close price
Standard Pivot Points
Traders commonly use standard pivot points. Traditional pivots (P) identify potential levels of support (S) and resistance (R) by averaging the previous trading period's high, low, and close prices.
P = (H + L + C) / 3
S1 = (2 * P) - H
S2 = P - (H - L)
R1 = (2 * P) - L
R2 = P + (H -L)
Although they are popular among traders, they can produce false signals and lead to incorrect trades in ranging markets and during periods of high volatility.
Woodie’s Pivot Points
Woodie's pivots are similar to standard pivots but include a slight modification to the calculation. In Woodie's method, the close price is assigned more weight.
P = (H + L + 2 * C) / 4
R1 = (2 * P) - L
R2 = P + H - L
S1 = (2 * P) - H
S2 = P - H + L
However, their extra sensitivity can make them less reliable during choppy markets or when the price lacks a clear direction.
Camarilla Pivot Points
Camarilla pivots use a set formula to generate eight levels: four support and four resistance. They are based on the previous day’s close and range and multiplied by a certain multiplier. The inner levels (R3 and S3) often act as reversal zones, while R4 and S4 are watched for breakouts. Still, in trending markets, the reversals can fail frequently.
R4 = C + (H - L) x 1.5
R3 = C + (H - L) x 1.25
R2 = C + (H - L) x 1.1666
R1 = C + (H - L) x 1.0833
P = (High + Low + Close) / 3
S1 = C - (H - L) x 1.0833
S2 = C - (H - L) x 1.1666
S3 = C - (H - L) x 1.25
S4 = C - (H - L) x 1.5
Fibonacci Pivot Points
Fibonacci pivot points are based on the Fibonacci sequence, a popular mathematical concept in technical analysis.
They are calculated in the same way as the standard indicator. However, the levels of support and resistance are determined by including the Fibonacci sequence with a close monitoring of the 38.2% and 61.8% retracement levels as the primary price points.
P = (High + Low + Close) / 3
S1 = P - (0.382 * (H - L))
S2 = P - (0.618 * (H - L))
R1 = P + (0.382 * (H - L))
R2 = P + (0.618 * (H - L))
Despite their popularity, Fibonacci pivots can become less reliable when the price reacts to other fundamental drivers.
Trading with the Pivot Points
Although every trader develops their own trading approach, there are common rules of pivot point trading that are expected to improve their effectiveness.
Day Trading
Day trading with pivot points is usually implemented for hourly and shorter intraday timeframes. As pivot levels are updated daily and calculated on the previous day's high, low, and close prices, this allows traders to react promptly to market changes and adjust their strategies. Some traders prefer Camarilla pivots as their calculation takes into account the volatility of the previous trading period to produce pivot levels closer to the current price.
Medium-Term Trading
When looking at a medium-term analysis, weekly pivot levels are added to four-hour and daily charts. These are calculated using the previous week's high, low, and close prices, which remain unchanged until the start of the next week.
Long-Term Trading
For longer-term analysis, traders use monthly pivots on weekly charts. These levels, gathered from the previous month's data, offer a broader picture of market trends and price movements over time.
Pivot Point Trading Strategies
The pivot points indicator is typically used in two ways – breakout and reversal trading.
Breakout Trading Strategy
The breakout approach seeks to take advantage of market momentum by entering trades when prices break above or below significant levels of support and resistance.
- Bullish Breakout. When levels P and R1 are broken, and the price closes above either, it’s more likely a rise will occur.
- Bearish Breakout. When levels P and S1 are broken, and the price closes below either, it’s more likely the price fall will occur.
Strong momentum and high volume are two critical factors needed for a solid price movement in both cases.
Trading Conditions
If a breakout is confirmed, traders enter a trade in the breakout direction. A take-profit target might be placed at the next pivot level. A stop-loss level can be placed beyond the previous level or calculated according to a risk/reward ratio. Traders continuously monitor their trades and adjust their stop-loss levels to lock in potential returns if prices move in their favour.
Reversal Trading Strategy
The reversal strategy seeks to take advantage of a slowdown in market momentum by entering trades when prices stall at significant levels of support or resistance.
- Bullish Reversal. When levels S1 and S2 are not broken and the price stalls above either, a reversal is more likely to occur.
- Bearish Reversal. When levels R1 and R2 are not broken and the price stalls below either, a reversal is expected to happen.
Note: Reversals are always confirmed by another indicator or a chart pattern.
Trading Conditions
If a reversal is confirmed, traders consider entering a trade in its direction. The next level may be a take-profit target, which might be trailed to the next level if the market conditions signal a continuation of a price move. A stop-loss level is typically placed below a swing low or above a swing high, depending on the trade direction.
Pivot Points and Other Indicators
While pivots show where the price may reverse, there’s nothing to say a market won’t trade through these areas. Therefore, traders typically pair them with other technical indicators and patterns.
Candlestick and Chart Patterns
Traders often combine levels with specific reversal candlestick formations, like three black crows/three white soldiers or engulfing patterns, to confirm a change in market movements. For example, a bullish engulfing candle forming at S1 could reinforce the idea of a reversal at that level.
Moving Averages
When a pivot aligns with a major moving average, e.g. the 50-period or 200-period EMA, it strengthens the area. As moving averages act as dynamic support and resistance levels, an overlap can signal a strong area where a reversal might occur.
RSI and Stochastic Oscillator
Momentum indicators like RSI or Stochastic help judge whether the price is likely to bounce or break through a pivot. If it hits support and RSI is oversold, that adds conviction. But if momentum is still strong in one direction, it might get ignored.
Considerations
Even with strong confluence, these combinations can fail. Markets don’t always respect technical alignment, especially around data releases or sharp movements in sentiment. For instance, in stocks, pivot points may be ignored if an earnings release strongly beats analyst estimates. Instead, they are believed to work when treated as one piece of a broader technical framework.
Limitations
Pivot points are widely used, but like any tool, they have flaws. They’re based purely on past price data, so they don’t account for news, sentiment shifts, or broader market context.
- False signals in ranging markets: The price often oscillates around pivot zones in markets without a clear direction, meaning setups might not follow through.
- Less reliable during strong trends: In trending conditions, the price can blow past several levels without reacting.
- No built-in volatility filter: The points don’t adapt to changing volatility, so levels might be too close or too far apart to be useful.
- Lag in real-time shifts: Since pivots are pre-calculated, they don’t adjust mid-session as new data emerges.
Final Thoughts
Pivot points are widely used in stock trading as well as in commodity, cryptocurrency*, and currency markets. While they can be useful tools, their limitations cannot be overlooked. It is essential to conduct a comprehensive analysis and confirm the indicator signals with fundamental and technical analysis tools.
FAQ
What Is a Pivot Point in Trading?
The pivot point meaning refers to a technical analysis tool used to identify potential support and resistance levels. It’s calculated using the previous day’s high, low, and close prices, and helps traders find areas where the price may react during the current session.
What Is the Best Indicator for Pivot Points?
There isn’t one best indicator, but traders often pair pivot points with moving averages, RSI, or candlestick patterns to confirm a potential reversal. The most effective setup usually depends on the strategy and market conditions.
What Are the Pivot Points’ R1, R2, and R3?
R1, R2, and R3 are resistance levels above the central point. They represent increasingly stronger potential resistance zones where the price may stall or reverse.
Which Is Better, Fibonacci or Camarilla?
Fibonacci offers wider levels based on retracement ratios, useful in trending markets. Camarilla focuses on tighter reversal zones, which are mostly used for intraday strategies. Each suits different trading styles; neither is objectively better.
*Important: At FXOpen UK, Cryptocurrency trading via CFDs is only available to our Professional clients. They are not available for trading by Retail clients. To find out more information about how this may affect you, please get in touch with our team.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Options Trading Strategies: From Simple to AdvancedPart 1: The Basics of Options
Before diving into strategies, let’s review the two core types of options:
1. Call Option (CE)
Gives the buyer the right (but not the obligation) to buy an underlying asset at a predetermined price (strike price) within a specific time period.
Bullish in nature.
2. Put Option (PE)
Gives the buyer the right (but not the obligation) to sell an underlying asset at a predetermined price within a specific time period.
Bearish in nature.
Each option has a premium (price you pay to buy the option), and that’s the maximum loss a buyer can face. Sellers (or writers), on the other hand, receive the premium but take on higher risk.
Part 2: Simple Options Strategies
These are basic strategies suitable for new traders.
1. Buying a Call Option (Long Call)
When to Use: If you expect the stock/index to rise significantly.
Risk: Limited to the premium paid.
Reward: Unlimited potential profit.
Example:
Stock XYZ is trading at ₹100. You buy a 105 Call Option at ₹2 premium.
If stock moves to ₹115:
Intrinsic Value = ₹10
Profit = ₹10 - ₹2 = ₹8 per share
Why It’s Good: Cheap entry, high upside.
2. Buying a Put Option (Long Put)
When to Use: If you expect the stock/index to fall.
Risk: Limited to the premium paid.
Reward: High if stock crashes.
Example:
You buy a 95 PE when stock is at ₹100, and premium is ₹3.
If stock falls to ₹85:
Intrinsic Value = ₹10
Profit = ₹10 - ₹3 = ₹7 per share
Why It’s Good: Good for bearish bets or portfolio hedging.
3. Covered Call
When to Use: You own the stock and expect neutral to moderately bullish movement.
Risk: Limited upside potential.
Reward: Premium + stock movement (if not called away).
Example:
You own 100 shares of XYZ @ ₹100.
You sell 110 CE for ₹5.
If stock rises to ₹110, you sell at that level and keep ₹5 premium.
If it stays below ₹110, you keep the shares + premium.
Why It’s Good: Generates income from stocks you hold.
4. Protective Put
When to Use: You own a stock and want downside protection.
Risk: Limited downside.
Reward: Unlimited upside.
Example:
Own 100 shares of XYZ @ ₹100.
Buy a 95 PE at ₹3.
If stock drops to ₹85, your put becomes worth ₹10, offsetting losses.
Why It’s Good: Acts like insurance on your holdings.
Part 3: Intermediate Strategies
Once you’re comfortable with buying/selling calls and puts, it’s time to explore neutral and range-bound strategies.
5. Bull Call Spread
When to Use: You expect a moderate rise in the stock/index.
Risk: Limited.
Reward: Limited.
Structure:
Buy 100 CE at ₹5
Sell 110 CE at ₹2
Net Cost: ₹3
Max Profit: ₹10 - ₹3 = ₹7
Max Loss: ₹3
Why It’s Good: Lower cost than buying a call outright.
Part 4: Risk Management Tips
Never deploy a strategy you don’t understand.
Use stop-loss and position sizing to avoid blowing up capital.
Be aware of Greeks (Delta, Theta, Vega) — they drive profits/losses.
Avoid naked options selling unless you have enough margin and experience.
Always review IV (Implied Volatility) before placing straddles or condors.
Understand expiry effects — options lose value faster as expiry nears.
Part 5: Real-Life Example
Let’s say Nifty is trading at 22,000. You expect no major movement till expiry. You execute an Iron Condor:
Sell 22100 CE at ₹100
Buy 22300 CE at ₹40
Sell 21900 PE at ₹90
Buy 21700 PE at ₹30
Net Credit = ₹100 - ₹40 + ₹90 - ₹30 = ₹120
Max Loss = Spread width (200) - Net Credit = ₹80
If Nifty stays between 21900 and 22100 — all options expire worthless and you earn full ₹120.
Conclusion
Options trading is like a chess game — it's not only about direction, but also timing, volatility, and strategy structure. Simple strategies like buying calls and puts are perfect for starters, but intermediate and advanced strategies allow you to profit in any kind of market — bullish, bearish, or neutral.
The key lies in choosing the right strategy for the right market condition, managing risks, and being patient.
Whether you're hedging your portfolio, generating income, or speculating on big market moves, options provide the tools — but it’s your responsibility to use them wisely.
If you’d like charts, payoff diagrams, or examples using live data (like Bank Nifty or stocks), let me know and I can include those too!
Basics of Options: Calls and PutsWhat are Options?
An option is a financial contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset (like a stock or index) at a specific price, on or before a specific date.
Think of it like booking a movie ticket. You reserve the right to watch a movie at a particular time and seat. But if you don’t go, it’s your choice. You lose the ticket price (premium), but you're not forced to go. Options work similarly.
Options are of two basic types:
Call Option
Put Option
Let’s break both down in detail.
1. What is a Call Option?
A Call Option gives the buyer the right (but not the obligation) to buy the underlying asset at a pre-decided price (called the strike price) on or before a certain date (called the expiry date).
When do traders buy a Call Option?
When they believe the price of the underlying stock or index will go up in the future.
Example of Call Option (Simple Case)
Let’s say you are bullish on Reliance Industries stock, which is currently trading at ₹2,500.
You buy a Call Option with:
Strike Price: ₹2,550
Premium Paid: ₹30 per share
Lot Size: 250 shares
Expiry: Monthly expiry (say end of the month)
You believe Reliance will go up beyond ₹2,550 soon. If it goes to ₹2,600 before expiry:
Your profit per share = ₹2,600 (market price) - ₹2,550 (strike price) = ₹50
Net Profit = ₹50 - ₹30 (premium) = ₹20 per share
Total Profit = ₹20 x 250 = ₹5,000
But if Reliance stays below ₹2,550, say at ₹2,500 on expiry, you won’t exercise the option. You lose only the premium (₹30 x 250 = ₹7,500).
Key Terminologies in Call Options
In the Money (ITM): When the stock price is above the strike price.
At the Money (ATM): When the stock price is equal to the strike price.
Out of the Money (OTM): When the stock price is below the strike price.
2. What is a Put Option?
A Put Option gives the buyer the right (but not the obligation) to sell the underlying asset at a pre-decided price (strike price) on or before the expiry.
When do traders buy a Put Option?
When they believe the price of the underlying stock or index will fall in the future.
Example of Put Option (Simple Case)
Assume HDFC Bank is trading at ₹1,600. You are bearish and expect it to fall.
You buy a Put Option with:
Strike Price: ₹1,580
Premium: ₹20 per share
Lot Size: 500 shares
Expiry: Monthly
If HDFC Bank falls to ₹1,520:
You can sell at ₹1,580 even though market price is ₹1,520
Gross profit per share = ₹60
Net profit = ₹60 - ₹20 = ₹40 per share
Total profit = ₹40 x 500 = ₹20,000
If HDFC stays above ₹1,580, your put expires worthless. You lose only the premium (₹10,000).
Key Terminologies in Put Options
In the Money (ITM): Stock price below strike price.
At the Money (ATM): Stock price = strike price.
Out of the Money (OTM): Stock price above strike price.
Who are the Two Parties in an Option Contract?
1. Option Buyer (Holder)
Pays the premium
Has rights, but not obligations
Can exercise the option if profitable
Loss is limited to the premium paid
2. Option Seller (Writer)
Receives the premium
Has obligation to fulfill the contract if the buyer exercises
Risk is unlimited for call writers and limited for put writers (if stock price becomes zero)
Profit is limited to the premium received
Difference between Call and Put Options (Summary Table)
Feature Call Option Put Option
Buyer’s Expectation Bullish (price will go up) Bearish (price will go down)
Right Buy at strike price Sell at strike price
Profit Potential Unlimited Limited (until price reaches zero)
Risk (for buyer) Limited to premium Limited to premium
Seller’s Role Sells call & hopes price won’t rise Sells put & hopes price won’t fall
Premium and What Influences It?
The premium is the price you pay to buy an option. This is influenced by:
Intrinsic Value: Difference between market price and strike price
Time Value: More days to expiry = higher premium
Volatility: Higher the volatility = higher the premium
Interest Rates and Dividends
What is Strike Price and Expiry?
Strike Price: The price at which you can buy (call) or sell (put) the underlying stock
Expiry: The last date till which the option is valid. In India:
Weekly expiry for Nifty, Bank Nifty, and FINNIFTY
Monthly expiry for stocks
Cycles Don’t Lie — But Which One Speaks Here ?Markets love to repeat themselves.
But just because something repeats, doesn’t mean it’s predictable — or useful.
Let’s break down the main types of market cycles that traders talk about, and more importantly, let’s call out their flaws. No sugarcoating.
🔹 1. Time Cycles
These are based on the idea that price behaves in a similar way over specific time intervals — whether it’s 90 days, 4 years, or a custom Fibonacci count.
They show up in seasonal patterns, halving cycles (like Bitcoin), or through tools like Gann, Hurst, or even basic cycle lines.
The problem?
– The exact timing is rarely clean. A 120-day cycle might play out in 87 days next time.
– Flat, choppy markets will destroy any cycle-based setup.
– Different timeframes show different "cycles," so good luck aligning them.
– Most cycle tools are complicated and impractical for real-time decision making.
🔹 2. Psychological Cycles
The famous emotional rollercoaster: Hope → Euphoria → Fear → Panic → Capitulation → Depression → Optimism.
Every bull and bear market goes through these in some form — in theory.
The problem?
– It’s almost entirely subjective. Everyone sees a different phase.
– You usually recognize the cycle only after it’s over.
– Emotions aren’t equal across all assets — BTC retail emotions ≠ S&P500 institutional sentiment.
– There’s no precise tool to measure this. You’re mixing vibes with candles.
🔹 3. Structural Cycles (e.g. Wyckoff)
This one’s more about price behavior itself — accumulation, markup, distribution, markdown. The idea is that markets rotate through these four structural phases again and again.
The problem?
– Identifying where you are in the structure is hard in real time.
– Markets don’t always follow the Wyckoff textbook. Sometimes they just... go.
– It relies heavily on volume — and that doesn’t always align.
– Traders love to force a structure where there isn’t one. Confirmation bias, anyone?
🔹 4. Macro Cycles
Classic economic boom and bust: Expansion → Peak → Recession → Trough.
These cycles move slow but shape everything — interest rates, employment, growth, and eventually, risk assets.
The problem?
– They’re way too slow to help short-term traders.
– Good luck timing the top or bottom of the economy.
– Governments and central banks constantly interfere with natural cycles.
– Most macro data is lagging, so you’re reacting to history, not forecasting the future.
🔹 5. Liquidity / Volume Cycles
This idea tracks capital flow: when liquidity comes in, prices rise. When it dries up, risk assets fall. Simple, right?
The problem?
– Volume isn’t universal. Crypto volume =/= stock volume =/= forex volume.
– You can’t always track capital flow accurately, especially in OTC markets.
– Low volume doesn’t always mean weakness — sometimes it’s just summer.
– Volume data can be misleading, especially on shady exchanges.
🔹 6. Fractal Cycles
Markets repeat — at every level. 5-minute looks like the 4-hour, which looks like the daily. Elliott wave, harmonic patterns, whatever — the idea is that patterns echo across timeframes.
The problem?
– Pattern recognition can be wildly subjective.
– The market doesn’t always care about geometry. Sometimes it’s just noise.
– By the time a pattern is “confirmed,” you missed the move.
– Focusing too much on pattern symmetry makes you blind to macro/fundamentals.
So after breaking all that down, let’s finally get to the chart in front of us.
Let’s take a closer look and see which cycle has actually played out here — and more importantly, which one actually helped :
As you can see on the chart, before every breakout above the previous all-time high, the market tends to form some sort of bottoming structure or reversal pattern.
And once that structure completes, the actual breakout usually leads to a solid price pump.
But here’s the key question:
Which one of the cycles we talked about earlier does this actually follow?
If you ask me, a professional trader will always try to use every tool available — not because any single one gives you the answer, but because combining them gets you closer to what's likely to happen.
And that’s what separates a well-rounded trader from a one-dimensional one.
Why do I say “one-dimensional”?
Because if you insist on looking at the market through a single lens, you’re bound to make bad decisions. We’re not here to prove our personal theories — we’re here to profit from what actually happens in the market, not what we think should happen.
In the chart above, we actually see a mix of all the cycles we talked about.
But I’d love to hear from you as well — let’s brainstorm together.
What do you see here as a trader?
And what’s your take on this setup?
Bottom Line
Yes, markets repeat.
But repetition doesn’t equal reliability.
Every cycle has its use — and its blind spot.
Know the difference. Use what fits your style.
And don’t romanticize a model just because it looks clean on a chart from six months ago.
When Gold Believers Flip – Uncle Jimmy, Silver & New Safe Havens💰📉 When Gold Believers Flip – Uncle Jimmy, Silver, and the New Safe Havens 🧠🔄
Let me tell you a story that says more than any chart ever could.
📜 Meet Uncle Jimmy (from Canada) . He’s not really my uncle, but out of respect, that’s what I call him.
A true OG — early stockbroker, big mustache , 20+ apartments, a life built on commissions, charts, and one sacred truth: '' Gold never lies. ''
He's bought gold at every dip, every crisis, every whisper of war or inflation.
But now?
“I’m thinking of selling gold to buy silver.” ( WHAT?! 😳👀💥)
That’s it. That’s the moment.
📉 A gold maxi flipping into silver. A generational pivot.
And that’s the real divergence the chart doesn’t always show.
⚖️ Macro Sentiment Rotation:
📊 Gold
Sitting on crucial support. Breakout potential to $3,465+ remains — but divergences (OBV, CMF) are stacking. A breakdown? Targets stretch down to $3,000 or even $2,716.
🪙 Silver
Just hit $38.14 — now eyeing the legendary $49.83 ATH from 1980. Legacy capital rotating in. Silver’s moment? (My chart says 'wait a bit'...divergences!)
💻 NASDAQ/Tech
Some now call it the “new safe haven” — not because of bonds, but because of trust in corporate resilience vs. geopolitical chaos. When Nasdaq rises, silver often outperforms gold — risk appetite returns, and so does industrial metal demand.
₿ Bitcoin
And then there’s Bitcoin…
The safe haven that legacy minds still don’t trust.
I told Uncle Jimmy to buy it at:
→ $4,000
→ $18,000
→ $45,000
→ Even $70,000.... I stopped doing that at some point, he just wouldn't get it, or wouldn't make a move into the 'crypto unknown'. Respect!
So...He never did. Maybe Bitcoin just became what gold once was — but for the next generation. Not for Big Jimmy.
🧠 What to Watch:
Sentiment is shifting
Safe havens are evolving
Charts show structure — but stories show psychology
Whether you're long metals, crypto, or tech — the key is knowing when beliefs break and rotations begin.
Watch price. Listen to sentiment. And never underestimate Uncle Jimmy.
What would you tell Jimmy today if he was your uncle? Let me know below!
One Love,
The FX PROFESSOR 💙
Disclosure: I am happy to be part of the Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analysis. Awesome broker, where the trader really comes first! 🌟🤝📈
Understanding Wedge Patterns - A Real Bitcoin Case Study🎓📊 Understanding Wedge Patterns - A Real Bitcoin Case Study 🧠📈
Hi everyone, FXPROFESSOR here 👨🏫
From this moment forward, I will no longer be posting targets or trade setups here on TradingView. Instead, I’ll be focusing 100% on education only for here in Tradinfview.
Why? Because over time I’ve learned that even when traders receive the right charts, most still struggle to trade them effectively. So, from now on, FX Professor Crypto content here will be strictly educational — designed to teach you how to read and react to the markets like a professional. Unfortunately I cannot be posting on Tradingview frequent updates like I do all day. Education is always better for you guys. And i am very happy to share here with you what matters the most.
🧩 In today’s post, we dive into one of the most misunderstood formations: the wedge pattern.
Most resources show wedges breaking cleanly up or down — but real price action is messier.
🎥 I recorded a video a few days ago showing exactly how BTC respected a wedge formation.
⚠️ Note: Unfortunately, TradingView doesn’t play the audio of that clip — apologies that you can’t hear the live commentary — but the visuals are clear enough to follow the logic. (there is no advertising of any kind on the video so i hope i don't get banned again - i did make a mistake the last time and will avoid it-the community here is awesome and needs to stay clean and within the rules of TV).
Here’s what happened:
🔸 A clean wedge formed over several days
🔸 We anticipated a fake move to the downside, grabbing liquidity
🔸 BTC rebounded off support around a level marked in advance
🔸 Then price re-entered the wedge, flipping support into resistance
The lesson?
📉 Often price will exit the wedge in the wrong direction first — trapping retail traders — before making the real move. This is a classic liquidity trap strategy, exercised by the 'market'.
💡 Remember:
Wedges often compress price until it "runs out of space"
The initial breakout is often a trap
The true move tends to come after liquidity is taken
The timing of the 'exit' has a lot to do with the direction. In the future we will cover more examples so pay attention.
I stayed long throughout this move because the overall market context remained bullish — and patience paid off.
Let this be a reminder: it’s not about guessing the direction — it’s about understanding the mechanics.
More educational breakdowns to come — keep learning, keep growing.
One Love,
The FX PROFESSOR 💙
Disclosure: I am happy to be part of the Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analysis. Awesome broker, where the trader really comes first! 🌟🤝📈
Options Blueprint Series [Intermediate]: Gold Triangle Trap PlayGold’s Volatility Decline Meets a Classic Chart Setup
Gold Futures have been steadily declining after piercing a Rising Wedge on June 20. Now, the market structure reveals the formation of a Triangle pattern nearing its apex — a point often associated with imminent breakouts. While this setup typically signals a continuation or reversal, the direction remains uncertain, and the conflict grows when juxtaposed with the longer-term bullish trajectory Gold has displayed since 2022.
The resulting dilemma for traders is clear: follow the short-term bearish patterns, or respect the dominant uptrend? In situations like these, a non-directional approach may help tackle the uncertainty while defining the risk. This is where a Long Strangle options strategy becomes highly relevant.
Low Volatility Sets the Stage for an Options Play
According to the CME Group’s CVOL Index, Gold’s implied volatility currently trades near the bottom of its 1-year range — hovering just above 14.32, with a 12-month high around 27.80. Historically, such low readings in implied volatility are uncommon and often precede sharp price movements. For options traders, this backdrop suggests one thing: options are potentially underpriced.
Additionally, an IV analysis on the December options chain reveals even more favorable pricing conditions for longer-dated expirations. This creates a compelling opportunity to position using a strategy that benefits from volatility expansion and directional movement.
Structuring the Long Strangle on Gold Futures
A Long Strangle involves buying an Out-of-the-Money (OTM) Call and an OTM Put with the same expiration. The trader benefits if the underlying asset makes a sizable move in either direction before expiration — ideal for a breakout scenario from a compressing Triangle pattern.
In this case, the trade setup uses:
Long 3345 Put (Oct 28 expiration)
Long 3440 Call (Oct 28 expiration)
With Gold Futures (Futures December Expiration) currently trading near $3,392.5, this strangle places both legs approximately 45–50 points away from the current price. The total cost of the strangle is 173.73 points, which defines the maximum risk on the trade.
This structure allows participation in a directional move while remaining neutral on which direction that move may be.
Technical Backdrop and Support Zones
The confluence of chart patterns adds weight to this setup. The initial breakdown from the Rising Wedge in June signaled weakness, and now the Triangle’s potential imminent resolution may extend that move. However, technical traders must remain alert to a false breakdown scenario — especially in trending assets like Gold.
Buy Orders below current price levels show significant buying interest near 3,037.9 (UFO Support), suggesting that if price drops, it may find support and rebound sharply. This adds further justification for a Long Strangle — the market may fall quickly toward that zone or fail and reverse just as violently.
Gold Futures and Micro Gold Futures Contract Specs and Margin Details
Understanding the product’s specifications is crucial before engaging in any options strategy:
🔸 Gold Futures (GC)
Contract Size: 100 troy ounces
Tick Size: 0.10 = $10 per tick
Initial Margin: ~$15,000 (varies by broker and volatility)
🔸 Micro Gold Futures (MGC)
Contract Size: 10 troy ounces
Tick Size: 0.10 = $1 per tick
Initial Margin: ~$1,500
The options strategy discussed here is based on the standard Gold Futures (GC), but micro-sized versions could be explored by traders with lower capital exposure preferences.
The Trade Plan: Long Strangle on Gold Futures
Here's how the trade comes together:
Strategy: Long Strangle using Gold Futures options
Direction: Non-directional
Instruments:
Buy 3440 Call (Oct 28)
Buy 3345 Put (Oct 28)
Premium Paid: $173.73 (per full-size GC contract)
Max Risk: Limited to premium paid
Breakeven Points on Expiration:
Upper Breakeven: 3440 + 1.7373 = 3613.73
Lower Breakeven: 3345 – 1.7373 = 3171.27
Reward Potential: Unlimited above breakeven on the upside, substantial below breakeven on the downside
R/R Profile: Defined risk, asymmetric potential reward
This setup thrives on movement. Whether Gold rallies or plunges, the trader benefits if price breaks and sustains beyond breakeven levels by expiration.
Risk Management Matters More Than Ever
The strength of a Long Strangle lies in its predefined risk and unlimited reward potential, but that doesn’t mean the position is immune to pitfalls. Movement is key — and time decay (theta) begins to erode the premium paid with each passing day.
Here are a few key considerations:
Stop-loss is optional, as max loss is predefined.
Precise entry timing increases the likelihood of capturing breakout moves before theta becomes too damaging. Same for exit.
Strike selection should always balance affordability and distance to breakeven.
Avoid overexposure, especially in low volatility environments that can lull traders into overtrading due to the potentially “cheap” options.
Using strategies like this within a broader portfolio should always come with well-structured risk limits and position sizing protocols.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com - This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
Why Your Chart Might Be Lying to You And (How to Fix It) !Hello Traders 🐺
Ever clicked the “Log” button on your chart and suddenly everything looked different?
Yeah, you’re not alone...
Most traders ignore it.
But understanding the difference between a Linear and Logarithmic chart can literally change how you see price action — especially if you’re into long-term moves or trading volatile markets like crypto.
Let’s break it down real simple 👇
🔹 Linear Chart (a.k.a. the default)
This is what most charts use by default.
It measures price change in absolute terms.
Meaning: the distance from $10 to $20 is exactly the same as from $20 to $30 — because in both cases, price moved $10.
🧠 Sounds fair, right?
Not always. Here's why...
Let’s say a stock goes from $1 to $2 — that’s a 100% gain.
But if it goes from $100 to $101 — that’s just 1%.
✅ Linear Chart – Pros
Simple and easy to read
Good for short-term price action
Better for assets with small price ranges
Familiar to most beginners
❌ Linear Chart – Cons
Misleading in long-term charts
Distorts large percentage moves
Trendlines become unreliable over time
Doesn’t reflect real growth in % terms
🔹 Logarithmic Chart (Log Scale)
This one shows percentage-based price movement.
Now, going from $10 to $20 (100% gain)
and going from $100 to $200 (also 100% gain)
look exactly the same on the chart — which actually makes more sense when analyzing growth.
It’s super useful when:
✅ You’re analyzing big moves over time
✅ You want to draw accurate trendlines in long-term charts
✅ You're dealing with assets that grew 5x, 10x or more
✅ You care about % gains instead of raw price
❌ Log Chart – Cons
Less intuitive for beginners
Not useful for low-volatility assets
Small price moves may look insignificant
here is an example of the same chart but in the Log Scale :
As you can see on the chart above there is huge difference in accuracy when you use Log scale
for the high volatile asset such as BTC specially in the long term movements .
🆚 So, When Should You Use Each One?
Situation Use Linear Use Log
Small price changes ✅ ❌
Day trading / scalping ✅ ❌
Long-term analysis ❌ ✅
Parabolic or exponential moves ❌ ✅
Drawing long trendlines ❌ ✅
Final Thoughts
If your chart looks weird when you zoom out…
If your trendlines don’t quite fit anymore…
Or if you’re analyzing something that went 10x…
🔁 Try switching to Log scale — it might just clean up the noise.
Small toggle. Big difference.
And also remember our golden rule :
🐺 Discipline is rarely enjoyable , but almost always profitable. 🐺
🐺 KIU_COIN 🐺
Time to Wait and Watch
**"The $133K zone remains Bitcoin’s key resistance level.**
If Bitcoin fails to break this resistance for any reason and forms a **reversal candle** in this area,
I expect a **correction phase** to begin, with the market entering **panic sell mode.**
**First support** lies at **$110K.**
Further support levels are **$100K, $92K, and $88K** respectively.
If the price drops to the **$74K zone**, it’s time to **sell everything you’ve got** (yes, even your kidneys!) and **buy Bitcoin.**
However, if **$133K is broken to the upside**, we’re heading for **$140K, $150K, and $170K**… and **then** the real **panic selling** begins."
Why To Draw Before You Trade ?Hello fellow traders and respected members of the trading community, In a fast paced market dominated by automation and algorithms, we often forget the value of simply picking up a tool and drawing on our charts. Let’s revisit why this fundamental habit still holds the power to sharpen our edge and elevate our decision-making.
Why We Should Draw and Trade? Turning Charts Into Clarity
Introduction-:
In an age of auto-generated indicators, black-box algorithms, and AI-driven signals, many traders are drifting away from one of the most fundamental trading tools: manual chart drawing.
But what if the very act of drawing is not just an old habit—but a powerful trading edge?
This publication explores why actively drawing on charts and trading based on visual context can elevate your market understanding and execution like nothing else.
1. What Does It Mean to “Draw and Trade? Drawing isn’t just technical analysis it’s interactive thinking. When you draw, you're mapping the structure of the market using tools like
Trendlines
Support & Resistance zones
Chart Patterns (Head & Shoulders, Flags, Triangles, etc.)
Supply & Demand levels
Gaps, Fibonacci levels, and more
Once the chart is marked, you’re no longer entering trades blindly you’re entering with context, clarity, and confidence.
2. The Psychology Behind Drawing
Manual drawing engages your focus, discipline, and decision-making. You don’t just predict, you process and It forces you to slow down helping reduce impulsive trades. Drawing anchors your emotions and keeps you mindful. The act of drawing becomes a psychological filter—helping you trade from structure, not stress.
3. Why It Beats Indicator Only Trading?
Indicators are reactive. Drawing is proactive.
Here’s the difference:
Indicators show what already happened
Drawing lets you prepare for what could happen
You learn to-:
Anticipate breakouts, fakeouts, and reversals, Understand market structure and Develop your own strategy not depend on someone else's signal. In short you become the strategist, not just a follower.
4. The “Chart Time” Advantage
Just like pilots need flight hours, traders need chart hours. Drawing charts manually gives you those hours.
You start to see patterns that repeat and notice behavior shifts before they show on indicators. Build a visual memory of how the market moves and It’s this visual experience that separates analysts from traders.
5. Real-World Edge: Case Studies
Wyckoff Distribution: Mapping the structure—BC, AR, ST, UT, LPSY—helps anticipate smart money exits.
Gap Zones: Marking an old breakaway gap can help predict future rejection or support
Demand Zones + Fib Confluence: Drawing reveals high-probability reversal zones most indicators miss
Each drawing becomes a trade-ready story with logic and risk control.
6. From Drawing to Discipline
Drawing is not just prep it’s planning. You trade with a clear plan and pre-identified entry/exit zones this reduced emotional interference and It becomes your personal visual rulebook. No noise no randomness just structure driven action.
7. Final Thoughts: The Trader’s Mind vs. The Machine
Yes, AI and indicators are useful.
But your most powerful edge?
Your mind.
Your eyes.
Your experience sharpened through drawing.
If you want to evolve from a reactive trader to a consistent performer, here’s the golden rule:
Stop watching. Start drawing. Trade what you see, not what you hope.
I hope you will like this post, Thanks for giving your valuable time for reading.
Regards- Amit
The Pullback Panic? Your Whole Plan Dies?!!!!!One red candle is all it takes to destroy your entire plan.
Why do we panic so fast? Why do we exit too early before a rally?
And worse: why do we FOMO back in at the worst possible time?
Hello✌️
Spend 3 minutes ⏰ reading this educational material.
🎯 Analytical Insight on Dogecoin:
BINANCE:DOGEUSDT is approaching the key psychological level of 0.20, which also aligns with a strong daily support and the final Fibonacci retracement zone 🧭. Despite recent volatility, it continues to hold its mid-range Fib level, suggesting potential accumulation. If this support holds, a rebound toward the 0.30 resistance — a move of around 27% remains on the table 🎯.
Now , let's dive into the educational section,
🧠 The Victim Mindset in Crypto Markets
Here’s the uncomfortable truth.
Most traders believe they’re making rational decisions but in reality, they’re reacting emotionally to past pain.
One bad experience during a correction makes us fear all pullbacks.
Missing one big rally creates constant FOMO.
We can’t handle drawdowns but we accept buying tops again and again.
It’s not just you. This is how most retail traders operate and whales know it.
🐳 How Whales Profit From Our Fear
Whales never buy during hype. They buy during fear.
Mini pullbacks, shakeouts and false breakdowns are designed for one thing.
To make you exit so they can enter.
A red candle, a small wick, maybe a fake support break.
We sell out of fear, they buy the dip.
We FOMO back in too late.
Pullbacks are not just price moves. They are psychological traps.
📈 How to Break This Cycle
You don’t need to predict the future. You need to understand yourself.
Ask if this correction is technical or emotional.
Use confirmation from volume, OI and divergence.
Enter after traps, not inside them.
Question your feelings before every move.
You are not trading the chart. You’re trading your mind reacting to the chart.
📊 TradingView Tools to Escape the Fear Greed Cycle
TradingView gives you access to several practical indicators that can help protect your capital from emotional decision-making.
🔹 Fear and Greed Index (Crypto)
Simple but powerful. When the index drops below 30, most traders are in panic mode. That is exactly where whales accumulate, while we run away.
🔹 Open Interest Heatmaps
When open interest rises but price stays flat, it often signals an upcoming shakeout. One scary-looking red candle and the weak hands are gone.
🔹 Volume Profile and VPVR
Perfect for distinguishing between healthy corrections and manipulative dumps. If price pulls back but buying volume remains strong, it's not a real sell-off. It’s a trap.
🔹 Divergence Indicators like MACD or RSI
If RSI rises during a pullback, there’s a hidden bullish divergence. Exiting may be the worst thing to do.
🔹 Liquidity Maps
These show where stop losses and liquidation clusters are located. Often before any major move up, the market takes a detour to liquidate these levels.
Use these tools to stop reacting emotionally and start trading rationally.
📍 Final Thoughts
Small corrections are not the enemy.
Your emotional reaction to them is the real threat.
Before you panic-exit, ask yourself if this fear is justified or just mental conditioning.
The market always gives second chances but we rarely wait for them.
✨ Need a little love!
We pour love into every post your support keeps us inspired! 💛 Don’t be shy, we’d love to hear from you on comments. Big thanks , Mad Whale 🐋
📜Please make sure to do your own research before investing, and review the disclaimer provided at the end of each post.