The Only Technical Analysis Video You Will Ever Need... (Full Course: Beginner To Advanced)

your ability to use technical analysis in order to make good trading decisions and inevitably make money in any market is imperative it's something you cannot do without and if you do not understand some parts of technical analysis or if you don't know how to use them correctly then that is likely a huge reason that you are currently either losing money as a trader or struggling to create profits over time so for that reason what i want to do in today's video is show you everything you need to know about technical analysis we're going to be going all the way from what a candlestick chart is to indicators support and resistance trend all the way to entry patterns and how to take stops and targets we're dissecting everything today in this video i will be pouring all the knowledge about technical analysis that i have gained over the past decade of my own trading career into one video and since i'm doing that for absolutely free it would be awesome if you could just smash that like button for me to help out with the youtube algorithm if you are new go ahead and click that subscribe button because we come out with content like this each and every week you're already subscribed welcome back you know what's coming i'll see you after the intro and disclaimer [Music] so i'm gonna say this really slowly so that anybody who is brand new will easily understand technical analysis is the study of historic price movements in order to make accurate decisions of what the market may do next technical analysis is how we make those accurate decisions of what price may do next every part of technical analysis is based around price think about a candlestick chart that's just a visual representation of price itself trends are nothing more than higher highs and higher lows or lower lows and lower highs in price structure support and resistance even indicators are based around price they are just a formula added to historic price data in order to plot that indicator on your chart so because of the fact that the foundation of all technical analysis is priced the very first thing we're going to study today is a candlestick chart and i'm going to put a timestamp beside me of the seven or eight things we're going to be going over in today's video that way you can skip ahead if you already know parts of technical analysis with that said let's go ahead and dive into candlestick charts what you see on the screen in front of you is known as a candlestick chart right now we are on a daily chart of the s p 500. i'm gonna go to a price chart of bitcoin now we are on the daily chart of bitcoin and now let's go to a candlestick chart of the euro dollar now what do you notice about all three of these they all have candlestick charts so the foundation of technical analysis no matter what market you're trading in whether that be forex stocks crypto the foundation of technical analysis in every market are these candlestick charts but before we can understand this full candlestick chart first you need to understand what a single candlestick represents so let's do that now here are a couple of single candles and what these candles represent is price movement throughout a certain period of time depending on the time frame that you're on i'm sure you've all heard of time frames right the daily chart the one hour chart the five minute chart depending on what time frame you're on that's the amount of price movement these candles represent so let's consider that we are on a five minute chart that means that each of these candlesticks would represent five minutes of price movement now before i get ahead of myself candles have two parts candlesticks have a body which you can see here colored in in green and a wick which are the lines above and below the body of the candle a green candle represents a five-minute period since we're on a five-minute chart right a five-minute period where price went up or closed above where it opened we're going over that in just a second a red candle has a body as well but the body of this candle is red because it represents a five minute period where price closed below or went lower during that five minutes to make this really simple let me go ahead and explain the open high low and close the open of a candle is where it opened during that five minute period so let's say that the beginning of our candle is at 12 o'clock what this candle would represent is the open of a candle at 12 o'clock the low would be the lowest point price got to during a five minute period the high would be the highest point price got to during a five minute period and our close would happen at 1205 and that would be the ending price during a five minute period so that is a green candle a red candle represents when price went down during that period of time so for a red candle we would have an open at the top of the body this is the only difference between the two candles the open is at the top of the body of a red candle because during a red candle it represents a period where price closed below where it opened or went lower during let's say a five minute chart so the open is there the highest point is the same it's the top of the line or wick of the candle that's the highest point price got to within five minutes the low is the lowest wick on that candle that's the lowest point price got to in five minutes and the close is the closing price after five minutes of data on a five-minute chart again if we started this at 12 o'clock then the closing price would be at 1205 and this candle shows you all of price between all of the action of price between 12 and 1205 if you're on a five minute chart if we're on any other time frame everything is exactly the same except for the amount of time that passes if you're on a one hour chart then this would be the open at 12 o'clock and the close of this candle would be at one o'clock everything else stays the same the low is the lowest point that candle got to during that hour the highest the highest point that candle got to during that hour so at this point you should know exactly what each and every candle represents and we put a large amount of these candles together in order to interpret what price is likely to do next by identifying trends and areas of value identifying entry patterns which is all stuff that we're going to go over right now so let's dive down to a chart take a look at a couple of live examples of single candles and talk a little more about trend areas of value and the way we can use candlestick charts to predict what the market may do next with a high degree of accuracy just as a quick look at candles on an actual chart we are currently on the one day chart of the year in new zealand so what do each of these candlesticks represent they represent 24 hours of price movement or one day of price movement a green candle represents a day where price went higher or a day where the price closed above where it opened right a red candle represents a day when price went lower or a day where price closed below where it opened this most recent green candle what does it represent it represents price opening right here at the beginning of the day the lowest price that price got to is the bottom of this week the highest price that price made during that 24 hour period is the top of the wick right here and the close of that day is the top of the body of that candle the opposite is true for a red candle so now that we have that let's move on to how we can use a large amount of these candles in order to identify a trending market and make accurate trading decisions so if you had to take a guess of what trend the euro new zealand was in which is the chart that is in front of you what would you say uptrend downtrend or consolidation hopefully you were able to say an uptrend and simply put an uptrend is nothing more than when a candlestick chart is consistently making new highs and then higher lows fall by new higher highs new higher lows new higher highs new higher lows new higher highs new higher lows and so forth this higher high and higher low situation is what is referred to as a trending market and this particular situation would be an uptrend now the reason we utilize a trending market is because it gives us more accuracy on our trades you've probably heard followed the trend before and most beginners will gravitate towards trend trading for good reason again it adds accuracy to your trait it can make for better reward to risk setups and all in all it's much easier to ride a trend that's already there than to pick the very top or the very bottom of a market trying to trade reversals so it's a good thing to trade with the trend with this market being in an uptrend what direction would you like to trade this market to the upside right you'd want to be buying while the market is in an uptrend but here's the problem with trend identification that i see all the time and that is just not really understanding or having a set in stone objective defined way to identify trend a lot of traders can easily identify this right that's an easy trend to see but what if price is acting like price normally does and it looks more like this we have our high low a new high but then price does this and this and then finally goes up and then goes up again at this point doesn't it get a little bit harder to identify trends so with that being the case i want to give you an objective way to identify trend right now what we have in a trending market are impulsive moves that is the big moves that break into new highs right here is our impulsive move i'll label those with an i these are the impulsive moves after an impulsive move the market takes a breather we call that our pullbacks these are our pullbacks in price this would be a pullback followed by our next impulsive move that breaks a high right here impulsive move and again pullback right here so the objective way that we're going to be identifying trend is the lowest low of the pullback cannot be broken for us to stay in an uptrend so once we have this move that breaks and closes above our previous high we call that our what impulsive move once we have that impulsive move breaking into new higher highs which is what we're looking for in an uptrend this market is still considered in an uptrend until we break our close below the lowest low of the previous pullback so when we get a break above this high right here when this market breaks above this high with the new impulsive move making a new higher high then this market is still considered to be in an uptrend until or unless the market breaks and closes below what the lowest low of the pullback which would be where i just put this line this is the lowest low of that pullback so as long as the market stays above that low then we're still considered to be in an uptrend and we still want to look for buying opportunities at this point right here we have had what another impulsive move this move is our impulsive move because it broke above the previous higher high at this point what level cannot be broken for us to continue this uptrend we cannot see the low of our pullback broken where's the low that's the lowest point price got to in this pullback as long as the market stays above that level and continues making higher lows and higher highs than we're still in an uptrend what we do not want to see is the market come down and break below that previous low of the previous pullback i know that might sound complicated we'll do it on a real chart to help clear things up also if it sounded complicated just go back and rewatch this portion of the video this is how i objectively identify whether the market is trending up or down is going to be the opposite we'll look at a downtrend as well but the reason we have to have this information is because we want to be trading alongside the trend of any given market if this market's in an uptrend like this do i need to be trying to sell and go short and go against the trend no because the likely scenario is that we're going to continue into this trend we're going to continue breaking into new highs and just to show you that let's click play and see what happens at at this point right now looking at the chart what do you expect to happen what do we have we have our low just as we were just drawing it out to a high a higher low a higher high here's our higher low right here our higher high our higher low our higher high and our higher low we have now done what created an impulsive move what do we expect after the impulsive move we expect a pullback but what cannot happen this pullback after our impulsive move cannot break and close below the low of our previous pullback this is the low of our previous pullback so if this market does this then we're expecting what a possible reversal we're expecting this market to possibly head lower but as long as we stay above this previous pullback we're still considering this market in an uptrend still looking for buying opportunities let's see what this market does boom just like that we break into new structure highs continuing this uptrend here on the euro new zealand so that's how i identify uptrends list now switch the script flip the coin if you will and take a look at downtrends and how to identify those in order to make more accurate trading decisions so if for a uptrend we are looking for higher lows and higher highs what do you think we're looking for with a downtrend it's the complete opposite right we're looking for a starting point here then we're looking for lows followed by a lower high followed by a lower low followed by a lower high followed by a lower low followed by a lower high so on and so forth and with this being the case just like with the other example i'll give you an example on the whiteboard here if we're heading lower it's really easy to identify this as a downtrend this chart extremely easy what about when price does what price normally does and we get something like this and then the market goes like this and gets higher and consolidates and then finally breaks below this low well now since we just went over this you know that this is still a downtrend unless what happens just like an uptrend we have our impulsive moves here followed by pullbacks what we do not want to see is the market break and close above the high of the previous pullback in a downtrend if that happens then we're considering that a possible reversal but as long as that doesn't happen then we are still in a downtrend and what kind of trading opportunities are we looking for if this market's heading down we're looking for selling opportunities as long as the market continues to head in the downward direction so that is my objective way of identifying trend and at this point you have a lot of knowledge you've gained throughout this video you now understand candlestick charts you understand how to identify a trending market whether that be up or down so if you've already gained value why not go ahead and smash that like button for me and what we're going to do now is talk about how to find high probability areas of value using structure support and resistance see you there support and resistance are simply areas in the market that price is likely to react from support is an area in the market that price is likely to have a bounce up from or be supported by whereas resistance is an area in the market where the price of an asset or currency pair or crypto or stock is likely to fall or drop down from these areas are based on historic price and based on other areas of support and resistance we can see in historic data and those are based on the decisions of all other market participants we're not going to dive into the psychology of support and resistance in this beginner video but these areas of support and resistance are useful for three main reasons you can use them to spot possible reversals you can use them as entry points on train continuation trades and you can use them to help you determine your stops and targets so what we're going to do right now is go over a couple of those as i said earlier most beginners are going to gravitate towards trend continuation trading so what i'm going to do is show you how to use these areas of support and resistance to make better trading decisions while in a trending market and i'm going to go over how to use them to help you set your stops and targets so let's go ahead and dive into some charts and talk about support and resistance and how they can help us make better trading decisions using support and resistance as entry points in a trending market is very simple if we build on what we already know from the previous lesson about trend if we were to draw out a trending market it would look something like this low to a high pull back break above a little bit of consolidation not crossing that previous pullback low though so what are we still in an uptrend right continuing then pulling back continuing up pulling back and continuing higher in an uptrend the likely scenario if we're going to continue in this uptrend and one of the best ways to look for possible support and resistance trades is to look at the previous level of resistance that was broken to become support this is how we use support and resistance for entry points in a trend continuation model and in a trending market is by using that previous level of resistance as possible support let's do a bearish example in a bearish trend the trend would look something like this right as we go further and further what we're looking for in a bearish trend is for the market to get back up to that previous level of structure support that now we expect to become resistance so this is called a break and re-test strategy and what we're looking for with this strategy again is the market to break below a previous level of support like we have right here come back to that level and provide a trading opportunity we're going to talk about how we enter trades later on in the video but what you need to know right now is using structure support and resistance for entry levels in a trend continuation model and in a trending market goes like that and what we're going to do now is take a look at this on live chart data here we are on that same euro new zealand chart what did we just discuss well we want to see the trend start so we have our low to high high or low followed by our higher high at this point the reason this is our higher high is because this is where the market made a new high compared to its previous high and closed above the previous level of resistance with that being the case the previous level of resistance is likely to become support for a trend continuation market for a train continuation trade if we continue looking here we have a push-up a pullback a push-up to a new high this pullback where does this pull back come to if i was to draw this box out right here at our previous level of structure resistance and make it a little easier to see for you what do you notice at this point with this trend continuation in mind the market made a new high with our impulsive move comes down to our pullback where does our pullback come to our pullback comes right into the previous high that was broken this is resistance turned into support and this is how we use support and resistance to find entry points in trend continuation let's take a look at a bearish example of this now here we are on that same euro aussie chart we looked at for the trending model we were discussing earlier in the video in this case we have our high down to our low up to our high once we break below this low right here what are we looking for in a bearish trend after we break that low we would be looking for a pullback and let me delete these lines to make it easier to see into that low just as we have right here and a continuation of the trend afterwards as you can see this market pulls back right into the previous area of support it does become resistance and this market continues pushing down this happens over and over again and looks to be happening right now on live chart data here on the euro aussie let's draw that out so you have a complete comprehension of how to use support and resistance to find entry points in trending markets we have our high to our low our lower high what happens we break below what our previous low if we put a box around that previous low what has price now done price has now came back into that previous support level that now is what it's a break in retest strategy so if it was support it's now going to be resistance so at this point once we get to that level we can start looking for entry reasons again we're gonna talk about ways to enter the market in these type of situations a little bit later on in the video but for now it's just important for you to understand and comprehend that we're looking for breaks and re-tests of support and resistance levels in trending markets whether we're trending up or down that shouldn't have been too hard to comprehend but if you had any trouble rewind the video and watch that section again now let's talk about how to use these levels for possible targets let's go back to a bullish example so for a bullish example of this let's say that you got a entry in this area on a lower timeframe let's say you drop down and you saw like a double bottom or something in this area if that's the case then the way we could use support and resistance for possible targets is this level of support this box that we drew we definitely want our stop loss below that level so with that being the case we would make sure that our stop is below that level keeping us safe in terms of what we can expect out of targets the way we use this to prepare to take those targets is if we're expecting train continuation and before i continue do you see how everything's coming together we learned about trend in the last section if your pullback has not broken below the low of the previous pullback then what's the likely scenario that we break above these highs right into new highs and continue in this uptrend with that being the case what if you said well the way i'm going to take targets on this trade is by looking at the previous high and taking my targets there because the likely scenario is that this market continues higher so then you would place your targets based on this resistance level right here and that is how you use trend and structure in order to give yourself good reward to risk ratios and accurate trading opportunities in this case would have been about 3.6 reward to risk ratio on this trade my camera literally just died on me but i have an extra camera so no worries let's wrap it up with a recap for a trending market to the upside what we are looking for is a level of resistance to break and then we're looking for the pullback after the break of that level of resistance to come back to that level of resistance we're then looking for that level to become support in an uptrend and in a trending market for a downtrend we are looking for quite the opposite we're looking for a level of support to break and then the market have a pullback that comes back to that level of support we're looking for that level of support to become the likely area of resistance for the continuation of that downtrend in terms of stops and targets we're using these levels to make sure our stop loss is beyond that level of support that we point out or that level of resistance we point out and we want to look left and make sure our targets are not close to a level of resistance for a buy trade or not past a level of major resistance because that level of major resistance may push the market down we want to make sure we take targets or at least roll stops to break even before the market gets pushed down by that level of resistance the opposite is true in a downtrend with a level of support if you're selling you want the market to go lower you don't want to be beyond a level of support so that wraps up the support and resistance lesson next up we're going to talk all about indicators and how they can help you make better trading decisions let's do that right now before we get started i need you to make your chart look exactly like this just joking but trading indicators are formulas added to current and historic price and mathematical equations in order to plot lines and histograms on your chart the purpose of trading indicators is to help simplify what price is doing a candlestick chart itself can be very confusing at times so trading indicators are meant to clean up some of that noise they can also be used as an invaluable objective role in a trading strategy or in our trading in general to help us have consistency so essentially trading indicators can help to provide clarity on market conditions they can even help us to identify trend identify areas of value help us find entry points and even help us determine where we want to place our stops and targets now there are thousands of trading indicators out there and feel free to go test and study all of them to find the ones that fit your trading style best but in this lesson what i'm going to do is share with you my top three that i use every single day in my trading as indicators to help me make better trading decisions so let's jump into that right now the most useful indicator that i have ever found and with no exaggeration an indicator that i use every single time i place a trade is the atr indicator atr stands for average true range and what this indicator does is gives you the average movement of price out of the last 14 candles the way it works is it adds up the price movement in total the total amount of pips each candle moved out of the last 14 candles then it divides that number by 14 to give you the total average movement of price in the last 14 candles hopefully you can already see why that is so valuable but if not let's talk about how we use this indicator before we do that let's talk about how to find it on trading view it's super easy you go up here to your indicator tab click indicators and you type in atr it is the first one that is called built-ins any trading platform should have an atr indicator if it doesn't you probably shouldn't be trading with it but the way we use this indicator is to stay in line with the volatility of a market currency pair or time frame for example there's been so many times that i see a trader or hear from traders and they say stephen i don't know what i'm doing wrong i keep losing trades and you know i'm i got a good reward to risk ratio but i'm losing so much i'm still losing money in my account and they'll send me emails of their trades and they're risking 10 pips to make 20 pips but they're doing that on every currency pair and every time frame now this may work on a five minute chart maybe right on a 15-minute chart possibly that creates a profit depending on the strategy but if you're on a daily chart risking 10 pips when the average if you look up top here whenever i go away from my drawing tool the average movement on a daily chart is 190 pips you think that 10 pip stop loss is going to get hit yeah 90 of the time 90 of time you're gonna lose that trade because you're not in line with the volatility of the time frame you're on the same thing goes for different currency pairs for example the euro pound in the currency world is a currency pair that has a very small amount of movement per candle on the daily chart we're looking at 50 pips again look up here at the circle right at 48 pips that's a full day of trading on average for the euro pound whereas the pound new zealand on the same chart look at this day 160 pips so do you think you need to be using the same exact stop loss when these two markets are moving so differently one moving in tiny amounts per candle one moving in huge amounts per candle no so that's why we need the atr indicator to help us stay in line with the volatility of a certain currency pair or a certain time frame to keep from getting wicked out by the market if you've ever been wicked out of a trade a lot of that could be because you're not following the volatility of a certain market so now let me move on and show you how i actually use this in my own personal trading so based on what you've learned so far in this video what trend is the aussie canada in right now well we've had a high down to a low up to a lower high down to a lower low with that being the case are we in a downtrend yes we are and in terms of structure and support and resistance we look for while in a downtrend what are we looking for we are looking for the previous level of support to become resistance in a downtrend and we haven't gone over this yet but we actually have a nice inverted hammer here or a nice shooting star candle whatever you want to call it i don't really worry about the names of them this candle has a long wick to the top side again we're going over candlestick patterns actually in the very next lesson but right now what i want to show you is how i would use the atr to help me predict stops and targets in terms of how i would use that indicator to place those let's go ahead and put a position tool on the chart right now the atr if you look in the top left corner of the screen right up here is 67 for the aussie canada if the atr is 67 what i want to do is make sure that i am at least one atr above the swing high of this current pullback to give the trade breathing room so if up to that high is 30 pips as you can see right here this is up to the swing high then i need to add 67 pips to that that would be a 97 pip stop loss now i know that i said we shouldn't be looking past levels of support like this in order to take targets but in this situation let's just do it anyway and with that being the case i may say something like i expect this in terms of targets right this was how i use it for stops i make sure that i'm at least one atr above the swing high or below the swing low if i'm shorting versus going long now for targets i may say i'm expecting the market to move two times the atr indicator so what's two times 67 134 so now i can have a 134 pip target and again this would work better if there wasn't a level of structure in the way but for the purpose of the atr indicator just go with it and that sets me up with a 1.4 to 1 reward to risk ratio this is how one of the ways that i would use the atr in order to place stop losses another way you can do this is by simply this is a more simple way is by saying okay i want a stop loss that is two times the atr indicator from my entry so that would be 134 from entry right and in order to get a two to one reward to risk ratio i want to have a 4 times atr indicator for my target 134 times 4 is 268 and that would be a 2 to 1 reward to risk ratio and that would be the way your trade setup looks at this point you're giving yourself room for your stop loss and you're accounting for the volatility of the market in terms of finding targets as well those are the two ways i like to use the atr indicator let's now move on to the next favorite indicator that i have the second most valuable in my opinion which is moving averages moving averages are exactly what they sound like it is the average movement of price over a certain period of time so the red line you see on the screen right now is the 20 period moving average what that means is that this indicator took the closing price of the last 20 candles and then divided that number by 20 in order to plot this line on the screen if this moving average was to be 50 periods or look back period or length whatever it's defined as in your trading platform it may be slightly different if it's 50 though what does that mean that means that this indicator took the closing price of the last 50 candles divided that by 50 and that's how you get this line on your screen right here now in order to plot this on the chart it should be self-explanatory but you just go up to indicators here on trading view it's very easy you type in moving average without that weird vocal tone and then you go down to moving average and just plot it on the chart now there are three main ways i use moving averages let's go ahead and dive into those right now the first way that i like to use moving averages is to help me define trends so earlier in the video we talked about candlestick charts and a defining trend with swing highs and lows as i said about indicators earlier though indicators are there to help you clarify what price is actually doing so a moving average is a great objective way to define trend the way you would do that is if price is trading above whatever period moving average you choose for short term trends the 20 works great if price is above the 20 then i am in an uptrend and i'll do an example on the screen now for if price is below the 20 then i am in a downtrend and that's the way we would use a moving average a single moving average to help us define trend and the way we would trade based around that is we only look for buy trades while price is moving and creating new highs and lows above the 20 period moving average for this short term trend and highly volatile trend if it's staying above the 20 moving average then a really high volatility trend great time to trade breakouts which we're gonna discuss later on in the video but the next way i like to use moving averages is as an area of value as you can see on the chart here yes this is cherry picked and it will not work every single time i'm not saying buy every time the market hits the 20 period moving average trust me i've done that and it sucks it does not work that's why let me just break off for a second here that's the reason that we have to have a combination of all of these technical factors in order to create a profitable edge over the market in a profitable system we can't just use one but let's get back to the video this can add confluence to a trade when you're using this area of value with combinations like the previous level of resistance that was broken and candlestick patterns right but as i digress the 20 period moving average can act as a great area of value in short term trends as you can see on the chart here when the market pulls back to that moving average we get a pop out of it pulls back gets a pop out of it pulls back gets a pop out of it now in terms of using moving averages for identifying areas of value there are only three i would use and that is the 20 period moving average we have right here the 50 period moving average that we have right here as you can see support provided area value out of the market and i bet this is going to land somewhere near the 200 or this may let's let's try it and the 200 period moving average so those are the only three i would use damn i was close those are the only three i would use as areas of value as you can see the 200 also provides resistance and support as well the reason those three work the best is because those are the top three moving averages used by traders around the world so you might as well align with them if there's gonna be a bunch of traders taking longs off the 200 period moving average that's gonna push the price up right so that's how i like to use moving averages as areas of value again not by themselves don't just buy because the market hits a moving average i got to combine that with things like structure support and resistance and candlestick patterns and other technical factors trend and other indicators in order to create that profitable edge the third way to use a moving average in your trading or the third most useful way that i personally have found is to use a moving average as a trailing stop the way that would work is maybe you decided you want to place a reversal trade after you saw something like this the market broke above a previous resistance right our trend continuation trade that we've talked about we got our higher high higher high higher low higher high now we're pulling back into that resistance let's say you place a trade there so your entry would be right here boom you enter the market and at this point you have a stop loss one atr right below the lows so let's say here's your stop i'm gonna color that red what you would do with the third way is use the moving average as a trailing stop so if you were just going for a regular two to one you'd probably be out of your trade right up here and that's great you know you got your two to one reward risk awesome but if you would have used the 20 period moving average as a trailing stop you could have got a little bit more out of this trade taking profits up here closer to a three or four to one reward to risk ratio so in a trending market using a moving average as a trailing stop can be highly beneficial to capture more of that trend and essentially capture more targets out of that particular trade so those by far my favorite two indicators the other indicator that we are going to go over although i barely use it is the rsi indicator because i do think there's a place for it when trying to trade reversals only when combined with other factors like structure higher time frame trend all of things that we're going to go over later in the video but we are going to discuss the rsi indicator right now the rsi indicator is considered by most traders as a reversal indicator when in fact it's actually a momentum indicator it tells you when price has been moving in a certain direction for a long period of time this is why we don't just sell when the market goes over ball and buy when the market goes oversold let me digress one more time with the rsi indicator most traders think that when the market uh price is above 70 that that means it's time to sell in order to look for that possible reversal and when the price is below 30 on the rsi that means it's time to buy for a big reversal to the upside while this may work out sometimes without combining this with other technical factors it is a losing strategy other technical factors including major levels of structure trend on higher time frames things of that nature but as i said there is a place for the rsi indicator i'm going to go over this very briefly because i know how long this video is going to be already the place i see the rsi indicator is if we're at a previous level of major structure resistance when this market goes into an overbought scenario and if we have something called rsi divergence where price is making higher highs and the rsi is making lower highs then we get a candlestick pattern like an engulfing pattern that is an area where i believe the rsi is extremely useful outside of using this indicator as a confluence with multiple other technical factors i don't see it being as useful as things like the atr indicator and the moving average indicator but i did want to throw this on the screen here and throw it in with this video because i think it can be useful when used properly when used with divergence and higher time frame structure levels and trend but with that said that is going to do it for indicators next up we're moving on to how we actually enter the market we're talking candlestick patterns chart patterns breakout patterns the real nitty gritty i'll see you guys there candlestick patterns are candlesticks that form in a very specific way in order to help us determine what price is likely to do next you may have heard of some of these before candlestick patterns like the engulfing pattern are very popular hammer and shooting star candles are extremely popular and there are tons of candlestick patterns out there feel free to go study all of them but it's unnecessary because what i'm going to do right now is give you my favorite three candlestick patterns that i use in my own personal trading but before we do that let's talk about how we use these candlestick patterns candlestick patterns can be used to help us spot reversals they can be used to help provide clarity on market sentiment and they can be used for entry reasons and trend continuation and reversal trades that's what i normally use them for and now let me show you the three candlesticks that i use most often the first one is called the 382 candle or 38.2 percent candle and you're gonna understand why in a second you may be looking at these going man steven that looks like a hammer or a tweezer top and that looks a lot like a shooting star why are you calling it a 38.2 candle because the name of the candlestick pattern does not matter let me explain the reason i call this a 38.2 candle is because the role that i have for this pattern and what it shows us is that price or buyers the market itself meaning all of their participants have pushed this market all the way down to the bottom of this wick remember when we talked about candlestick charts at the very beginning of the video price moved all the way down to here but what happened after price moved down there buyers came in and took control pushing us all the way back up near the highs this is a huge bullish sign for me and a reason to expect bullish pressure afterwards in any particular market the reason it's called a 38.2 candle is because in order to objectively identify these candles the only thing i do to make this extremely simple and let me talk about the reason i do this first if you ask people what a hammer candlestick is or you show them a chart i'll put a chart on the screen and ask is this a hammer or is this a hammer candlestick you may get two different answers what i'm trying to say is that candlestick patterns unless you have rules for them are subjective and in order to have consistency in our trading we have to be objective so an objective rule i have for the 38.2 candle is that i pull a fibonacci retracement from the swing low of the candle itself to the high of the candle itself as long as the entire body of that candle is above the 38.2 retracement then i count this as a valid 38.2 percent candle and i count this as a candle that's showing me buying pressure you guessed it it's the exact opposite for a bearish version of this pattern a bearish version of the 38.2 candle what do you think i'm gonna do to identify this pattern in an objective way i'm taking a fibonacci retracement from the top of that candle the high down to the low and as long as the entire body of that candle is below the 38.2 retracement then i know that selling pressure is likely to come into the market again the way we use these types of candles is if this was to occur at the top of an uptrend it might be a sign of a reversal if this was to occur in a downtrend on our pullback it might be a sign that we're about to continue in trend we're going to talk about that on a live chart after i go through the other two candlestick patterns so next after the 38.2 candle we have the engulfing candle this is a candle you've probably heard of and you may already know how to identify but in the forex market the way i identify an engulfing candle is a candle that has a larger body than the previous candle and that changes colors so for a bullish engulfing pattern i need to see that the previous candle was red that the next candle is green and that the green candle has a larger body than the previous candle that is a bullish engulfing candle for me we'll take a look at a bearish engulfing on a chart so i'm not going to have to do that right here so next up we have the close above and close below candle again all these candles are used in the same way they're all either going to be used to help you identify reversals market sentiment or help you enter on trend continuation trades here we have close above and close below candle pretty self-explanatory but a close below candle would be a candle in which the close of that candle is below the low of the previous candle as long as that happens that to me is showing selling pressure and the opposite would be true in the bullish direction we would have it close above again we'll take a look at that down on the chart but right now let's go take a look at a few live examples of the 38.2 candle first so here we have a good example of a 382 candle or 38.2 percent candle and what i want to do is explain to you how all of these things are already coming together and we haven't even hit the end of the video yet what have we learned about trend trend is when the market is making new higher lows and higher highs what have we learned about indicators when the market's above the 20 period moving average we are in a highly volatile up trend what have we learned about support and resistance the previous level of resistance is likely to become support right now with all of that in mind what did we just learn a specific candlestick formation called the 38.2 candle look right here does this candle have a long wick let's talk about the psychology behind it really really quickly the candle opened here sellers pushed it all the way down to the bottom of the wick but buyers took back over as soon as they happened as soon as that happened as soon as the sellers said we're pushing this market down buyer said hell nah we're pushing it back up and they did we close up here closer to the highs this happened while in an uptrend and at our area of value being this previous resistance level now let's make sure this is a 38.2 percent candle we have to use a fibonacci retracement we're pulling it from the low of the candle to the high of the candle and once we do that is this candle the entire body of it above the 38.2 retracement it is therefore objectively we have a reason to enter this market that's what i was talking about when i said these can be used for entries into a long-term trend so in this case we have a long-term uptrend we have a market at an area of value and we get our specific entry reason showing us buying pressure now again we're combining everything so let's put on our position tool what if we say okay one atr how do we play stops with the volatility of the market that we're trading right now in the aussie canada daily chart the atr or average true range is 66. so let's go down to our swing low to our swing low is right at 47 pips that plus 66 is 113 pips so we have a 113 pip stop loss on this specific trade and let's say we want to use two times that atr as our target 66 times 2 is 132. so move that up to 132 and we now have our trade setup let's click play and see what happened boom hit targets no problem for about a 1.2 to 1 reward to risk ratio i wanted to do that entire scenario just to show you how everything is coming together if you liked that then make sure to go ahead and smash that like button you've been watching this bad boy for like 45 minutes now i know you've gotten at least some value out of it so go ahead and click that like button for me go ahead and comment as well if you're still here because that is amazing all right so that is our 382 candlestick pattern let's talk about how we can use it for reversals and just to show you that it doesn't always work i have no idea i've not looked at this data yet this might work as a reversal and it may not but right here what do we have we have a 382 candle at the top of an uptrend if this market happened to be overbought on the rsi check it out it is combining other technical factors looking left for resistance we're not quite at a level of resistance right now but this would be an example of the 382 candle and why would it be an example of that candle because if i pull a fibonacci retracement from the top of this candle down to the low of this candle is the entire body below the 38.2 retracement yes this is showing a selling pressure in the same way we would just set our stop loss one atr above this candle here and then have a target somewhere near these levels of support may not work out or then again if we had our targets down at this level of support then it would have worked out we would have hit those targets right here so this is how we can use the 38.2 percent candle to help us with entries on trend continuation trades and to help us identify possible reversals let's take a look at a couple of live examples of the engulfing candle as well as the clothes above close below candle but essentially they all have the same use they're all going to be used either to spot reversals or as possible entries and trend continuation trades to ride the trend up even further let's go ahead and look at the engulfing candle on live charts right now while we were on the whiteboard we looked at a bullish example of the engulfing candle so here we're going to look at a bearish example and again i want to i want you to see the things that are coming together on this trade it is a winning trade yes it's cherry picked but it has a very good merit behind it because of the fact that let's do this one more time what kind of trend are we in right now well according to the 20 period moving average we're definitely in a downtrend price is below it are we making new lows and new lower highs below the 20 period moving average yes we are here's our last low new lower low here's our last high lower high this could be our next lower high we are at what the 20 period moving average is that an area of value or possible area of resistance yes it is all of those coming together and then the entry pattern we can try to use in trend continuation type trades is what this engulfing candle as you can see here an engulfing candle as i explained earlier is just a candle in the forex market at least whose body is larger than the previous candle and i need a color change green to red that's a color change is the red body larger than the green body it is therefore we have a valid bearish engulfing candle here for possible entry into this trend continuation setup pushing the market further down and showing us selling pressure next up we're gonna take a look at the example of the clothes above candle let's take a look at that now here is a good example of a close below candle this big red candle what happens here we close below the low of the previous candle and we do so the wear is very important like i said you want to do it in areas of value right we don't want to just trade random clothes above and close below candles that's not a profitable strategy we have to combine a number of technical factors in order to create a profitable strategy so in this case what we have is the top of an uptrend this market's been heading higher what you can't see yet we know this is a valid close below right you understand that i hope that a close below is nothing more than a candle that closes below the low of the previous candle the opposite's true for a close above but i want to show you how everything comes together yet again because this happening in the middle of nowhere like it did right here is irrelevant i'm not trading this just because we have a close below candle no i want to trade these in areas of values such as previous levels of resistance as you can see my green or not green sorry my gray box here is showing that this was a level of previous resistance that pushed the market around a ton now that we're back to this level i have an area of value this is another good example of how to use the rsi indicator here we have a overbought situation and what do we have we have higher highs on price but what's the rsi doing if you remember from the indicators portion of the lesson what we were talking about in terms of divergence is higher highs on price and lower highs on the is that what we get here yes it is so with all of these factors coming together it's a pretty good opportunity to try to use our close below candle as an entry on this trade doing so would look something like this we have an entry at the close of that candle the atr is 77 so we have 98 plus 77 we're going to go 177 to make this easy math 177 for our stop loss we're going to put a target down at the previous level of support which is right here and we're going to click play to see what happens here on this specific trade as you can see the market pushes down now here's a good reason why we use that atr for our stop loss if we used a 10 pip stop above our swing high do you see how easily we would have been stopped out by this wick instead we used the atr indicator combining all of our good technical factors to help us have a positive trade here so with that said that's going to do it for the candlestick patterns portion and next up something i like even more than candlestick patterns and that is chart patterns so stick around i'll show you my favorites and how i use them in the market to help you better understand the entirety of technical analysis even more so than you already do i'll see you in just a second unlike candlestick patterns that form with between one to maybe a few candles a chart pattern is going to form with between 10 to maybe 50 candles and what they are are identifiable patterns that like candlestick patterns can give us an indication of possible reversals can give us an indication of market sentiment and can help us identify possible entries in the market chart patterns are by far my favorite way to enter trades and luckily even though there are hundreds of chart patterns and feel free to go study as many of them as you would like to find the ones that fit your trading style best i personally use one type of chart pattern more often than any others and for the most part only utilize this one chart pattern in my own trading and they are double bottoms and double tops i said they're one i know that's two but they're essentially the same thing just flipped upside down so before we go through the way i utilize double bottoms and double tops in my trading we need objective rules for this the same way we had objective rules for candlestick patterns we have to have objective rules for chart patterns as well so these double tops and double bottoms are going to have objective rules and that's what we're gonna discuss right now is the objective rules for these patterns for a double bottom that's what we're looking at right now here on the euro yen for this pattern what i'm looking for and the way it looks on a chart sorry i didn't do that before the way it looks on a chart is a market that comes down creates a level of support then bounces up to a level of resistance but instead of continuing down in this downtrend we come down we re-test this level of support and we're supported yet again so much so that we push up enough to break and close above what is called the neckline so this is bottom number one of a double bottom bottom number two of a double bottom this is referred to as the neckline and that is the initial pullback from the first bottom that we need to break in order to classify this as an actual double bottom so a way that most traders enter this is either by entering exactly as the market breaks that neckline or one of my favorite ways to enter and the way we're going to talk about and discuss entering today is waiting for the market to break and close above that neckline and then getting a pull back into that neckline the reason i trade double bottoms like this is because i can get smaller stops therefore having a larger reward to risk ratio on these types of trades so that is how we spot double bottoms let's go over how we spot double tops first and then i'm gonna talk about how i actually use these patterns to consistently make badass trades in my own trading let's check out a double top though so a double top is going to be when the market pushes up to a level of resistance then pushes down in our initial pullback but instead of continuing this uptrend we now test that level of resistance once more and find resistance yet again the market then breaks through the neckline so on a double top we have top number one right here we have top number two right here and the support level that was created after top number one is known as our neck line we need that neckline to break to validate that this is actually a double top and the way i said we're going to be trading these today is by waiting on a pullback after that validation after that break we want to see a pull back into our level of support and that's where we're going to be placing possible trades and looking for the continuation down now before we get into how i use it i know i said we're going to right after this i want to talk about those objective rules so the objective rules i have for a double bottom let's actually start there is i need to see the first bottom and the pullback at the point that i see this first bottom and a pullback what i do is place a box my box is going to be let me make this way way more easy hold on here we go okay so at this point it doesn't look like a double bottom right but i need an objective rule for how i'm going to enter a double bottom so what i do at this point whenever i see a bounce like this is i place a box from the lowest bodies of this first low to the lowest low of this first low that is what i call my termination point what i want to see is the market re-test this point a candle can close inside of this area a wick can go past this area we could see nothing but the wick of a candle touch this area all of that i would consider a valid double bottom what i would not consider a valid double bottom is if we get a candle but the wick doesn't touch my area or if we get a pullback and we see a candle that closes all the way below my zone those two situations are no longer a valid double bottom for me so those are my objective rules for a double bottom we'll click play here and see what the market does as you can see we've now entered into my termination zone we have not closed below it therefore we have a valid double bottom so far still is this valid yes no candles closed below my zone therefore i'm still in considering this a valid double bottom the next thing i need to see is a break of this neckline once i see that like we do right there i'm then waiting for this market to pull back to that neckline to place my possible entry once we do that and pull back to the neckline i want to see buying pressure for me buying pressure is nothing more than a green candle once i see buying pressure here's i'm just explaining to you exactly how i trade these double bottoms or exactly how a lot of people trade them i trade them slightly differently but for the purpose of this video this is what we're going to talk about so i would place an entry there we have a 17 pip atr right now so 17 plus 30 is 47 47 pips and i want to target my next level of resistance which is right up here in this area so at this point we have our trade setup we've had buying pressure after a double bottom has been confirmed by the breakout and a pullback to the neckline plus buying pressure okay cool we're in the trade let's see what happens eventually pushing up down up down this is the reality of trading guys you will be tortured emotionally during situations like this but it's just what happens sometimes while we're trading and there we go finally hitting targets you have to have emotional fortitude that's something unfortunately we're not gonna have time to discuss in this video because it is going to be well over an hour long i already know that but that is how i would trade the double bottom the double top would be the exact opposite of that we'll go over that really quickly you should have a pretty good idea by now but here on the double top the only difference is i am putting a box let's actually does it sound like i'm saying pudding it does to me let's put a box right there so now what i'm waiting for for a double top is the market to push up into an area of resistance and have a pullback once i have that pullback i'm placing a box from the highest bodies of the first top to the highest wick of the first top this is what i call my terminations on i want to see a candle that at least touches that zone but what i cannot see is a candle that closes above this zone a candle can close inside of the zone a wick can go past the zone the only thing i cannot see is either a candle not touching it at all or a candle closing above it so with that said click play you already know what this turns out like yes we have a valid double top and yes we broke the neckline the way i would trade this is by waiting on selling pressure at the neckline as the market pulls back up clicking play yet again selling pressure would be this red candle stop loss at that point would only need to go above our swing high and then we could target whatever we needed to pushing lower and that my friends is how i use the double top and double bottom strategy so now you have the rules based approach i take to spot these patterns the way i enter them is with buying pressure at the neckline after the break the other thing you need to know about these patterns is they work best whenever you're aligning yourself with higher time frame trends so let's say you're trading these patterns on an hourly chart if you're trading a double bottom on the hourly chart and what i mean by that is you actually see the double bottom itself on an hourly chart you want to make sure that the daily chart is in an uptrend so that way you are aligned with a daily chart uptrend while trading a double bottom on a one hour chart the opposite is true for a downtrend and a double top if you're trading a double top on let's say the one hour chart you want to make sure that you are aligned with the daily chart trend you want to make sure the daily chart is actually in a downtrend while you're trading that double top on a lower time frame this is going to add an amazing amount of accuracy to your double top and double bottoms trade double bottom trades it'll also add accuracy to any other chart patterns that you decide you want to add to your trading arsenal so that's gonna do it for the chart patterns portion of this lesson next up we got breakout patterns so we're gonna go ahead take a look at some breakout patterns and how i like to use them in my own trading to make the best trading decisions possible i'll see you there breakout patterns are when the market goes from a low period of volatility to a much higher period of volatility we see that a lot on uptrends and downtrends what we see is impulsive moves the market makes a large move to the upside and then we see a small period of consolidation before the next large move to the upside we call these flag patterns we're going to talk about those in just a second we also see this in the form of what i trade and call and what is called i guess you could say ascending and descending wedges what this means an ascending wedge is when price has a level of resistance that it cannot get above but as it's testing that level of resistance the support level is rising so that means that buyers are coming in sooner and sooner at higher and higher prices until eventually that pattern breaks out to the upside and a descending wedge is the opposite we have a level of support we have lower highs coming in showing that sellers are stepping in sooner and sooner at lower and lower prices and eventually that breakout level gives way to what we call an ascending and descending wedge breakout pattern those are the two breakout patterns i personally use the most there are many more breakout patterns that you are free like everything else in this video to go study on your own but i want to talk about the ones i'm actually familiar with and the ones that i personally use so let's take a look first off at flag patterns let's talk first how do we use flag patterns we now know what flag patterns are how do you use them well i use them to capitalize on volatile trends what did we talk about earlier a volatile trend oftentimes stays above the 20-period moving average as you can see on the chart here we have price staying above the 20-period moving average so the way i like to use a flag pattern is if we are staying above the 20-period moving average and we've just had an impulsive move to the upside then i want to draw out a flag pattern on my period of consolidation after that period of consolidation we get what is known as a breakout candle this breakout candle breaks the top trend line of that period of consolidation and this is when most traders decide to enter on a flag pattern trade i'm going to give you some specific rules in just a second but let's take a look at one more example we have another situation here where the market's continuing in trend we make an impulsive move that breaks above previous resistance we then see this market have a period of consolidation this pullback that as you can see looks like a flag right we have the poll which is normally the amount of price the impulsive leg before the period of consolidation we have a small period of consolidation then we have our breakout candle and the market continues in that uptrend this happens time and time again in volatile trends and that's how we can take advantage of flag patterns and volatile trends now just as with everything in our trading we need to have some objective rules here so for me one of the best objective rules i have found when trading flag patterns is that i want to only trade these patterns when they happen above or near the 20 period moving average that's the only time i can actually place trades based on flag patterns because the 20 period moving average acts as my filter for highly volatile trends and i only want to take flag pattern breakout trades if the trend is highly volatile because that's my best chances of having a move higher and for stops and targets we'll go and discuss those you should have a pretty good idea where do you think i would put stops and targets if my entry candle is this breakout candle right here what do you think i would do for stops i would have my stop loss below the previous low by what one atr as we discussed earlier so let's go ahead and set this trade up it would look something like this and a target up here at the previous level of resistance right here so at this point you know exactly how i trade bullish flags this video has gotten well over an hour long so i'm not going to do an example of a bearish version of this just flip it upside down it's literally the same exact thing in the opposite direction in terms of a bearish flag pattern we'd be waiting on the market to head down with an impulsive move head down with an impulsive move we would be trading this small period of consolidation on a breakout of that period of consolidation to the downside we'd be selling or going short so that is again how i trade flag patterns let's take a look now at another breakout pattern that i really enjoy using which is the ascending and descending wedge here is an ascending wedge and unlike flag patterns that take just a few candles to set up these types of patterns normally take anywhere between 20 and 50 maybe even 100 candles to actually set up their larger patterns but essentially what we're looking for with a wedge pattern is a level of resistance that the market is having trouble getting past but at the same time we're having trouble getting past this level of resistance we want to see sellers stepping in at higher prices what this is showing us is that excuse me i said sellers i've met buyers we don't see buyers stepping in at higher prices what this is showing us is that buyers are more and more interested in this currency pair stock crypto whatever it may be they're more interested in higher prices and as we continue to make these higher lows the not inevitable but likely scenario is that eventually we bust through this level of resistance because sellers eventually give up trying to push the market down from this level of resistance as their pushes down gets smaller and smaller and we get higher and higher lows they eventually give up and when they do it looks something like this we get a breakout of that level now one of my favorite ways to trade this is on the pullback almost like the double top and double bottom we were looking at earlier but a lot of traders trade on the breakout candle that we can see right here the way i like to trade them is after this breakout i like to wait for a pullback back into my zone of resistance when i get that pullback i look for buying pressure what do i define as buying pressure a green candle so once i pull back to that zone and get a green candle that is when i personally we'll enter the trade so now we have a pull back into the zone waiting for a green candle boom personally i would be entering into the trade here we'll go ahead and do the trade setup we've had all of our rules met for an ascending wedge we have a level of resistance that is acted as resistance multiple times we have rising support levels coming into that level of resistance we now have a breakout of that level and a pullback to that level of resistance at this point yet again whenever i find buying pressure here that is when i want to place a trade because of the fact that i waited for the pullback i can now have a much smaller stop loss based on this previous swing low so i have an atr of 36 pips on my entry candle i want to be 36 below my swing low so 39 let's go 40 plus 36 is 76 pips 76 pips would be about right here with that being the case where is my target going to go if i place targets based on structure the next level that looks to be a major level of structure support or resistance is right there so let's see what that would look like do i get more than a one to one reward risk i get about a one-to-one reward to risk ratio maybe move stops at break even when the market hits that price right and then continue with the position let's see what happens we push up we push back down stopped out for break even or we watch the market continue and eventually push higher but that regardless of how that trade worked out is how i would be trading ascending wedges and the exact opposite is true again this video is getting very long so just flip that over what we're looking for for a bearish version a descending triangle is nothing more than a level of support that's hit multiple times while we have falling resistance levels or falling swing highs falling swing highs plus the same level of support is going to give us a descending triangle descending triangles once broken to the downside are likely to continue in that direction personally i wait on this pullback to come back into that level sometimes it doesn't happen and i miss out on some trades but it gives me a better reward to risk setup so i like to wait on that pullback in terms of getting a better reward to risk on these trades so i would love to be able to tell you that this is all you need and now you can go out there and trade and make money quit your day job and you'll be good to go from here on out unfortunately that is not the case unfortunately just understanding technical analysis isn't enough although in this video i did share everything you need to know about technical analysis i did not and was not able to in one video share everything you need in order to be a consistently profitable trader but luckily we do have some space available in our mentorship program so if you would like to learn the exact combination of technical factors i use that i call a strategy the exact strategies that i use every single day in the market if you would like mentorship from me personally with any questions you have about the course that we have that we offer or about forex in general if you would like to receive a video every single week of the trade setups that i'm looking to take throughout that week along with much much more including an entire course that goes over the other two huge aspects of trading outside of technical analysis which are trading psychology and risk management if you want access to all of that and you want to speed up your journey to becoming a consistently profitable trader then there's a link below to a very discounted price on the eap training program we're actually running the black friday sale again and the reason is because well mostly i'm just too lazy to create a new sales page and i want to give you a discount for watching this entire over an hour long video so if you're interested in that you get everything that i've ever made in terms of paid content for 697 or for like three payments of 297 if you can't afford the whole 697 we do have a payment option you can learn all about the program what it includes and how you can get access to it by clicking the link in the description labeled eap training program if not that is totally fine too you now have everything you need to know about technical analysis combine some of these technical factors to create your own strategy take that strategy back test it create risk management plan around it and work on your trading psychology demo trade for a while so that you get confident and consistent probably you need to look up some videos on this if i was you i would literally go on youtube look up risk management if you only know technical analysis now and you're a complete beginner go on youtube look up risk management look up trading psychology try to implement those into all everything that you've already learned then create a strategy out of everything you've already learned by combining a bunch of these technical factors and try demo trading that for a while to see if you can actually create a profitable three months with a rules-based strategy if you can hats off to you you're doing better than 95 of traders and then you can choose when you would like to take your trading live as i said we do have the eap training program at a major discount right now check that out if you want some more advanced training and some more help with your trading personally from me if not totally fine too make sure you click that like button make sure you're subscribed i am so tired right now because i've been doing this video for like eight and a half hours that i am out and i'll see you guys in the next video talk soon

Channel: The Trading Channel

Views: 1,559,919

Rating: 4.9786167 out of 5

Keywords: Technical analysis, technical analysis for beginners, technical analysis forex, technical analysis cryptocurrency, technical analysis tutorial for beginners, technical analysis of stocks, technical analysis for options trading, technical analysis course, technical analysis for dummies, technical analysis secrets, technical analysis chart patterns, technical analysis tutorial for begginers, technical analysis for begginers, technical analysis vs fundametal analysis

Id: eynxyoKgpng

Length: 77min 35sec (4655 seconds)

Published: Thu Mar 11 2021