If there is a confusing message between these two systems, e.g. if it is a buy according to the trendline and if it is a sell according to the London Open setup, you may skip the trade. However, the trendline alone is a very strong signal, so if you can find one more reason to go with the trendline signal go with it, and skip the London Open signal.
Before we do anything, we need to watch the formation of the 2:45, 3:00, and 3:15 candle. Once we know which pattern it formed we will buy or we will sell. Don't worry if there is a day without a setup. I will be probably updating this system, as I develop new setups that may show up in our trading. As you know we are dealing with the forex market where nothing works 100 percent of the time. As long as we are making more trades that are winners than losers, we are going to make money in this business. Don't rush anything. There is an old saying: "Good things happen to those who wait." Believe me, learn to be patient, wait for a setup to happen, and you are on your way to financial freedom. Just don't rush anything and don't make unrealistic goals of making $1,000,000 a year.
I grouped all the combinations according to the following system:
• Section A: white candle, white candle, white candle
• Section B: white candle, white candle, black candle
• Section C: white candle, black candle, white candle
• Section D: black candle, black candle, black candle
• Section E: black candle, black candle, white candle
• Section F: black candle, white candle, black candle
• Section G: black candle, white candle, white candle
• Section H: white candle, black candle, black candle
As soon as we have a doji formed as one of our three candles, we won't be taking trades using the London Open system (with some exceptions that are listed in the setups).
Technically, we have a doji formation when the opening and closing price of the candle is the same. However, we will modify this definition a little bit, by giving the same name to a candle where there is a one-pip difference between the opening and closing price.
Here is an example on how to quickly determine the correct setup:
1. If the 2:45 candle is white, and the 3:00 candle is black, we will know that only setups from Section C or H may happen. So we are not going to look for answers anywhere else.
2. When the 3:15 candle is almost finished, we should have an idea if it is going to close as a white or black candle. If it looks like a black formation we will concentrate on setup H.
3. At this point we have to think fast, because we will be entering our trade at 3:30 am and you need to know which setup is in place, and if this is a sell or buy setup.
All candles shown in the pictures below represent Highs and Lows (not the opening or closing price), and sentiment: bearish (black) or bullish (white). They do not represent how the candles on your chart will look like. On my charts you will see bullish candles marked as white, and bearish candles marked as blue.
We enter a long position when we have a "green setup" (B), or we enter short position when we have a "red setup" (S).
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