Hello, Konnichiwa.
This is Kei and I am a professionaltrader in Tokyo, Japan.
In this part 2 of price action video series, I will be talking about another 4 common patterns and how you can trade with those signals.
So if you like this video already, pleasepress a good button, and let’s get started right now! Alright, the first one I am introducing isspike low.
Look at this chart.
As it says here, it really works when thisshows up during the down trend.
How you can identify this is that the lowshould be clearly all the way down from the previous low, I mean, the wick pointing downwardsshould be especially long like this in this chart example.
And when you find this pin bar, you can callit spike low.
And what this means is it’s the indicationof a trend reverse.
So like in this example, when there’s adown trend like this, after you see a spike low here, the trend might reverse to the upside.
More precisely, when there’s a down trendfor a couple of days perviously, you know, it’s been lower low, higher low, but ifyou look at this pin bar pointing downwards, it’s obvious that it’s way below fromthis previous low, and also this low.
It’s way below down here.
And if you look at this candle, the body isvery tiny, you know, it’s just this much, but the wick is pointing down very long, right? So when you see a candle stick like this whileit’s on a down trend, that means it shows there’s a higher possibility that the trendreverses to the upside after this day.
This is one of the very important candlesto look for because when there’s a trend reverse, you can see this spike low very often.
One of the examples would be when you lookat this chart, this is the Daily chart of GBPJPY and if you look at these, there arewicks pointing downwards and the trend reversed to the upside after this.
And remember what I said earlier? The spike low should be appeared when themarket is on a down trend.
You should look for the spike low while themarket is on a down trend, not while it’s on the up trend.
So for example, this one right here is notthe spike low, you see? If you only remember the pin bar and looka this chart, and when you find this one right here, you might think it’s the signal ofthe market keep moving up, and you might place buy here.
I used to think like that, too when I wasa newbie, like as soon as I found a pin bar anywhere, I thought it’s a trend reversesignal.
But let me tell you, this one is not reliablebecause it’s appearing while it’s on bullish momentum.
So the lesson is, when you look for this spikelow, always look for it while the market is on down trend, not while it’s on up trend, alright? So when you look at these spike lows and placesell here, you will get all these pips and it’s going to be a lot of pips because thisis in Daily chart, like this first one, it’s like 350 pips to the top, so if you place1 lot, then you’ll get like $3, 500 of profit, right? So after you watch this video, please opena chart and look for these candles with your on eyes, then you’ll get to realize a lotof things by yourself.
So now, I think you have an idea of what thisspike low is like.
Alright, let’s move on to the next one.
It’s the spike high.
You may already have an idea what it’s like, but this one is basically the other way around from the spike low.
So this one also has the precondition.
When you look for a spike high, always lookfor it while the market is on a bull trend.
And the wick should be clearly pointed uphigher than the previous highs.
And it shows the strong signal for trend reverseto the downside.
So when you look at this chart example, therewas a up trend like this, you know, lower high, higher high, but suddenly, there’sa candle stick with a long wick pointing upwards appeared on the market, and after it markedthe highest, the price came back all the way down to where it’s started, and createda wick pointing upwards as a result.
So as you can see, the highest here, the tipof the wick on this candle is the highest from all the previous candles.
So if you find this candle while the marketis on a bull trend, this is going to be an indication of the trend reverse to the downside.
So if you have a buy position, you may takeprofit, or close it with break even.
Or, if you want to sell after this, you cando so to get all these pips to the downside, alright? Le me share a real chart.
This is an example in EURUSD in Daily chart.
And last year in 2018, if you look at themarket right here, there was a wick pointing upwards with a tiny body, right? And this is the indication of a trend reverseand in fact, the market dropped all the way down here until it showed another spike lowdown here.
So as you can see, the spike high especiallyworks while the market is on a bullish momentum.
You know, I think you learn the best whilelooking at the live chart, so try to look for these spike high and low or other patternslike runway up and runway down from part 1 with your own eyes.
Or, as you may know, I do the live streamingevery Tuesday and Friday, so you can join and watch the market realtime with me andlook for these price actions.
And if you don’t understand fully on anyof these, make sure you look back the video and try to understand 100% because every stepyou take along with my video will help you to become a professional trader because Ionly introduce the techniques I use, and I became independent like this.
So I’m sure you can be like me if you masterall these and apply yourself.
And if you have any questions on anythingI’ve said earlier, please feel free to ask me anytime through email, or facebook, orwhatever, alright? because I’m here to help you and I really want you to be an independenttrader, and that’s why I keep uploading these videos.
Alright, so let’s move on to the next priceaction pattern.
This is called Inside.
And what this price action looks like is whenyou see today’s candle is within the high and low of the previous candle, this patternis called inside.
So when you look at this example on the left, look at this candle stick.
The high is here and the low is down here, right? and if you look at the one before, the high was at this level and the low wasat this level.
So you can see the current high and low areall within the previous high and low and this is called inside, or in Japanese, it’s calledHarami candle pattern.
And what this shows is the market is goingto be in a range.
It shows that a consolidation is going tohappen.
For example, if there was a bullish trendbefore, if you look at this inside, then you can expect the trend will stop and the marketmight be into a range.
And how you can trade if you see this insideis, when the price breaks out towards the direction of the major trend, then that showsthe trend continues.
So when there was a bullish trend prior tothis inside, when it breaks this range upwards, most likely a bullish trend may continue.
So after the breakout, for example you canbuy here at the push back and follow the major trend and take profit.
If you are still a newbie, don’t think complicated.
Just think to follow the trend after breakout, and it’s ok for now.
But the point is, when you see this inside, then you better wait until the price breaks to either direction, because as you see onthis example, usually the market moves up and down with big volatility after the inside.
So you may not be able to expect a big profitunder this condition, you know you will have a risk to get stop loss many times by thesewicks because the market gets volatile.
So considering the efficiency in time andmoney, I wouldn’t trade in this condition.
But rather, waiting for the breakout whilelooking at other pairs might be a wise decision.
Here is another version of inside.
The previous one was the inside while themarket is on bullish, but this one is while it’s on bearish, so basically it’s thesame thing.
But when there’s an inside during the downtrend, it should be when the price of high and low today is within the previous highand low.
So when you look at this pin bar or Doji candleright here, when you look at the previous high and low, the candle is all inside, right? And let’s say there’s a continuous beartrend and you see this inside price action.
Then you think to wait until the price breaksthe lower support line downwards, and you actually place sell here, right? After this, the price bounced up a littlebit, but eventually kept going down like this.
So again, when you see the inside on the market, expect that there will be a range, and the market may consolidate by itself.
And talk to yourself, like “I won’t betrading unless it breaks it downwards” alright? This is truly based on my trade experience, and you will see lots and lots of market like this.
So I’m sure you can also apply this on themarket.
Moving on to the next one, it’s called Outside.
And what this price action means is that it’swhen today’s candle is completely within the tomorrow’s high and low.
So in this chart example, it’s here on thisblue one.
As you see, the high and low of this bluecandle is completely within the high and low of next day’s candle stick.
Inside was the other way around.
Inside was when the previous candle coverstoday’s candle, but the outside is when next day candle covers today’s candle stick.
And when you see a pattern like this, mostlikely it shows the continuous trend towards the breakout of the next day candle.
So for example, when there’s a continuousbull trend and when you find this outside, then it indicates the bullish trend may persist.
And note that on this outside price action, you can judge it today, I mean when this is a Daily chart.
However, as for the inside, just by lookingat this candle stick on this day, you still don’t know if it’s going to be insideor not until you see the next candle, you see? But as for this outside, you can tell it todayright? after today’s candle covers previous day’s high and low.
For example, look at this chart.
This is a H1 chart of AUDJPY and while themarket has been uptrend, if you look at a candle right here, you can see there’s aclear outside bar, you see? this high and low are engulfing the previous high and low, And after this, the price kept going up, so if you buy here, you can get all thees pipslater on.
So this is an example of how you identifythe outside bar and apply it in a real chart.
So again, open up a chart and look for whereyou can find these 4 price actions, and make sure to check with your own eyes where theyappear on the market, so that you can apply to it by yourself.
Alright, on the next video part 3, I willbe talking about some of a trade strategies on Pin Bars and how you can identify themfrom multiple time frame charts so that you can increase your trade accuracy.
So if you don’t want to miss the video, make sure to subscribe and hit a bell so that you get an notification when it’s uploadednext Monday.
And also, if you liked today’s video, andif you can press a good button, I will appreciate it very much.
Alright, so I will see you on the next one.
Stay Gold, Matane.
