Ultimate Candlestick Patterns Trading Course (PRO INSTANTLY)

[Music] [Applause] [Music] hey guys welcome back to another episode candlestick patterns are one of the most important factors when it comes to trading successfully yet you'd be surprised that the majority of traders use candlestick patterns incorrectly in this video we're going to show you everything you need to know about trading candlestick patterns from beginning to end now there is a massive highly detailed candlestick patterns trading guide that works in combination with this video and is required to fully grasp these advanced concepts we'll discuss how you can get this later in the video so in order for us to keep producing these videos for free we need your support by hitting the like button subscribing and turning on the notifications bell now here's exactly what we will be covering in this video [Music] so let's get right into it [Music] [Music] we're gonna first do a quick recap of the candlestick basics to get all the new people here on the same page first how to read candlesticks you have your green candles which are bullish you have your red candles which are bearish this here is the candle body these here are the candle wicks for green candles the opening price is at the bottom here and the closing price is at the top here for red candles the opening price is at the top here and the closing price is at the bottom here the wick ends at the top represent the highest price point the wick ends at the bottom represent the lowest price point so why are candlesticks important to understand the candlestick pattern that forms acts as a leading indicator that tells you exactly what is occurring in terms of the buying and selling within the market at that particular moment in time which then helps give you a directional bias to trade in so next how do we use candlestick patterns many traders will take trade entries solely based on what candlestick pattern forms on its own which results in low quality trades what we like to do is combine candlestick patterns with key levels in areas of confluence to increase the quality of the trade and the higher the trade quality the higher the percentage chance of success so now let's dive into the exact candlestick patterns we use [Music] [Music] now there are a multitude of candlestick patterns that traders use but these are the ones we find the most effective and that occur the most often let's start with the first which is the long wick candle this is any candle where the wick is sticking out in the same direction as the moving trend now there are two variations of the longwick candle that make it of higher quality first the smaller the body of the candle the better the candle and second the longer the wick the better the candle also known as a very long wick candle so let's now show how this is used in combination with key levels starting in an uptrend first price came up hit and reversed giving you your key level of resistance as price came back up you had a perfect longwick candle form right at the key level of resistance which presented a trade opportunity short so what is the price action psychology behind this pattern buyers tried to push price higher but they failed to close it out with momentum during that initial push causing the wick to stick out if they closed with momentum then the candle should have looked like this which is a momentum candle the longwick candle forms through a combination of buyers taking profit at the key level as well as sellers stepping in and opening new short positions at the level this double action of buyers closing long positions and sellers opening short positions causes price to stall and react to the key level within that particular moment in time now going in the opposite direction price came down hit and reversed giving you a key level of support as price came back down you had a perfect longwick candle form right at the key level of support which presented a trade opportunity long so what is the price action psychology behind this sellers tried to push price lower but they failed to close it out with momentum during that initial push causing the wick to stick out the longwick candle forms through a combination of sellers taking profit at the key level as well as buyers stepping in and opening new long positions at the level so next multiple long wick candles so exactly like the name of it states this is where you have multiple longwick candles clustered together now on the charts starting in an uptrend price came up hit and reversed giving you a key level of resistance as price came back up you had multiple long weight candles form at the key level which presented a trade opportunity short so what is the price action psychology behind this pattern this shows that buyers tried over and over again to breach the resistance level for attempts in total to break through but failing showing that sellers held the level strong and that the level is valid this time around now going in the opposite direction price came down hit and reversed giving you a key level of support as price came back down you had multiple long wick candles form at the key level three in total which presented a trade opportunity long so what is the price action psychology behind this pattern this shows that sellers tried over and over again to breach the support level three attempts in total to break through but failing showing that buyers held the level strong and that the level is valid this time around so next the inverted long wick candle the inverted long wick candle is a lot like the traditional long wick candle except the wick sticks out in the opposite direction of the moving trend direction now on the charts starting in an uptrend first price came up hit and reversed giving you a key level of resistance as price came back up you had the inverted long weight candle form right at the key level of resistance which presented a trade opportunity short so what is the price action psychology behind this pattern once price got to the level you had strong selling presence that entered the market immediately within that particular moment in time causing the wick to stick out below and against the moving uptrend and validates that the level is in play and respected this time around now going in the opposite direction in a downtrend price came down hit and reversed giving you a key level of support as price came back down you had the inverted long weight candle form right at the key level of support which presented a trade opportunity long so what is the price action psychology behind this once price got to the level you had strong buying presence that immediately entered the market within that particular moment in time causing the wick to stick out above and against the moving downtrend so next the inside bar candle this is where the high and the low of the candle are contained within the high and the low of the previous scandal now on the charts starting with an uptrend first price came up hit and reversed giving you a key level of resistance as price came back up you had the inside bar pattern form right at the key level of resistance which presented a trade opportunity short so what is the price action psychology behind this pattern price failed to make a higher high candle which shows a loss of momentum from the buyers in the market and is an early signal of buyers no longer being in complete control of the moving trend direction now going in the opposite direction price came down hit and reversed giving you a key level of support as price came back down you had the inside bar form right at the key level of support which presented a trade opportunity long so what's the price action psychology behind this price failed to make a lower low candle which shows a loss of momentum from the sellers in the market and is an early signal of the sellers no longer being in complete control of the moving trend direction now before we continue we have a very important question we need you to answer do you prefer videos with a white background like the one we are using in this video or would you prefer a black background like the ones we use in all our past videos comment below right now and tell us which background color you prefer also if you're enjoying this video please hit the like button subscribe and turn on the notifications bell so that you know exactly when we release new content the last thing make sure you go follow our instagram account at wisetrade to stay notified about a lot of big projects we have on the way so next consecutive shrinking candles this is where you have consecutive candles that shrink in size notice how every candle gets smaller and smaller now on the charts starting with an uptrend price came up hit and reversed giving you a key level of resistance as price was approaching the key level notice how the candles get smaller and smaller in size now this pattern works best when it also forms a reversal candlestick pattern once price reaches the level such as a long-wick candle like this this isn't required but when you have this combination it will increase the quality of the setup so what is the price action psychology behind this pattern it shows a loss of momentum from the buyers in the market because the distance traveled per candle is shorter and shorter and is an early signal of the buyers losing control and momentum of the upwards trend direction now going in the opposite direction price came down hit and reversed giving you a key level of support as price starts approaching the key level notice how the candles get smaller and smaller in size which presents a trade opportunity long again notice how the shrinking candles finish with multiple long wick candles which increases the quality of the trade setup so what is the price action psychology behind this it shows a loss of momentum from the sellers in the market because the distance traveled per candle is shorter and shorter and is an early signal of the sellers losing control and momentum of the downwards market direction so next candles increasing in size this is where you have consecutive candles that get larger and larger in size now on the charts starting in an uptrend you first need to identify a short trade setup at resistance now some traders will take a short trade right after the long wait candle forms here which is fine but a more secure entry is to wait for this candle pattern to form where the candles get larger and larger then you would take a continuation trade short so what is the price action psychology behind this pattern the pattern confirms that heavy selling presence has actually entered the market after the trade setup because it shows a gain of bearish momentum from the sellers as the distance traveled per candle increases meaning you can use the pattern as a trend change confirmation now going in the opposite direction you first need to identify a long trade setup at support now right after the long opportunity setup occurs is when you would look for this pattern to form where the candles increase in size one after the other so what is the price action psychology behind this the patterns confirm that heavy buying presence has actually entered the market after the trade setup because it shows a gain of bullish momentum from the buyers as the distance traveled per candle increases so next the candle color change this is where you have consecutive candles all of one color before an opposing color finally presents itself now on the charts starting with an uptrend first price came up hit and reversed giving you a key level of resistance as price starts approaching the key level notice how you have all green candles before a red candle finally appears now this pattern works best when it also forms a reversal candlestick pattern once it reaches the level this isn't required but when you have this combination it will increase the quality of the setup so what is the price action psychology behind this pattern the consecutive green candles shows a continuation of buying presents before a red candle appears which then shows a loss of momentum from the buyers as price failed to close the candle with a higher candle close now going in the opposite direction price came down hit and reversed giving you a key level of support as price starts approaching the key level notice how you have all red candles before a green candle finally appears so what is the price action psychology behind this the consecutive red candles shows a continuation of selling presents before a green candle appears which shows a loss of momentum from the sellers as price failed to close the candle with a lower candle close so next the momentum candle this is where the candle body size is much larger than the previous candle which represents a heavy gain of momentum now on the charts so starting with an uptrend you first need to identify a short trade setup at resistance now some traders will take a trade short right away after the inverted long wait candle forms here which is fine but a more secure entry is to wait and see if you get a momentum candle to form like this after the trade setup then you would take a continuation trade short so what is the price action psychology behind this pattern the momentum candle confirms that a lot of sellers actually stepped into the market at the level creating the heavy bearish momentum and thus causing the massive momentum candle to form now in the opposite direction you first need to identify a long trade setup at support such as this one right here through the long wick candle now right after the long trade setup occurs is when you would look for this momentum candle to form so what is the price action psychology behind this the momentum candle confirms that a lot of buyers actually stepped into the market at the level creating heavy bullish momentum and thus causing the massive momentum candle to form now as a reminder don't forget that there is a massive highly detailed candlestick patterns trading guide that works in combination with this video and is required to fully grasp these advanced concepts so now that we've covered the candlestick patterns we look for let's get into how to actually use these patterns through a variation of entry methods [Music] [Music] so a question we often get asked is how do you trade with candlesticks in bullish bearish and in sideways markets we always read the comments to decide the next videos we plan on making so right now go to the comments below and tell us exactly what topics you want us to cover next [Music] so here's the core formula of the strategy and here are the variations of the strategy we'll be going through now for this section we are only using one time frame to keep it simple so starting with the first which is a trend trade in an uptrend here is the anatomy of the trade setup so let's show this right on the charts you have your clear moving uptrend through the higher highs and higher lows so you want to trade with the moving up trend this here was your area of confluence and where the trade opportunity presented itself because of the following factors key support level the moving average that crossed right at the same area and the 61.8 fib level now as price came back down you were looking for any of the candles we covered to form at the area of confluence to show a reaction to the level in this case here the candles you had that formed is multiple long wick candles and an inverted long wick candle again it could have been any of these candle patterns that formed as it would work the same now a reaction does not equal an automatic trade long as price can stall at the area of confluence and still break right through because even though your big picture trend is an uptrend your immediate trend is a downtrend and price can stall at the area and then still break right through and trigger a larger trend change and this is why you need the trend change confirmation after the candlesticks form and react to the key level to show that the short term downtrend is over and that the larger uptrend can continue if only using one time frame you wait and see if you get a momentum and follow through candle to form like this here which shows that heavy buying presence has actually entered the market at the area of confluence and then that is when you would take a long trade entry so going in the opposite direction a trend trade in a downtrend here is the anatomy of the variation now on the charts clear moving downtrend through the lower highs and lower lows this here is your area of confluence and where the trade opportunity presented itself as price came back up to this level you were looking for any of the candlestick patterns to form at the area of confluence and in this case you had an inverted longwood candle form followed by a momentum candle which shows a reaction to the level this setup here allowed for a trend line to be placed like this and once the trend line broke the reversal is confirmed and you would then take a trade entry short so one more example this was a short trade entry on the pinterest stock during the recent market decline we were strictly looking for short trade entries to trade with the bearish market sentiment so you had your moving downtrend through the lower highs before a descending triangle pattern formed price then broke below the pattern showing a trend continuation of the downtrend and bearish market sentiment this here was your area of confluence and where the trade opportunities short occurred as price pulled back up to this area of confluence you add your long weight candle form which shows a reaction to the area again you either take a short trade after the bearish momentum candle or the preferred method would be to look for an intraday trend change and intraday entry short using our entry strategy and tool so next a reversal trade in an uptrend here is the anatomy of the variation so let's show this right on the charts you have your key level of resistance because of this reversal point here as price approached the level you had shrinking candles showing a loss of momentum from the buyers which you like to see especially when trading counter trend once price hit the level you had perfect multiple long wick candles which shows that price tried over and over and over again to push through the level but failed showing that the resistance level held strong and that it is valid this time around you then needed a trend change confirmation which you got in two parts first you had candles that were increasing in size showing heavy bearish momentum had entered the market and two to cap it off you add a momentum candle break through the trend line all of this signals a confirmation of the reversal from an uptrend to a downtrend at this point here is when you would take a trade entry short so going in the opposite direction a reversal trade in a downtrend here is the anatomy of the variation now on the charts you have your key level of support because of these two reversal points here as price reached the level you had multiple long-wick candles including a very long wicked candle this setup here allowed for a trend line to be placed like this once you had your break through and above here the reversal is confirmed and then that is when you would take a long trade entry so next a reversal continuation trade in an uptrend here is the anatomy of the variation now on the charts you first had your moving uptrend before a double top formed followed by a break of the neckline confirming the reversal from an uptrend to a downtrend so your traditional reversal entry took place up here but this second entry here acts as another way to get into the reversal trade and is a more secure way to do so because price has already formed the lower low here and you would be riding the momentum of the fresh trend change now as price pulled back you had multiple long-wick candles react to the new level of resistance that formed trend line placed below like this and once you had your break the reversal is confirmed and you would then take a trade entry short now going in the opposite direction a reversal continuation trade in a downtrend here is the anatomy of the variation now on the charts you first had your moving downtrend before a double bottom formed followed by a break of the neckline confirming the reversal from a downtrend to an uptrend now as price pulled back you had shrinking candles followed by a long wig candle so in terms of the trend change confirmation option one wait for a confirmation candle pattern such as these candles increasing in size but the issue is you are getting in all the way up here which can be a bit late to the trade as it has already moved a bit so how do we get around this problem this leads us perfectly into our next topic which is the usage of multi-time frames which allows you to find an intraday trend change right after you had the candlesticks form at your trade opportunity area so let's get into it [Music] [Music] now as a reminder don't forget that there is a massive highly detailed candlestick patterns trading guide that works in combination with this video that goes through a lot of content and detail that we don't have enough time to cover all in this video also if you are enjoying this video and want to support our team hit the like button subscribe and turn on the notifications bell so that you know exactly when new content is released now here's the core formula combined with the use of multi-time frames and here are the core variations of the strategy so starting with the first which is a trend trade in an uptrend using multi-time frames so again you had your uptrend and your trade opportunity long at this area of confluence here you then had your multiple long-wick candles reacting to the area of confluence now the trend change confirmation came from this momentum candle here meaning you wouldn't have been able to get into this trade long until after this momentum candle closed up here and this is why you would want to use multi-time frames which is to get into this trade at an earlier entry point meaning after you had the candle six form here you would go to a lower intraday time frame and find price action that signals a trend change from a downtrend to an uptrend and get into this trade at an earlier point so let's pull up a lower time frame and put it beside this one the chart on the left is the six hour time frame we just looked at meaning every candlestick represents six hours of time the chart on the right is the same asset but using the 30 minute time frame meaning every candlestick represents 30 minutes of time same key level same pullback same area of confluence now notice how on the 30 minute time frame on the right you can see so much more detail and can actually see the swings of price in comparison to the six hour time frame on the left so again after you had these long wick candles react to the area of confluence you were looking for any form of price action that signaled a trend change from a downtrend to an uptrend and in this case here here's what you had the double bottom form right at the key support level and inside of the long wait candles from the higher time frame trend line placed above connecting the swing highs then once price broke through the trend line and formed a clear higher high with momentum this confirms the reversal from a downtrend to an uptrend and you would take a long entry on the same time frame or on an even lower time frame using our entry strategy and tool so again why are we using multi time frames if you only used the higher time frame on the left you got in at the top of this candle here which is roughly right here on the lower time frame where in contrast by using this lower time frame on the right for an entry you were able to get into the trade down here which is at an earlier point so what are the benefits of getting in at an earlier point one you were able to capture a larger portion of the move before the trend moves too far and starts suffering from trend exhaustion and potentially pulls back or reverses completely and two an earlier entry point means more profit as you're capturing a larger portion of the move so now going in the opposite direction a trend trade in a downtrend using multi-time frames so on the left is the eight hour time frame you had your moving downtrend and your short trade opportunity right here at the area of confluence once price pulled back to the area you had a candle color change and one where the wick is sticking out that's when you would look inside for a trend change and use a lower time frame such as the one on the right which is the two hour time frame same key level same pullback same area of confluence again we were looking inside of this candlestick pattern on the lower time frame for price action that signaled a trend change from an uptrend to a downtrend and here's what you had first this can be viewed as a form of double top which is a reversal pattern or if you work off of candle closes this is a full trend change pattern as you have your lower high and then your lower low and combined with a bearish momentum candle which all confirms the reversal and is when you would start looking for trade entries short on the same time frame or through a lower time frame using our entry strategy if you only used the higher time frame on the left you wouldn't have started looking for short entries until this bearish momentum candle formed which is roughly down here on the two hour time frame in contrast by using the lower two hour time frame to find an entry you started looking for short entries up here which is an earlier point and is a huge advantage so next a reversal trade in an uptrend using multi-time frames so on the left is the six-hour time frame you had your key level of resistance because of this reversal point here and this is where your reversal trade opportunity short presented itself and is where you had an inside bar pattern form at the key level so then on the right is the 30 minute time frame that was used for an entry point same key level same pullback this area here is this same area here now on the 30 minute time frame you can place a trend line like this due to the swings of price being visible where you couldn't do that on the six hour time frame on the left after the trend line was breached you started looking for trade entries short in this area here where if you only used the six hour time frame on the left you wouldn't start looking for entries until after this bearish momentum candle closed here which is roughly down here on the right lower time frame so going in the opposite direction a reversal trade in a downtrend using multi time frames so on the left is the four hour time frame you add your key level of support because of this reversal point and this is where your reversal trade opportunity long presented itself and it's where you had multiple long-wick candles form at the level so then on the right is the one-hour time frame that was used for an entry point same key level same pullback this area here is this same area here now if you use candle closes for your analysis this is a lower low whereas the rsi makes a higher low which formed a divergence and is an early signal of a possible trend change from a downtrend to an uptrend this can also be viewed as a double bottom which is a reversal pattern neckline placed at the recent swing high here and once price breaks above and makes a higher high it confirms both the double bottom reversal and the divergence reversal which makes this a higher quality trade again if you only used the four hour time frame on the left for your entry you wouldn't have started looking for long trades until after this bullish momentum candle closed up here which is roughly up here on the lower time frame in contrast by using the lower one hour time frame you started looking for long trades all the way down here which is a huge advantage so now the final two types of entries the reversal trade continuation entry in an uptrend using multi-time frames and the reversal trade continuation entry in a downtrend using multi-time frames these work the same like we previously showed you when using only one time frame except now just apply the multi-time frame on top we don't want to get too repetitive so moving on to the next topic [Music] [Music] now before we continue we have a very important question we need you to answer do you prefer videos with a white background like the one we are using in this video or would you prefer a black background like the ones we use in all our past videos comment below right now and tell us which background color you prefer also if you're enjoying this video please hit the like button subscribe and turn on the notifications bell so that you know exactly when we release new content the last thing make sure you go follow our instagram account at wisetrade to stay notified about a lot of big projects we have on the way so what are false candles and false reversals let's break it down you had your key level of support because of this reversal point once price reached the level you had multiple very long-wick candles form at the key support level and you thought to yourself this is a great long trade opportunity i'm going to open a long trade right away and make a fortune then what happens price breaks through with momentum and you lose your money this was a false reversal also known as a fake out or a trap so why does this happen amateur traders who don't wait for a trend change confirmation will enter right away after the candle patterns form at the level here and they will often place their stop losses up tight and in this area here below the candle if heavy selling presence then enters the market whether it be regular or manipulated all those stop losses placed close by below all get triggered at once which results in all those long positions that were just opened at the level being closed all at once this is what causes the heavy momentum candle to form right after which is a result of all those premature long positions that were just opened at the level being no more so how do we get around this problem you should already know the answer by now one always wait and see if you get price action that signals an actual reversal of price and two after the reversal is confirmed you need to find an actual key entry point that maximizes gains and limits risk so let's pull up a lower time frame specifically the one hour time frame to look inside of where the candlestick patterns formed here to show you how everyone got trapped now on the left is the six hour time frame we just looked at and on the right is the same asset but the one hour time frame same key level same downtrend this area here where the candlesticks formed is this same area here now notice how on this lower time frame you had a perfect descending triangle pattern that formed price broke below the pattern which is price action that signals a trend continuation of a downtrend there was zero price action that signaled a reversal and zero price action that confirmed the along with candles from the higher time frame meaning there was no trade long for you to consider a long trade entry against the strong downtrend you would need two things one a break above the pattern and a higher high and two after you had the trend change confirmation to go to the even lower time frames to identify a precision entry point that maximizes gains and limits risk so let's show this again this is the twitter stock that we took multiple short trade entries on along the way down starting from when the lower high here formed but now let's say you were considering looking for stocks to buy and adding to your portfolio at a discounted price during this market decline here's what you saw you had clear heavy bearish momentum without a green candle ever appearing which is already a bad sign if looking for long positions especially when going counter trend you noticed this very key level here because of these two reversal points when price reached the level you had this small candle with the wick sticking out which shows a reaction again if you decided to automatically go long you would have been trapped as price continued down so let's pull up the daily time frame to look inside of the candle and why this long setup failed on the left is the monthly time frame we just looked at and on the right is the daily time frame same key level same downtrend this area here where the candlestick formed is this same area here you had a descending triangle that then breaks below which shows more bearish momentum and a continuation of the downtrend before even considering a counter-trend entry against a very strong downtrend you would have wanted things like a green candle to appear or multiple along with candles to form on the higher monthly time frame on the left then a break above the pattern here and a higher high on the daily and then after all that based on the price action setup begin considering a long entry through the lower intraday time frames also as a bonus for those trading with the moving downtrend this year actually presented another short trade opportunity for you through the pullback to the broken pattern bottom so one more example this is the coinbase stock now let's first establish what gave us our bearish bias starting on the weekly time frame you had your moving uptrend with all green candles before a red candle finally appears which shows a loss of momentum from the buyers in the market so let's pull up the daily time frame so this area here on the coinbase weekly time frame we just looked at is this same area here on the coinbase daily time frame you again hit bearish price action through the lower high that formed and a lower low that formed which represents a fully formed trend change from an uptrend to a downtrend this is also a descending triangle pattern before price broke below which is again a reversal pattern from an uptrend to a downtrend so we were strictly looking for short trades to trade with this new bearish momentum and one of many entries that we took along the way down occurred right here where the longwood candle pulled back to the bottom of the descending triangle to the trend line which presented a great short trade now back to the larger topic let's jump back to the weekly again we established that we have bearish momentum so figuratively speaking let's say you are a value investor looking for stocks to buy to add to your portfolio at a discounted price during this market decline you spotted this key support level here due to these multiple reaction points as price reached the level you had a green candle with the wick sticking out again if you decided to automatically go long against the strong downtrend simply because you had candlesticks at a key level you would have been trapped as price continued down so let's pull up the four hour time frame to look inside of these candles and why this long setup failed on the left is the weekly time frame we just looked at and on the right is the four hour time frame same key level same downtrend this area here where the candlesticks formed is this same area here all you had on this time frame was your falling wedge and without a break above and without a break of the trend line and without a higher high there was no price action that signaled a reversal from a downtrend to an uptrend price instead gapped below the falling wedge and below the very key level signaling a trend continuation down now moving on to the most important topic of this video [Music] [Music] imperfect trades are when there are multiple key levels close together which creates a zone and you are taking a trade in the general zone and area let's break it down [Music] so notice to the left you would have two key levels drawn in level one here and level two here these are two very different and distinct key levels and here's the problem since these levels are close by to each other as price is approaching these levels you are thinking to yourself should i look for candlestick patterns at this first level or should i look for candlestick patterns at the second level having multiple levels drawn in close by to each other can cause confusion and analysis paralysis now to get around this problem instead of drawing in multiple levels what you do is you draw in a wide zone like this and treat the zone as a general area where you look for candlestick patterns to form within or around this is very important candlesticks don't have to form exactly within the zone they can form slightly past it as well because again you are treating it as a general area where you are looking for candlestick patterns to form so then as price pull back here and enter the zone you have the long wick candle form inside of the white zone and area which shows a reaction and that's why we call this an imperfect trade entry because the candlestick pattern forms in the general area where key levels are stacked so as always we need a trend change confirmation so let's pull up a lower time frame specifically the four hour time frame and put it beside this one on the left is the 12 hour timeframe we just looked at and on the right is the four hour time frame of the same asset same key level same downtrend this area here is the same area here now on this lower four hour time frame on the right you had your trend line placed above and once price breaks this confirms the trend change from a downtrend to an uptrend and you would start looking for trade entries long through the lower intraday time frames so let's show this again to the left level one is here level two is here these are two very clear and distinct different key levels but they are close by to one another so again instead of having two levels drawn in and causing paralysis and confusion create a wide zone and look for candlestick patterns to form in that wide zone and area followed by trend change conformation so as price came into this area here's what you had multiple along with candles reacting to the area and then a candle color change so let's pull up a lower time frame specifically the 30 minute time frame and put it beside this one on the left is the two hour time frame we just looked at and on the right is the 30 minute time frame of the same asset same key level same downtrend this area here is this same area here so inside of the candlesticks you had a perfect symmetrical triangle form and once price breaks above with bullish momentum the trend change is confirmed and is when you would start looking for long trade entries through the even lower intraday time frames so next to the left you have your level one here and your level two here again instead of having two separate levels we remove them and create a zone this is a very key area because price reacted to the area as both a support area and a resistance area so as price entered the key area here's what you had a very long wick candle and then a candle color change so let's pull up a lower time frame specifically the 30 minute time frame and put it beside this one on the left is the four hour time frame we just looked at and on the right is the 30 minute time frame of the same asset same key level same uptrend this area here is the same area here so inside of the candlesticks you could have viewed this as a head and shoulders pattern or a channel pattern regardless of which one you use neckline and support line placed below and once you had this bearish momentum kindle break through reversal confirmed and then you would look for short trade entries through the even lower intraday time frames now here's a very key point about taking imperfect entries you don't have to trade zones and imperfect trade entries you can be a more conservative trader and only look for trade setups at a clear distinct support and resistance level which is perfectly fine our job is to provide you with all the tools and you as a trader should pick and choose what works best for you based on your trading style and your risk tolerance there is no right or wrong style of trading as long as what you do makes you money that's it so one more example of an imperfect entry to the left level one here and level two here this is clearly a very key level because it is an extreme swing high meaning the highest point that price has reached in recent time and price reacted to the level every time price touched it without being able to push through now this is a great example of why you are treating it as an area because notice how price breaks slightly above an amateur trader would then think this invalidates the short trade where a more experienced trader like you are now knows that if you get an intraday trend change this short trade is still on the table remember that you are looking for candlestick patterns to form in the general area it doesn't have to be within the zone you created it can go slightly past as well this break above is also known as a false breakout and amateur breakout traders all got trapped into long breakout trades now as price entered the area you had multiple candles with the wicks sticking out in both directions which shows a reaction and indecision at the area as always we need a trend change confirmation so let's pull up a lower time frame specifically the two hour time frame and put it beside this one on the left is the eight hour time frame we just looked at and on the right is the two hour time frame of the same asset same key level same uptrend this area here is this same area here so inside of the candlesticks you had a perfect rising wedge form once price breaks below with a bearish momentum candle trend change confirmed and is when you would start looking for short trades through the even lower intraday time frames now while on the topic of imperfect trading and trading zones and areas we want to show you something interesting that occurred on bitcoin before it crashed [Music] [Music] so as you already know bitcoin and the crypto market as a whole has recently experienced a market dip before this reversal occurred if you were watching the higher time frame levels you would have noticed a few interesting things so let's break it down this is the bitcoin monthly time frame you had this very key level and area so you would have had a zone drawn in like this from our past videos you should know that things you find on the higher time frames hold more weight especially when found on the monthly time frame the reason for this is because monthly price action and monthly key levels are very slow to form so when they do form or to be more specific when they are visible and visually obvious on the monthly time frame they represent very very key levels to watch for this area was also an all-time high area which again shows how key this level and area is as price came up to this level you had multiple along with candles reacting to the general key area and zone now we're not saying you should have shorted bitcoin but if you were a holder who was running with a very large profit and with many large positions whether directly through bitcoin or correlated crypto asset this would be a good time to consider closing out positions to lock in profits and then wait for another possible future entry point so the initial reversal here shows you roughly where a lot of whales initially took profit causing the drastic dip then this second move back up to the all-time high price acted as a second chance for traders to close long positions as now they know where the parameters of the playing field are now let's pull up the weekly time frame and put it beside this one on the left is the bitcoin monthly time frame we just looked at and on the right is the bitcoin weekly time frame same key level and area same uptrend this area here is this same area here again notice how on the weekly time frame price broke out slightly above making this an imperfect area if you didn't close out your positions based on the monthly time frame price action and monthly key levels a second exit confirmation point would have been through the trendline break area here now to be clear no one could have predicted this drastic reversal here in an alternate timeline within the multiverse this could have ended up being a slight pullback and then price continued up and to the moon but as traders and investors your job isn't to only look for high quality entries and then hold those positions until the end of time the other half of the job is to identify great areas to consider taking profit to not only pull money out of the market but also to limit risk exposure now what we've covered today is only scratching the surface on our website at wisetrade.com we have a massive candlestick patterns master guide that is required to have in order to fully grasp all these concepts we have discussed in this video it goes through things like exactly how to enter and exit trades profit targets stop-loss placement and stop-loss management how to manage winning positions scaling into winning positions scaling out of winning positions and so much more we cannot cover all in this video as it would be way too long so again go to ystreet.com to get access to everything right away [Music] now again we need the answer to this question right now do you prefer videos with a white background like the one you saw today or do you prefer videos with a black background like the one we used in all our past videos tell us in the comments below right now [Music] also if you enjoyed this video and found it helpful and want to support our team please hit the like button subscribe and turn on the notifications bell so that you know exactly when we release new content the last thing make sure to go follow us on our instagram account at wisetrade to stay notified about a lot of big projects we have on the way so thanks for watching and i'll see you in the next episode [Music] [Music] [Applause] [Music] [Applause] [Music] [Applause] [Music] [Music] [Music] every dollar [Music] you

Channel: Wysetrade

Views: 3,059,213

Keywords: candlestick patterns, candlesticks, candlestick patterns trading strategy, technical analysis, stock trading, price action, cryptocurrency

Id: UU4ZQF-X9jE

Length: 53min 16sec (3196 seconds)

Published: Fri Mar 25 2022