• Determine the trend in a longer timeframe than the one you trade in. This is a very effective way of giving yourself an edge. Draw in the major trendlines and transfer them to the shorter time frames.
• Study the weekly, day, 4 hour and 1 hour candlestick charts before the start of trading. Look for candlestick patterns on these charts as they will give you a good clue as to what the market will do.
• Draw P, R1and S1 pvot lines. Update with R2, R3, S2 and S3 as trading proceeds.
• Draw horizontal and diagonal trendlines through relevant highs and lows.
• Draw nearby Fibonacci lines and update as trading proceeds..
• The engulfing candlestick pattern is particulariy strong and is used as follows.
♦ When an engulfing pattern appears, use the drawing tool to put a vertical line through the engulfing candle. (This vertical line on the 15minute just allows you to find the same point on another timeframe chart eastiy). An engulfing candlestick or poetic license candlestick is a sgnal to enter the trade immediately if the stochastic indicator is pointing in the correct direction. A second sgnal in the same direction will follow a few minutes later on the 5 minute chart when the 5 ema crosses the 13 ema. It is not necessary to wait for the second sgnal before taking action.
♦ Pace the trade at the point of the engulfing candle entry only if the Stochastics are pointing in the right direction. For exampe, to buy, the stochastic lines should have crossed and be pointing upwards and when selling, the stochastic lines should be pointing downwards. Waiting until the %K stochastic line crosses the %D line will sop you getting into a trade which reverses unexpectedly.
♦ If there isn't an engulfing candle on the 15 minute chart, look for one on the 1 hour chart. If the candle real body being engulfed by the body of the current 1 hour candle is small, it is often possible to pace a trade before the dose of the 1 hour candle. Sometimes the
1 hour candles travel a long way and waiting till they cose could mean that the next candle does not go very far before a reversal.
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