Identifying Candlestick Signals

It is necessary to know that a fore market is either in one of two common situations. Either a range bound market with resistance and support levels. This is the most common market situation. The different market that forex trader's find themselves in is a market trend with market price making higher lows and higher highs in a bullish trend or the opposite in a bearish trend.

Here is the main rule for candlestick entries that we want to concern on once forex market type has been determined.

-          If in a range market, we want to concern on candlestick patterns close support or resistance for trading. Support and resistance can be determined by looking price action ceiling and floors or by using pivot points technical indicator in graph.

-          If in a trending market, we want to concern on candlestick pattern close reverse in the direction of the market trend for open positions. In addition to pivot points, we can also use other indicators like 200 SMA to assist us determined candlestick formations around important price in the forex market.

Pivot points are a favorite technical indicator to assists you determine future levels of support and resistance to limit risk and set targets. The pivot  is the high, los and close added up and then divided by 3.  Pivot  point =(H+L+C)/3. This is more simple than it looks because it will be a main indicator you can add. Once the pivot point indicator is plotted with a Moving average indicator, we will find for market price action to trade to one these levels.

That is if we will heighten our attention to formations that develop to find if a reversal is upcoming or continuation is shown.

On the chart above, we can find market price test and trade off of the pivot point level. We also find additional situation around the 200 SMA that confirms the reversal of the resistance level reverse to the pivot point level. There is nothing analyze about the Pivot levels except the fact that many forex traders find to them in plotting profit targets, stop exits or determining when to stop selling or buying. When you add pivot point onto the graphs, you find that the market price often tests these levels in either continuation or showing a strong reversal.

Following chart describes market price reversal off the pivot point levels and trading up to the resistance level.

 

The point is that you can find to pivot point levels and a moving average indicator for trading continuation or reversal trading and then set your stop loss under the signal and your target close the support or resistance level. This will make sure you keep right trading management while searching for right entries.