BTCUSD: Decoding the Price Action Through "Tape Reading"🚀 BTCUSD: Decoding the Price Action Through "Tape Reading" 🚀
Hey Traders,
Let's dive into a "tape reading" analysis of BTCUSD, breaking down the recent price movements and looking ahead. We've seen some fascinating patterns emerge, and understanding them could be key to our next moves.
🔍 A Look Back: The Bullish Flag Formations 🔍
Our journey begins on April 7th, 2025, with the establishment of a strong "Flag Pole" at $74,489.00. This was supported by a robust double bottom, setting the stage for what was to come.
First "Flag" Confirmation: We saw the first "Flag" form, confirmed by a powerful "Hammer" candle on April 20th, 2025. This Hammer, with its unique "bottom-less Marubozu" body, signaled significant underlying strength.
Second "Flag" Confirmation: Another "Flag" emerged, solidified by strong multi-day bottom support around $94,791.00. This resilience suggested continued upward momentum.
The Breakout: On May 8th, 2025, BTCUSD surged, breaking out of its previous patterns and entering a new "flag pole" formation.
Third "Flag" & All-Time High: May 15th, 2025, brought the third "Flag" formation, again supported by a "Hammer" and a bullish Marubozu. This momentum culminated in a breach of the $105,770.00 multi-month price level on May 20th, 2025, breaking the previous all-time high from December 17th, 2024! We then rocketed to a new all-time high of $112,000.
📉 Recent Developments: The Downtrend and Key Levels 📉
Since the all-time high, we've started to experience a shift:
Downtrend Begins: A downtrend initiated around May 22nd, 2025.
High-Low Formations: We observed a second high-low formation on May 27th, 2025, followed by another on June 9th, 2025.
Double Top & Hanging Man: A clear double top formation emerged, further supported by a "Hanging Man" candle on June 10th, 2025.
🔮 What's Next? The Critical Close 🔮
Today's candle close is absolutely paramount! As of now, the candle is still forming, but my current read suggests a potential move to fill the wick of the June 13th, 2025, "Hammer" candle.
The direction BTCUSD takes – North or South – will largely be dictated by how today's candle closes. This will be our prime dominant signal.
Monthly Candle Perspective:
Interestingly, the Monthly candle is showing similar "Flag" patterns. Check out the chart here for a broader perspective:
Let me know your thoughts in the comments below! Are you seeing the same patterns?
Trade safe!
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⚠️ Disclaimer: This post is educational content and does not constitute investment advice, financial advice, or trading recommendations. The views expressed here are based on technical analysis and are shared solely for informational purposes. The stock market is subject to risks, including capital loss, and readers should exercise due diligence before investing. We do not take responsibility for decisions made based on this content. Consult a certified financial advisor for personalized guidance.
Chart Patterns
Iran-Israel Political Tension & End of Crypto marketDo geopolitical tensions truly cause markets to crash or pump?
In a world where financial safety is more fragile than ever, how do traders react?
This analysis dives deep into how pro traders think and act during critical moments.
Hello✌
Spend 3 minutes ⏰ reading this educational material.
🎯 Analytical Insight on Bitcoin:
Bitcoin is experiencing a fear-driven shock amid escalating geopolitical tensions, triggering potential downside volatility toward the $98K level 📉. Despite this risk-off sentiment, the broader market structure remains intact, and I maintain a bullish bias. A recovery from key support zones could pave the way for a renewed breakout above $100K in the mid-term .
Now , let's dive into the educational section,
🧠 Fear, Safety or Opportunity? Trading Psychology in Crisis 🧨
Markets don’t move based on headlines—they move based on how the crowd feels about those headlines. Political tension triggers emotional responses, especially panic selling.
However, experienced traders spot opportunities while others flee.
In such moments, two emotional extremes dominate:
🔸 Fear of losing capital (FUD)
🔸 Greed to seize a rare opportunity (FOMO)
Both are dangerous if uncontrolled. Tools like RSI and Fear & Greed Index (via external APIs) can provide rough estimates of market sentiment and potential turning points.
📊 Practical TradingView Tools for Analyzing Crisis-Driven Markets 🔍
When global tension spikes, the markets reflect collective emotion like a mirror. During uncertain times, smart traders rely on tools that turn raw data into sharp insights. TradingView provides several features that become extremely useful in times of high uncertainty:
1. Crypto Volatility Index Proxy (using ATR + Bollinger Bands)
These indicators help detect when the market is driven more by fear than logic. They show increasing volatility levels as tensions rise.
2. Sentiment Indicators – Funding Rate & Long/Short Ratios
These metrics, pulled from major exchanges, show whether traders are overly bullish or bearish. A sudden imbalance usually hints at insider expectations or fast-breaking news.
3. DXY and Gold (XAUUSD) Side-by-Side with BTC
Analyzing Bitcoin’s performance alongside USD and gold gives insight into whether investors are going risk-off or seeking crypto as a hedge.
4. Volume-Based Indicators – OBV & Volume Profile
While headlines can lie, volume doesn’t. These tools highlight areas of serious buying/selling interest and help identify where smart money enters or exits.
5. Multi-Chart Layout Feature
TradingView allows you to analyze multiple assets together—BTC, gold, oil, and stock indices like S&P 500—on one screen. Perfect for understanding macro capital flow during geopolitical events.
💣 Interconnected Markets During Regional Conflict 🌍
Crypto often acts like a risk-on asset during global crises. If traditional markets fall, Bitcoin may follow—unless it’s being viewed as a safe haven.
That’s why watching DXY, gold, and oil charts alongside BTC is crucial.
Understanding these correlations using TradingView’s comparison features gives you a better sense of where capital is flowing during uncertain times.
⏳ What Traders Should Focus on in Crisis Mode 💼
1. Focus on chart confirmations, not news hype.
2. Use multi-dimensional analysis with TradingView.
3. Prioritize risk management more than ever.
4. Cash is a position. Sometimes the best move is no move.
5. Always have a backup scenario—no analysis is guaranteed.
📌 Final advice:
When headlines play with your nerves, data becomes your best ally.
With the right tools and a disciplined mindset, traders can navigate even the stormiest markets with confidence.
The market rewards the calm, not the reckless.
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We put so much love and time into bringing you useful content & your support truly keeps us going. don’t be shy—drop a comment below. We’d love to hear from you! 💛
Big thanks,
Mad Whale 🐋
📜Please remember to do your own research before making any investment decisions. Also, don’t forget to check the disclaimer at the bottom of each post for more details.
Wyckoff Up-Thrust - This is how to identify using Speed indexClassic Wyckoff Up-Thrust formation, this is how to read it using Speed Index (annotations in sync with the chart):
1. Fib Area - this is where sellers might come in
2. FU - Fast Up wave with SI 0.4F
3. Next up wave with an abnormal SI of 1.0S while the average speed at 0.5, which means price has a hard time to move up (more sellers on the up move). Following the up wave on the down move we have double Short signals WU-Wyckoff Up-Thrust and PRS-Plutus Reversal Short and this where we enter.
I hope this was helpful. Enjoy!
Intraday Gold Trading System with Neural Networks: Step-by-Step________________________________________
🏆 Intraday Gold Trading System with Neural Networks: Step-by-Step Practical Guide
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📌 Step 1: Overview and Goal
The goal is to build a neural network system to predict intraday short-term gold price movements—typically forecasting the next 15 to 30 minutes.
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📈 Step 2: Choosing Indicators (TradingView Equivalents)
Key indicators for intraday gold trading:
• 📊 Moving Averages (EMA, SMA)
• 📏 Relative Strength Index (RSI)
• 🌀 Moving Average Convergence Divergence (MACD)
• 📉 Bollinger Bands
• 📦 Volume Weighted Average Price (VWAP)
• ⚡ Average True Range (ATR)
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🗃 Step 3: Data Acquisition (Vectors and Matrices)
Use Python's yfinance to fetch intraday gold data:
import yfinance as yf
import pandas as pd
data = yf.download('GC=F', period='30d', interval='15m')
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🔧 Step 4: Technical Indicator Calculation
Use Python’s pandas_ta library to generate all required indicators:
import pandas_ta as ta
data = ta.ema(data , length=20)
data = ta.ema(data , length=50)
data = ta.rsi(data , length=14)
macd = ta.macd(data )
data = macd
data = macd
bbands = ta.bbands(data , length=20)
data = bbands
data = bbands
data = bbands
data = ta.atr(data , data , data , length=14)
data.dropna(inplace=True)
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🧹 Step 5: Data Preprocessing and Matrix Creation
Standardize your features and shape data for neural networks:
from sklearn.preprocessing import StandardScaler
import numpy as np
features =
scaler = StandardScaler()
data_scaled = scaler.fit_transform(data )
def create_matrix(data_scaled, window_size=10):
X, y = ,
for i in range(len(data_scaled) - window_size - 1):
X.append(data_scaled )
y.append(data .iloc )
return np.array(X), np.array(y)
X, y = create_matrix(data_scaled, window_size=10)
________________________________________
🤖 Step 6: Neural Network Construction with TensorFlow
Use LSTM neural networks for sequential, time-series prediction:
import tensorflow as tf
from tensorflow.keras.models import Sequential
from tensorflow.keras.layers import LSTM, Dense, Dropout
model = Sequential( , X.shape )),
Dropout(0.2),
LSTM(32, activation='relu'),
Dense(1)
])
model.compile(optimizer='adam', loss='mse')
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🎯 Step 7: Training the Neural Network
history = model.fit(X, y, epochs=50, batch_size=32, validation_split=0.2)
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📊 Step 8: Evaluating Model Performance
Visualize actual vs. predicted prices:
import matplotlib.pyplot as plt
predictions = model.predict(X)
plt.plot(y, label='Actual Price')
plt.plot(predictions, label='Predicted Price')
plt.xlabel('Time Steps')
plt.ylabel('Gold Price')
plt.legend()
plt.show()
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🚦 Step 9: Developing a Trading Strategy
Translate predictions into trading signals:
def trade_logic(predicted, current, threshold=0.3):
diff = predicted - current
if diff > threshold:
return "Buy"
elif diff < -threshold:
return "Sell"
else:
return "Hold"
latest_data = X .reshape(1, X.shape , X.shape )
predicted_price = model.predict(latest_data)
current_price = data .iloc
decision = trade_logic(predicted_price, current_price)
print("Trading Decision:", decision)
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⚙️ Step 10: Real-Time Deployment
Automate the model for live trading via broker APIs (pseudocode):
while market_open:
live_data = fetch_live_gold_data()
live_data_processed = preprocess(live_data)
prediction = model.predict(live_data_processed)
decision = trade_logic(prediction, live_data )
execute_order(decision)
________________________________________
📅 Step 11: Backtesting
Use frameworks like Backtrader or Zipline to validate your strategy:
import backtrader as bt
class NNStrategy(bt.Strategy):
def next(self):
if self.data.predicted > self.data.close + threshold:
self.buy()
elif self.data.predicted < self.data.close - threshold:
self.sell()
cerebro = bt.Cerebro()
cerebro.addstrategy(NNStrategy)
# Add data feeds and run cerebro
cerebro.run()
________________________________________
🔍 Practical Use-Cases
• ⚡ Momentum Trading: EMA crossovers, validated by neural network.
• 🔄 Mean Reversion: Trade at Bollinger Band extremes, validated with neural network predictions.
• 🌩️ Volatility-based: Use ATR plus neural net for optimal entry/exit timing.
________________________________________
🛠 Additional Recommendations
• Frameworks: TensorFlow/Keras, PyTorch, scikit-learn
• Real-time monitoring and risk management are crucial—use volatility indicators!
________________________________________
📚 Final Thoughts
This practical guide arms you to build, deploy, and manage a neural network-based intraday gold trading system—from data acquisition through backtesting—ensuring you have the tools for robust, data-driven, and risk-managed trading strategies.
________________________________________
ICT cheat code 15 minutes strategy using frankfort timeThis is the guideline on how to use the strategy
1.Identify accunilation ,minipulation
2.Use 06:00 to 07:00 for entry point
3.Identify either a ifvg or fvg
4.Enter at the specific time stated.
5.Target 2 takeprofits 200 pips and 300 pips
Use as stated ill be active and post at those times to show prove of strategy
Minimize Big Losses by Managing your EmotionsHow many times have your emotions taken control in the middle of a trade? Fear, greed, or stress can be a trader’s worst enemy.
This analysis teaches you how to manage your emotions to avoid big losses and look at the crypto market with a more professional eye.
Hello✌
Spend 3 minutes ⏰ reading this educational material.
🎯 Analytical Insight on PEPE :
PEPE is testing a strong daily trendline alongside key Fibonacci support, signaling a potential upside of at least 30%, targeting 0.000016 . Keep an eye on this confluence for a solid entry point.
Now , let's dive into the educational section,
💡 Market Psychology and Emotional Management
Crypto markets are highly volatile, which triggers strong emotions in traders. Fear of missing out (FOMO) and greed are two of the biggest enemies of any trader. Without emotional control, it’s easy to fall into bad trades.
The first step in managing emotions is recognizing your behavioral patterns. Once you know when fear or greed kicks in, you can adjust your trading plan accordingly.
Second, stick to a clear trading plan. Whether the market is crashing or pumping hard, stay loyal to your strategy and make decisions based on logic and analysis—not feelings.
🛠 TradingView Tools and Indicators to Manage Emotions
First off, TradingView tools aren’t just for technical analysis—they can help you control emotions and impulses in your trades. One of the best indicators is the Relative Strength Index (RSI), which clearly shows whether the market is overbought (extreme greed) or oversold (extreme fear).
Using RSI, you can spot moments when the market is too emotional—either overly optimistic or fearful—and avoid impulsive decisions. For example, when RSI rises above 70, the market may be too greedy, signaling you to hold back from jumping in hastily.
Besides RSI, indicators like MACD and Bollinger Bands help you better visualize trends and volatility, allowing you to avoid emotional entry or exit points.
The key is to combine these indicators with awareness of market psychology, making them powerful tools to manage your feelings while trading crypto.
📊 Practical Use of Indicators to Avoid Big Losses
Imagine you entered a Bitcoin long position. By watching RSI and MACD, you can pinpoint better entry and exit points.
If RSI is above 70 and MACD shows a reversal signal, a price correction is likely. In such cases, trade cautiously or consider exiting to avoid significant losses.
Additionally, setting stop-loss orders based on support/resistance levels identified by Bollinger Bands is another key risk management strategy. This keeps your losses controlled and within acceptable limits, even if the price moves suddenly.
⚡️ The Psychology of Loss and Greed — Two Big Trader Traps
After losing, it’s natural to want to recover quickly, but that’s where greed often leads to risky, poorly thought-out trades. To break this harmful cycle:
Focus on the size of your losses, not just your profits
Take a break from trading after a loss to calm your emotions
Use TradingView tools for thorough analysis and never let feelings drive your decisions
🔍 Final Advice
Managing emotions is the backbone of successful trading in highly volatile crypto markets. Smart use of technical indicators like RSI, MACD, and Bollinger Bands, combined with self-awareness and strict adherence to your trading plan, can drastically reduce big losses and maximize gains. Always remember to view the market through a logical lens, not an emotional one.
✨ Need a little love!
We put so much love and time into bringing you useful content & your support truly keeps us going. don’t be shy—drop a comment below. We’d love to hear from you! 💛
Big thanks,
Mad Whale 🐋
📜Please remember to do your own research before making any investment decisions. Also, don’t forget to check the disclaimer at the bottom of each post for more details.
Everything Looks Fine Until You're Liquidated Ever felt like the market is calm and steady, then boom — everything crashes?
Everything seems fine … until one liquidation candle slaps you awake.
This analysis explores how the illusion of safety can destroy your capital — and how to use TradingView tools to stay ahead.
Hello✌
Spend 3 minutes ⏰ reading this educational material.
🎯 Analytical Insight on Dogecoin:
If Dogecoin fails to gain at least 30% in the next two weeks—while Bitcoin continues to rally—this divergence could signal a broader market weakness. When BTC outperforms and altcoins lag, it often reflects declining risk appetite and potential capital rotation out of speculative assets. A move toward the $0.25 target is key for confirming bullish continuation across the altcoin sector. 📉
Now , let's dive into the educational section,
🧠 The Illusion of Safety: Silent Capital Killers
The biggest risk in trading is when things “seem fine.” A quiet chart is often the calm before the liquidation storm. Don't get cozy.
📍 TradingView Tools That Could Save You 🛠️
When the market feels safe, that’s exactly when danger starts brewing.
This is where TradingView’s tools come into play as your best defense.
First up: Volume Profile V isible Range. It reveals exactly where big players entered and where liquidity is building up.
Right near these zones, you’ll often find fake breakouts and whale traps.
Next: Fixed Range Volume Profile — great for identifying volume clusters within specific price ranges. If volatility shrinks while nearing a high-volume zone, get ready: a shakeout may be coming.
Don't just use price alerts. Go deeper — set alerts for EMA crossovers, sudden RSI shifts, or breaks through low-volume areas . That’s where silent moves become violent moves.
One underrated gem: Long/Short Position Tool . Use it to simulate your liquidation points before you open a trade. It’s like pre-visualizing your own death — so you can avoid it.
These tools aren’t just fancy widgets. They’re how you read the silent signals of the market before it slaps.
🐍 Whales Hunt Your Comfort Zone
The market doesn’t wait for you to be ready. Whales wait until you feel safe. Then they hit, wiping retail traders to create room for entry.
🚩 Trades Without a Plan Are Liquidation Invitations
Opening a position without mapping your liquidation zone? That’s like flying blind into a hurricane. Always have Plan A — and a backup Plan B.
🔍 Quiet Crashes Begin With Fake Breakouts
The market won’t warn you. It teases with one green candle, maybe a soft pump... and then drops like a rock. That’s the trick.
🧮 Moving Averages: When Smooth Means Scary
When EMA 21 and 55 flatten out too much, it’s not peace — it’s buildup. Flat EMAs = warning. Don’t be fooled by “smooth” charts.
⚠️ Liquidation Data = Psychological Red Flag
Liquidation spikes on sites like Coinglass aren’t just stats — they’re signs of herd slaughter. Use them as sentiment analysis. It's not just what got liquidated — it's who and why.
🧪 Post-Liquidation Analysis: Recovery or Spiral?
After liquidation, many rush to “make it back.” That's when more destruction happens. You need a post-liquidation plan, not just a pre-trade strategy.
🔐 The Best Trades Are Sometimes Early Exits
Exiting a trade that looks “fine” is a pro move. When everything feels stable, the market may be prepping to flip the table.
🧊 Cold-Minded Trading Saves Accounts
Pros stay ready during calm markets. Amateurs dive in when it’s “finally safe.” That mindset difference defines survival.
🧭 Final Takeaway
If there’s one thing to remember from this analysis, it’s this:
Never trust the market. Trust your tools. Trust your strategy.
The market is never safe — it only pretends to be.
✨ Need a little love!
We put so much love and time into bringing you useful content & your support truly keeps us going. don’t be shy—drop a comment below. We’d love to hear from you! 💛
Big thanks,
Mad Whale 🐋
📜Please remember to do your own research before making any investment decisions. Also, don’t forget to check the disclaimer at the bottom of each post for more details.
What Is a Morning Star Pattern & How Can You Use It in Trading?What Is a Morning Star Pattern, and How Can You Use It in Trading?
The morning star candlestick is a popular price action pattern that technical analysts and traders use to identify potential trading opportunities. It indicates a reversal from a bearish to a bullish trend and is a valuable addition to any trader's toolkit. In this article, we will cover all the technical aspects of the morning star candlestick pattern.
What Is the Morning Star Candlestick Pattern?
The morning star in technical analysis is a reversal formation that appears at the end of a downtrend and signals a trend reversal. It consists of three candles.
To identify it on the chart, you should look for the following:
1. Downtrend: The market should be in a downtrend, and the first candle should be long and bearish.
2. Indecision: The second candle is usually expected to have a gap down, but gaps are uncommon in forex. Therefore, a small-bodied candle is considered sufficient. It's worth noting it can be either bullish or bearish, but if it’s bullish, the signal is stronger.
3. Significant increase: The third candle should be strong and bullish and close above the midpoint of the first bearish one. If it forms with a gap up, the buy signal is considered stronger.
When Morning Star Candlestick Patterns Occur
Traders can identify the morning star candlestick pattern in stocks, forex pairs, commodities, and cryptocurrencies*. It may also be observed across various timeframes, from minutes to weeks.
Generally speaking, a morning star pattern can be considered more reliable when it appears on a higher timeframe. For instance, a morning star candlestick pattern has more significance when it occurs over three days vs three minutes, given the increased amount of price action and market participation reflected over longer periods.
Psychology Behind the Pattern
The morning star reversal pattern reflects a shift in market sentiment from bearish to bullish. Initially, a strong bearish candle indicates prevailing selling pressure. The second candle, with its small body, suggests indecision as the market stabilises and neither bulls nor bears dominate. This pause indicates that sellers are losing momentum. The third morning star candle, a strong bullish one, confirms the shift as buyers take control, driving prices higher. This pattern signals that the downtrend is likely exhausted, and a potential reversal is underway due to increasing buyer confidence.
Trading with the Morning Star
Traders can use the following steps to trade this setup:
1. Identify the setup: Look for a setup on the chart formed after a solid downtrend.
2. Confirmation: After identifying the formation, traders should confirm it before entering a long position.
3. Enter a long position: Consider entering a long position once the formation is confirmed.
4. Determine a take-profit target: Although candlesticks don’t provide specific entry and exit points, traders may consider the closest resistance level to take potential profit.
5. Monitor the trade: Continuously monitor the trade and adjust the stop-loss and take-profit levels as needed based on market conditions.
What Is the Morning Star Candlestick Strategy?
The morning star trading strategy leverages the formation's ability to signal a bullish reversal after a downtrend. The formation's reliability increases when it occurs at a support level and is confirmed by a momentum indicator like the RSI or MACD.
Entry:
- Traders look for the full morning star to form at a support level.
- They then look for a confirmatory bullish signal from a momentum indicator, such as RSI showing oversold conditions, a bullish MACD crossover, or a bullish divergence in either.
- Traders may wait for additional confirmation, like RSI moving back above 30, or enter on the close of the third candle in the pattern.
Stop Loss:
- A stop loss might be set below the swing low of the setup.
- Alternatively, traders may place the stop loss beyond the lower boundary of the established support level.
Take Profit:
- Profits might be taken at a predetermined risk-reward ratio, like 2:1 or 3:1.
- Traders also often aim for an opposing resistance level where a further reversal might occur.
Morning Star and Other Formations
Traders should not confuse the morning star candle formation with other formations, such as the evening star, which is the complete opposite.
Doji Morning Star
In a traditional morning star reversal pattern, the candle that appears in the middle of the formation has a small real body, meaning there is a clear difference between the opening and closing prices.
In a morning doji star formation, the second candlestick has characteristics of a doji, where the opening and closing prices are very close to each other, resulting in a very small real body. This reflects the indecision as neither bulls nor bears can take control of the market.
The doji setup is less common than the traditional formation, but it still signals a potential upward movement after a prolonged downtrend.
Evening Star
In contrast to a morning setup, an evening star is a bearish setup occurring after an uptrend. It also consists of three candles – a long bullish one, a small-body one (it can also be a doji), and a long bearish one that closes below the midpoint of the first bullish candle. This suggests that the market is about to turn down.
Benefits and Limitations of the Morning Star Candle
The morning star is a useful tool for traders seeking to identify potential market reversals, but it does come with some benefits and limitations.
Benefits
- Strong Reversal Signal: Indicates a bullish reversal after a downtrend, helping traders anticipate upward moves.
- Broad Applicability: Effective across various financial instruments such as forex, stocks, commodities, and cryptocurrencies*.
- Timeframe Flexibility: It can be observed on different timeframes, from intraday to weekly charts.
Limitations
- False Signals: Like all patterns, it can produce false signals, especially in volatile markets.
- Confirmation Needed: A morning star pattern entry requires confirmation from additional indicators or formations to improve accuracy.
- Experience Required: Identifying the formation correctly and interpreting its signals requires experience and a good understanding of price action.
Final Thoughts
While candlestick formations such as the morning star can be useful for traders to identify potential trading opportunities, it is crucial to remember that they are not foolproof and should not be the sole choice of market participants when making their trading decisions. Traders should also incorporate technical indicators and develop risk management techniques to potentially minimise losses.
FAQ
What Is a Morning Star in Trading?
The meaning of a morning star in trading refers to a bullish reversal formation consisting of three candles. It appears at the end of a downtrend, indicating a potential shift to an uptrend. The setup includes a long bearish candle, a small-bodied candle, and a long bullish candle.
Is the Morning Star Bullish or Bearish?
It is a bullish candlestick pattern that indicates a potential reversal from a downtrend to an uptrend in the market. It suggests that the selling pressure is subsiding, and buying pressure is beginning to take over.
What Does the Morning Star Pattern Indicate?
It is a three-candle price action, often indicating a bullish reversal in the market. It suggests that selling pressure has been exhausted, and buyers are starting to gain control of the market.
How Do You Read the Morning Star Pattern?
To read the morning star formation, traders should look for the following characteristics: a long bearish candle formed in a solid downtrend and followed by a bullish or bearish candle with a small real body, which in turn is followed by a long bullish candle closing above the midpoint of the first one.
What Is the Opposite of Morning Star?
The opposite of a morning star is the evening star, a bearish reversal pattern. It appears at the end of an uptrend, signalling a potential shift to a downtrend. The morning and evening stars are similar, except the latter mirrors the former, consisting of a long bullish candle, a small-bodied candle, and a long bearish candle.
*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.
Trading Gold with Leverage: Smart or Dangerous?XAUUSD trading (Gold vs. US Dollar) is a popular choice among global traders due to its high liquidity, strong volatility, and profit potential. One of the tools that help traders amplify their returns is financial leverage. However, using leverage also carries significant risks if not managed properly. So, what exactly is leverage in XAUUSD trading? Should you use it? Let’s explore the advantages and disadvantages below.
1. What is Leverage in XAUUSD Trading?
Leverage is a financial tool that allows traders to control a larger position in the market than the capital they actually own. For example, with 1:100 leverage, you only need $1,000 to trade a position worth $100,000.
In the XAUUSD market, brokers often offer leverage ranging from 1:50 to 1:500, or even up to 1:2000—depending on their risk policies and regulations.
2. Pros of Using Leverage in XAUUSD Trading
🔹 Amplifies Potential Profits
Leverage allows traders to maximize profits with a relatively small amount of capital. When the market moves in the expected direction, the gains can be multiplied significantly.
🔹 Lower Capital Requirement
Instead of needing $10,000 to trade 1 lot of gold, a trader may only need $100–$500 depending on the leverage. This lowers the entry barrier and offers greater flexibility in capital management.
🔹 Enables Strategy Diversification
With the same amount of capital, traders can open multiple positions across different timeframes or strategies. Leverage allows for broader portfolio diversification while still maintaining control over total risk.
🔹 Takes Advantage of Short-Term Opportunities
Gold markets often react strongly to news and economic data. Leverage lets traders capitalize on short-term price swings, enabling faster profits without needing to hold positions long-term.
3. Cons and Risks of Using Leverage in XAUUSD Trading
Risk of Account Blowout
The higher the leverage, the lower the safety margin. A small market move against the position can trigger a margin call or stop-out, resulting in a full loss of the initial capital.
Emotional and Psychological Stress
High leverage often leads traders to gamble instead of follow a strategy, increasing the likelihood of emotional decisions and impulsive trading behaviors.
Difficult to Manage During Volatility
XAUUSD is a highly volatile asset, especially during U.S. sessions or major news releases (like CPI, Fed announcements, NFP). Over-leveraging can lead to rapid losses in seconds during sudden price spikes.
Increased Emotional Pressure
When using high leverage, every small fluctuation feels significant, causing stress and encouraging poor decisions—like exiting too early or revenge trading.
4. Conclusion: Should You Use Leverage in XAUUSD Trading?
Yes, but only with a disciplined and strategic approach.
Use moderate leverage (e.g. 1:100 or lower if you're a beginner)
Always set clear stop-loss and take-profit levels
Risk no more than 2% of your account per trade
Avoid “all-in” trades and don’t let emotions dictate position size
In Summary
Leverage in XAUUSD trading is a double-edged sword. Used wisely, it accelerates your profit potential. Used recklessly, it can wipe out your account in moments. The key is to trade with discipline, knowledge, and a solid plan to harness the power of leverage without falling into its traps.
My XAUUSD Scalping Strategy: Entry, Stop Loss & Management🔹 How I Think About Trading
My core trading principle is simple: capital preservation first, then profit-seeking.
While catching an entire move from start to finish can be exciting, it usually comes with greater risk. Rather than entering once and holding the full position, I prefer to scale into the move in phases. I take an initial entry with a tight stop, and once the trade moves in my favor, I take partial profits — typically reducing 70% of the position (as I’ll explain in the next section). If the market then breaks through the next key level, I re-enter using the same approach: tight stop, defined risk, and partial profits as the move extends. I repeat this process as the trend develops.
Instead of trying to hold from bottom to top in a single position, I reduce risk at each stage and use fresh entries to stay aligned with market momentum. The final portion of each trade — what I call the “runner” — is left to ride further price movement. This method keeps me engaged in the trend while tightly managing risk on every position.
To me, trading is a game of probabilities. We use structure and tools to filter out noise and increase our win rate. That’s why I believe in maintaining a consistent risk-reward ratio — it should never be changed emotionally or impulsively
🔹 How I Enter a Trade
As a scalper trading XAUUSD:
1. I identify the trend using the 30-minute and 15-minute charts
2. I confirm setups on the 5-minute chart
3. I enter a trade with precision on the 1-minute chart
4. I align all entries with the key levels I share daily
My stop losses are always tight — typically within a $1 to $3 range.
🔹 How I Manage a Trade
For example, if 3350 is a key level, I’ll wait for price to approach it closely so I can enter with a tight stop — say, at 3349.
Once in the trade, my conservative management approach is:
1. Take 70% profit after price moves $1 in my favor(e.g., if I buy around 3350 with a 3349 stop loss, and price reaches 3351, I’ll close 70% of the position)
2. Let the remaining 30% run to capture additional upside
3. Optional: Move the stop loss to breakeven, depending on your risk tolerance
3. Trim at intraday pivot levels or structure zones
This method is especially effective for new traders — it locks in early gains while keeping part of the position open for larger moves, all without increasing risk.
Crypto Patience or Crypto Poison? Escape the Trap of HopeIs sitting on a losing position without a plan still called patience—or just chronic self-deception? How many times have we told ourselves, “Just one more pump, and it’ll come back,” only to watch our capital get sliced in half?
Hello✌
Spend 3 minutes ⏰ reading this educational material.
🎯 Analytical Insight on XRP:
XRP is currently testing a key daily support zone, aligning with a descending trendline — a high-probability confluence area 📉. If this level holds, a potential upside move of around 17% could follow, with a primary target set near 2.65. Risk management remains essential as price action unfolds 🚀.
This analysis dives into one of the harshest truths in the market: when patience stops being a strength and becomes your biggest weakness.
🧩 The Victim Mindset: Why Do We Hold?
Most traders hold losing positions not because of logic—but because of fear. Fear of being wrong. Fear of realizing the loss. So the mind creates false hope to avoid pain. Every extra minute you “wait,” without a proper update to your thesis, you're letting the market control you—not the other way around.
📊 Smart Usage of TradingView Tools
TradingView isn’t just for drawing lines—it gives you smart tools that help prevent emotional traps. Let’s explore a few that can reshape your trading mindset:
Risk/Reward Ratio Tool: If you haven’t defined your loss tolerance from the start, patience becomes meaningless. This tool visually shows you whether your hold is strategic—or just emotional.
Fixed Range Volume Profile: Traders often get stuck in zones of high trading volume. This tool shows where the market traps liquidity and traders alike.
Alerts: If you don’t set exit alerts beforehand, emotions will make the decision for you. Use alerts to guide your logic—not your fears.
Replay Tool: Go back in time, relive your bad decisions, and study them. This helps build psychological awareness through chart practice—not just technical analysis.
Using these tools consistently turns your trades into structured decisions, rather than emotional guesses. TradingView gives you everything—you just have to use it wisely.
🪤 Patience or Behavioral Trap?
Have you noticed how after long periods of “holding,” your next move tends to make things even worse? That’s called a behavioral trap. After investing time and energy into a trade, you subconsciously want to “recover” that loss. So you increase your risk—or worse—re-enter the same losing coin.
🔍 Mental Positions vs. Market Positions
Most traders think they only have a position on the chart. But there's also a mental position—made of hope, fear, regret, or ego. More often than not, it's the mental position that makes us stay stuck—not the chart itself.
🧠 Spotting Real Patience vs. Emotional Holding
A quick checklist to test your patience:
Did you define your stop-loss and target before entering?
Are you holding because of a technical level—or just fear of realizing a loss?
Did you update your analysis—or are you clinging to outdated hope?
If this trade setup happened again, would you still hold?
💣 When "HODL" Becomes Mental Paralysis
In crypto, “HODL” isn’t always strategy—it can become mental paralysis. You can’t sell, not because of logic, but because of fear. That’s not conviction—that’s a warning sign.
🧱 Didn't Go Risk-Free? Then Patience Is Gambling
Patience only makes sense if your position is at least partially risk-free. If your capital is still fully exposed, your so-called patience is just emotional gambling. The market has no mercy for those without a plan.
🧭 Smart Exits: The Only Productive Patienc e
Sometimes patience means waiting for a better exit—not for a complete recovery. Kill your fantasy scenarios and look at what risk control really means. If your patience isn’t supported by structure, it’s a ticking time bomb.
🔚 Final Thoughts
Patience in crypto is not always a virtue. Without proper tools, structure, and psychological awareness, it becomes destructive. Use TradingView's tools wisely, build discipline, and know when you're waiting with logic—or just with fear.
📜 Please remember to do your own research before making any investment decisions. Also, don’t forget to check the disclaimer at the bottom of each post for more details.
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Big thanks,
Mad Whale 🐋
Quick Lesson: Slow & Fast Flows (Study it & Benefit in Trading)It is always important to look not only at levels (supports/resistances), but how exactly price moves within them.
On the left side , we see a slow flow—a controlled and gradual decline. Sellers are patient, offloading positions over time into visible liquidity levels. Each dip is met with small bids, creating a staircase-like drop. This kind of move doesn’t trigger panic immediately, but it’s dangerous because it builds up pressure. Eventually, when buyers dry up, a larger breakdown happens.
On contrary, the right side shows a fast flow. Here, a large sell order slams into a thin order book, causing an immediate price spike down. There's little resistance, and multiple levels are skipped. This creates an inefficient move, often forming a sharp wick. These fast drops are typically caused by fear, liquidation, or aggressive exit orders. But what’s interesting is the recovery: because the move was so aggressive and liquidity was so thin, price can snap back up quickly. These are often V-shaped reversals with low resistance on the way back.
Try to look for such setups on the chart and learn how the price behaves . Studying such cases will help you identifying upcoming sell-offs/pumps and earn on them.
How to Use Fibonacci Extension for Effective ProfitHow to Use Fibonacci Extension for Effective Profit-Taking in Forex.
Fibonacci Extension is a powerful tool for identifying profit-taking levels in Forex, including XAU/USD trading. Here’s a concise, SEO-optimized guide to maximize your gains:
1. Understand Fibonacci Extension Levels
The 127.2%, 161.8%, and 261.8% extension levels predict price targets after a breakout, making them ideal for setting profit goals.
2. Identify Key Price Swings
Select swing low (e.g., 3.300 USD), swing high (e.g., 3.344.70 USD), and retracement low (e.g., 3.312.570 USD) on the chart.
3. Apply Fibonacci Extension
Draw from swing low to high, then extend from the retracement low. For example, 161.8% may project to approximately 3.360 USD.
4. Set Profit-Taking Targets
Conservative: Target 127.2% (e.g., 3.350 USD).
Aggressive: Aim for 161.8% (e.g., 3.360 USD), aligning with resistance levels.
5. Manage Risk
Place a stop-loss below the retracement low (e.g., 3.300 USD) and aim for a 1:2 risk-reward ratio.
6. Pro Tips
Combine with resistance, RSI, or volume; exit early if momentum fades. Update levels with new swings.
Leverage this strategy to optimize profits in volatile Forex markets like XAU/USD!
What is a Fibonacci Sequence and Its Application in Forex?What is a Fibonacci Sequence?
The Fibonacci sequence is a series of numbers where each number is the sum of the two preceding ones, typically starting with 0 and 1 (e.g., 0, 1, 1, 2, 3, 5, 8, 13, 21, ...). In trading, the Fibonacci retracement levels are derived from key ratios (23.6%, 38.2%, 50%, 61.8%, and 100%) based on this sequence. These levels are used to identify potential support and resistance zones where price reversals or continuations may occur.
Application in Forex
In Forex trading, Fibonacci retracement is a popular technical analysis tool applied to chart price movements to predict future price action:
- Identifying Support and Resistance**: Traders draw Fibonacci levels between a significant high and low on a chart. For example, after a price drop, the 61.8% retracement level often acts as support where the price might bounce back.
- Entry and Exit Points**: Forex traders use these levels to determine optimal entry points (e.g., buying near a 50% retracement) or exit points (e.g., taking profit near a 23.6% retracement after a rally).
- Stop-Loss and Take-Profit**: Fibonacci levels help set stop-loss orders below support (e.g., below 61.8%) or take-profit targets near resistance (e.g., 38.2% or 50%).
- Trend Confirmation**: In a downtrend, if the price retraces to the 38.2% level and resumes falling, it confirms the bearish trend. Conversely, a break above this level in an uptrend may signal bullish momentum.
Example in Practice
On the XAU/USD chart, if the price drops from 3.344.70 USD to 3.312.570 USD, Fibonacci levels can be plotted. The 38.2% retracement might fall around 3.330 USD, serving as a potential support zone for traders to watch.
LTC - This is how a Wyckoff Spring look like when reading SI Reading the chart: Location, Structure, Speed Index and Plutus signals
Annotations in sync with the chart.
1. Major Fib
2. Support
3. Breaking Support with a false break - Fast wave = low Speed Index 1.1
4. Down wave, price has a hard time to move down = high Speed Index 2.9 (buyers absorbing sell orders)
5. Entry a Wyckoff Spring WS signal from Plutus
.... and up we go!!!
Uncontrolled Greed: Save Your Portfolio by these strategies Think fear is the only emotion causing big losses? Think again — this time, it’s all about greed .
🤯 That feeling when you don’t close a profitable position because you think it still has room .
📉 Let’s dive into the chart and see how even pro traders fall into the greed trap .
Hello✌
Spend 3 minutes ⏰ reading this educational material.
🎯 Analytical Insight on Bitcoin:
Bitcoin is currently testing a major monthly trendline alongside a key daily support zone, both aligning with Fibonacci retracement levels.📐 This confluence suggests a potential upside move of at least 9%, with a primary target projected near the $116,000 mark .📈 Market participants should watch this level closely as it may serve as a pivot for mid-term price action.
Now , let's dive into the educational section,
🧠 The Psychology of Greed in Trading
Greed speaks quietly but hits hard. It whispers: “Just a bit more. Let it run.”
But that’s the same voice that turns green into deep red. Markets don’t care about your dreams.
When a small win turns into a big loss — that’s greed in action.
No one knows the top. Trying to predict it out of emotion is how portfolios get wrecked.
Greed often spikes after multiple winning trades — when overconfidence kicks in.
That’s when you need data, not dopamine.
📊 TradingView Tools That Help Tame Greed
TradingView isn’t just a charting platform — if used right, it can be your emotional assistant too.
Start with RSI . When it crosses above 70, it signals overbought zones — prime time for greedy entries.
Volume Profile shows you where the smart money moves. If you see high volume at price peaks, it’s often too late to jump in.
Set up Alerts to get notified when your indicators hit key levels — avoid reacting in real-time chaos.
Use Replay Mode to rewatch old setups and identify where greed affected your past decisions.
Customize Chart Layouts per market type. Having a focused view helps you act based on logic, not emotion.
🛡 Strategies to Defeat Greed
Pre-define your take-profit and stop-loss before you enter. Non-negotiable.
Create a Psych Checklist: “Am I trading based on a missed move? Or a solid signal?”
After every trade, reflect on what drove your decisions — fear, logic, or greed?
Take a trading break after a streak of wins. That’s when greed loves to sneak in.
Withdraw a portion of your profits to reinforce the habit of securing gains.
Practice on demo during volatile days to build emotional discipline.
Never try to win back all losses in one trade — that’s greed’s playground.
If you're sizing up every position just because "the market is hot", pause.
Focus on surviving, not conquering. Long-term traders are calm, not greedy.
✅ Wrap-Up
In crypto's wild swings, greed destroys faster than any technical mistake.
Enter with a plan. Exit with purpose. Greed-based trades usually end with regret.
Emotional control equals long-term survival. Trade smart — not just hungry
📜 Please remember to do your own research before making any investment decisions. Also, don’t forget to check the disclaimer at the bottom of each post for more details.
✨ Need a little love!
We put so much love and time into bringing you useful content & your support truly keeps us going. don’t be shy—drop a comment below. We’d love to hear from you! 💛
Big thanks ,
Mad Whale 🐋
When Intuition Beats the Algorithm█ When Gut Feeling Beats the Bot: How Experience Can Improve Algorithmic Trading
In today’s world of fast, data-driven trading, we often hear that algorithms and rules-based systems are the future. But what happens when you mix that with a trader’s intuition, the kind that only comes from years of watching charts and reading price action?
A recent study has some surprising results: A seasoned discretionary trader (someone who trades based on what they see and feel, not just rules) was given a basic algorithmic strategy. The twist? He could override the signals and use his instincts. The result? He turned a losing system into a winning one, big time.
█ What Was the Experiment?
Researchers Zarattini and Stamatoudis (2024) wanted to test whether a skilled trader’s experience could boost a mechanical system. They took 9,794 stock “gap up” events from 2016 to 2023, where a stock opens much higher than the day before, and let the trader pick which ones looked promising.
⚪ To make it fair:
All charts were anonymized — no names, no news, no distractions.
The trader had only the price action to guide his choices.
He could also manage open trades — adjusting stop-losses, profit targets, and position sizing based on what the price was doing.
⚪ The Trading Setup
█ What Did They Find?
The trader only selected about 18% of all the gap-ups. But those trades performed far better than the full list. Here's what stood out:
Without stop-losses, the basic strategy lost money consistently (down -0.25R after just 8 days).
With the trader involved, profits rose fast, hitting +0.80R just 4 days after entry.
Risk was tightly managed: only 0.25% of capital was risked per trade.
⚪ So what made the difference? The trader could spot things the system missed:
Strong momentum early in a move
Clean breakouts from long sideways ranges
Patterns that had real follow-through, not just random gaps
He avoided weak setups and managed trades like a pro, cutting losers, letting winners run, and trailing positions with smart stop placements.
⚪ Example
An experienced trader can quickly identify a breakaway gap, when a stock gaps up above a clear resistance level. Unlike random gaps, this setup often signals the start of a strong move. While a system might treat all gaps the same, a skilled trader knows this one has real potential.
█ What Does This Mean for You?
This research shows that trading experience still matters — a lot.
If you’re a systematic trader, adding a discretionary filter (whether it’s your own review or someone else’s) could drastically improve your results. A clean chart read can help you avoid false signals and focus only on the best setups.
If you’re a discretionary trader, this study is proof that your skills can add measurable value. With the right tools and discipline, you don’t need to throw away your instincts, you can combine them with structure and still win.
█ Key Takeaways
⚪ Gut feeling isn’t just noise, trained instincts can spot what rules miss.
⚪ Trade selection matters more than just following every signal.
⚪ Managing risk and exits well is just as important as picking good entries.
⚪ Hybrid trading, rules plus judgment — might be the most powerful combo.
-----------------
Disclaimer
The content provided in my scripts, indicators, ideas, algorithms, and systems is for educational and informational purposes only. It does not constitute financial advice, investment recommendations, or a solicitation to buy or sell any financial instruments. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.
All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
The 10 probabilistic outcomes of any given trade ideaOutlined below, I have come to the conclusion that there are 10, most probable trade outcomes of any given trade idea.
After seeing these outcomes, one can see what outcome is the most challenging for a trader to handle. Everyone is different and can tolerate different scenarios.
Harmonic AB=CD Pattern Guide for TradingViewThe Harmonic AB=CD pattern is a powerful technical analysis tool used to predict price reversals in financial markets. Based on Fibonacci ratios, it helps traders identify high-probability entry and exit points. This concise guide is designed for TradingView users to apply the pattern effectively.
Pattern Overview
- Structure: Four points (A, B, C, D). AB and CD legs are equal in length or follow Fibonacci ratios.
- Fibonacci Ratios:
- BC retraces 61.8%-78.6% of AB.
- CD equals AB (1:1) or extends 1.272/1.618 of BC.
- Types:
- Bullish: Signals a buy at point D (price rises).
- Bearish: Signals a sell at point D (price falls).
How to Identify and Trade
1. Spot AB: Find a clear price swing from A to B.
2. Measure BC: Use TradingView’s Fibonacci Retracement tool to confirm BC retraces 61.8%-78.6% of AB.
3. Project CD: Use Fibonacci Extension to project CD, matching AB’s length or extending 1.272/1.618 of BC.
4. Confirm D: Check for confluence with support/resistance, candlestick patterns (e.g., doji), or indicators (e.g., RSI divergence).
5. Trade Execution:
- Bullish: Buy at D, set stop-loss below D, target point C or A.
- Bearish: Sell at D, set stop-loss above D, target point C or A.
Tips for TradingView
- Use TradingView’s Fib tools for precision.
- Confirm signals with additional indicators (e.g., MACD, volume).
- Avoid choppy markets; focus on trending or range-bound charts.
The AB=CD pattern is a reliable method for spotting reversals when used with proper confirmation. By mastering Fibonacci tools on TradingView and combining the pattern with other signals, traders can enhance their decision-making and improve trade outcomes. Practice on historical charts to build confidence.
Why Higher Timeframe Analysis Increases Your WIN-RATE!Many traders focus too heavily on lower timeframes, chasing setups without any real context. But what if the secret to improving your consistency was as simple as zooming out?
In this video, we break down why analyzing higher timeframes—and trading in their direction—can significantly increase your win rate across Forex, crypto, stocks, and futures. This isn’t just a theory. It’s a principle used by institutional traders, prop firms, and consistently profitable independent traders.
✅ Here’s what you’ll learn in this deep-dive:
The real purpose of higher timeframe analysis and how it acts like a GPS for your trading decisions.
How to identify structure, liquidity, and key levels on the daily, 4H, and weekly charts
Why trading against the higher timeframe flow often leads to premature stop-outs or fakeouts
The power of multi-timeframe alignment: how to sync HTF bias with LTF entries
How trading with higher timeframe momentum helps filter noise, reduce overtrading, and increase conviction
A walkthrough example showing how to use HTF context to validate a lower timeframe setup
Whether you're trading ICT concepts, Fibs, RSI, VWAP, or your own system—this principle applies. Trading in alignment with the higher timeframe doesn’t just increase your odds, it adds structure, patience, and confidence to your process.
📌 Key takeaway: When you understand what the market is doing on the higher timeframe, you stop guessing and start positioning yourself with the move—not against it.
🛠️ Helpful for traders using:
Smart money concepts (SMC)
ICT-based models (like AMD, OTE, and NDOG)
Supply and demand strategies
Price action or indicator-based systems
PRACTICALLY ANY TYPE OF STRATEGY OR METHODOLOGY
So, I hope the video was insightful for you. Let me know if you apply higher timeframe analysis, and how it has helped you.
- R2F Trading
What are Harmonic Price Patterns?Harmonic price patterns are chart patterns based on Fibonacci ratios and market geometry, used to identify potential reversal points in Forex. They rely on Fibonacci levels (e.g., 0.618, 0.786, 1.618) to measure price structures, predicting reversal zones (PRZ - Potential Reversal Zone).
Key Features:
- Based on Fibonacci ratios.
- Geometric structure with 4-5 points (X, A, B, C, D).
- Identifies PRZ for buy/sell opportunities.
- Symmetrical, reflecting market psychology.
Key Harmonic Patterns in Forex:
1. Gartley:
- AB retraces 61.8% of XA.
- D at 78.6% of XA.
- Buy/sell at D.
2. Bat:
- AB retraces 38.2-50% of XA.
- D at 88.6% of XA.
- High-precision at D.
3. Crab:
- CD extends 161.8% of XA.
- D at extreme levels.
- Suited for strong volatility.
4. Butterfly:
- AB retraces 78.6% of XA.
- D extends 127-161.8% of XA.
- End of strong trends.
5. Shark:
- AB retraces 113-161.8% of XA.
- D at 88.6-113% of XA.
- Volatile markets.
6. Cypher:
- CD retraces 78.6% of XC.
- Short-term timeframes.
How to Use:
1. Measure Fibonacci ratios to identify the pattern.
2. Locate PRZ at D, combine with support/resistance, RSI, or candlestick patterns.
3. Set stop-loss beyond PRZ, aim for risk/reward ≥ 1:2.
4. Enter trades at D after price/indicator confirmation.
Notes:
- Requires precise measurements.
- Combine with other tools for reliability.
- Practice on a demo account first.
- Avoid during high-volatility events (e.g., news releases).
Let me know if you need details on a specific pattern!
What Is the Hanging Man Candlestick Pattern: Meaning & Trading?What Is the Hanging Man Candlestick Pattern, and How Can You Trade It?
In the world of technical analysis, candlestick patterns play a vital role in helping traders decipher market trends and potential reversals. Among the many setups, the hanging man holds particular significance. This distinctive formation captures traders' attention as it often serves as a warning sign of a possible trend reversal. This article will go through the technical analysis of the hanging man formation and explain how traders can trade with it.
What Is a Hanging Man Pattern?
The hanging man candlestick pattern is characterised by a small body near the top of the candlestick, a long lower shadow, and little to no upper shadow. It resembles a figure hanging from its head, hence the name "Hanging Man."
Psychology Behind the Hanging Man
The psychology behind the hanging man candlestick pattern reflects a shift in market sentiment. After a sustained uptrend, the appearance of this pattern indicates that buyers are losing momentum. The long lower shadow shows that sellers were able to push prices down significantly during the trading session. Although buyers managed to drive prices back up, the close near the open price suggests weakening bullish sentiment. This pattern signals that selling pressure is increasing, potentially leading to a bearish reversal as confidence among buyers diminishes.
The hanging man is a versatile formation that can be applied across a wide range of financial instruments, including stocks, cryptocurrencies*, ETFs, indices, and forex, on different timeframes.
Identifying a Hanging Man Candlestick on Trading Charts
To spot a hanging man pattern in stocks and other financial instruments, you may follow these key steps:
Look for an existing uptrend: Start by identifying a prevailing upward price movement on the chart.
Locate a candlestick with specific characteristics: Search for a candlestick with a small body near the top, a long lower shadow, and little to no upper shadow. This formation resembles a figure hanging from its head. The colour of the candle doesn’t matter, but if it’s bearish, the signal is stronger.
Consider supporting indicators: Utilise other technical indicators or oscillators to further validate the potential reversal. These can include trendlines, moving averages, or momentum indicators that align with the bearish interpretation.
Note that there is no such thing as an inverted hanging man candlestick or a bullish hanging man candlestick pattern.
Trading the Hanging Man Pattern
Those trading the hanging man reversal pattern need to apply a systematic approach in order to increase the likelihood of successful trades. Here are a few steps traders usually follow to trade this pattern:
- Identification: Identify the setup by using the steps mentioned above.
- Look for confirmation signals: The setup alone is not sufficient for making trading decisions. Seek additional confirmation through subsequent candlestick patterns or technical indicators. This can include bearish candlestick patterns (e.g. bearish engulfing or shooting star), a breach of support levels, or the convergence of other indicators signalling a potential reversal.
- Define your entry point: An entry point can be either when the next candlestick confirms the bearish sentiment or when the price breaches a significant support level.
- Consider risk management: Assess the risk-reward ratio of the trade and ensure it aligns with your risk tolerance. For efficient risk management, you may adjust your position size accordingly. Risk management tools like position sizing, setting stop-loss orders, and diversification may help protect your capital. You may set a stop-loss order above the hanging man pattern to limit potential losses if the trade goes against you.
- Identify profit targets: The candlestick itself doesn't provide specific targets. Traders can identify profit targets by looking at previous support levels, Fibonacci retracement levels, or other technical analysis tools like moving averages or pivot points.
- Monitor the trade: Keep a close eye on your position as it progresses. Pay attention to any changes in market conditions or additional signals that may invalidate the trade.
- Learn from outcomes: Regardless of the outcome of the trade, analyse it afterwards to identify areas for improvement. Assess whether the setup provided accurate signals and identify any factors that may have affected its success. This analysis will help refine your trading strategy over time.
Live Market Example
Consider the example of a hanging man on the forex USDJPY pair. An entry is placed on the next bearish candlestick with a stop loss just above the hanging man. The take profit order is at the next level of support marked by the orange line.
Limitations of the Hanging Man Candlestick
The hanging man candlestick pattern, while useful, has certain limitations that traders need to consider:
- False Signals: The hanging man can produce false signals, especially in volatile markets where price movements are erratic.
- Market Context: The effectiveness of the pattern varies depending on the broader market context and prevailing trends.
- Timeframe Sensitivity: Its reliability can differ across various timeframes; what works on a daily chart may not be as effective on an intraday chart.
- Not Standalone: It should not be used in isolation but as part of a comprehensive trading strategy that includes other indicators and risk management tools.
Comparing the Hanging Man to Similar Candles
Understanding how the hanging man pattern differs from similar candlestick patterns helps in accurate technical analysis. Here's a brief comparison of the hanging man with related patterns.
What Is the Difference Between a Hanging Man and a Hammer?
Both have the same candle structure. However, the hanging man candlestick occurs in an uptrend and signals a potential bearish reversal, while the hammer occurs in a downtrend, indicating a potential bullish reversal. Interestingly, it is possible to see a hanging man candlestick in a downtrend, often as part of a bullish retracement. Both candles require confirmation from subsequent price movements. They should be analysed within the context of the overall market trend and other technical indicators.
What Is the Difference Between a Pin Bar and a Hanging Man?
A pin bar and a hanging man are both single-candlestick patterns with small bodies and long shadows, but they serve different purposes in technical analysis. The pin bar has a small body and a long tail, indicating a reversal, but it can appear in any market condition. Its long tail shows a strong rejection of a certain price level, with the body pointing in the direction of the anticipated reversal.
The hanging man, however, specifically occurs after an uptrend and signals a potential bearish reversal, characterised by a small body at the top and a long lower shadow, indicating selling pressure.
What Is the Difference Between a Shooting Star and a Hanging Man Candlestick?
The shooting star and the hanging man are both bearish reversal patterns, but they differ in their appearance and context. A shooting star occurs after an uptrend and features a small body at the bottom with a long upper shadow, indicating that the price was pushed up significantly but fell back down, showing strong selling pressure.
The hanging man also appears after an uptrend but has a small body at the top with a long lower shadow, suggesting that sellers dominated the session despite an initial push by buyers. Both require confirmation from subsequent candlesticks to validate the reversal.
Final Thoughts
While the hanging man alone is insufficient for making trading decisions, it serves as a warning signal that buyers may be losing control and that selling pressure could increase. Traders seek additional confirmation through subsequent candlestick patterns, support and resistance levels, and other technical indicators to validate the potential reversal.
By understanding the implications of the setup within the broader market context and employing proper risk management strategies, traders can enhance their decision-making process and improve their chances of identifying different trading opportunities.
FAQ
What Does the Hanging Man Pattern Indicate?
The hanging man trading pattern in technical analysis typically indicates a potential trend reversal in an uptrend. It suggests that the buyers, who have been driving the market higher, are losing control, and the selling pressure may increase.
The hanging man is represented by a small body near the top of the candlestick, a long lower shadow, and little to no upper shadow. It resembles a figure hanging by the neck. This visual representation conveys the potential bearish sentiment.
Can a Hanging Man Candle Be Bullish?
No, there is no such thing as a bullish hanging man candlestick pattern. The bearish hanging man pattern indicates a potential trend reversal from an uptrend to a downtrend.
Is the Hanging Man Pattern Reliable?
The reliability of the formation, like any candlestick pattern, can vary depending on several factors. While the setup is widely recognised and considered a potential bearish reversal signal, it should not be relied upon as the sole basis for trading decisions. It is crucial to consider other factors and confirmation signals to increase its reliability.
What Is the Confirmation Candle for the Hanging Man?
A confirmation candle for the hanging man is a bearish candlestick that follows the pattern, confirming the reversal. This can include a bearish engulfing candle or a candlestick closing well below the hanging man's body, indicating increased selling pressure.
Is the Hanging Man Pattern Bearish?
Yes, it is generally considered a bearish pattern in technical analysis. It is formed when the price’s open or close is near or at its high, there is a significant decline during the trading session, and it closes not far from the opening price. The pattern resembles a hanging man with his legs dangling.
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Same type of reversal pattern formed on XAUUSD & GBPUSD This is the reversal pattern early sign on M15 time frame which can help you to be flexible on current market structure what price is going to do. (Early sign of Sweep in Higher Time frame).
Bearish argument formed as 15M FVG after taken out High and started to respect those Point of interest and trade lower continiously.