I think you have accurately summed up how to apply volume. In its most basic sense it shows us the strength behind price movement. In the charts you had shown, if volume had been much lower than it was, you would be wary of a false break and pullback in the near future. Whenever you are breaking through key levels you want to see a lot of market participants actively trading. Likewise in the case of a false break candlestick such as the pin bar, if it occurs on large volume you are seeing the majority of the market actively pushing price back beneath a key level. If the same signal occurs on light volume you would want to be cautious because that means the majority of traders are sitting on their hands and havenāt made their move yet. With light volume means not a lot of strength and active participation of some of the major traders.
I always consider the volume in my trading. Whether I am trading individual candlestick patterns or full patterns I look at what volume is doing and whether the volume supports the pattern or not.
You just pointed out the biggest problem with these trades, they were counter trend. I have personally not found counter trend trades to be successful using candlestick patterns alone. I will only consider a CT trade if the candlestick pattern forms inside of a full price action pattern. That means if the pin bar forms inside of a double/triple top, H&S, 1-2-3 reversal etc. And on top of that the pattern quality must be 4-5 stars or itās a not go. There are so many great āwith the trendā or range trades that happen each month, that I donāt feel compelled to take these much riskier trades.
Iām at work so I canāt pull up my charts, but from what you posted it looks like price was forming an an ascending triangle. So in this case you were not only bucking the trend, but you were also shorting an ascending triangle which was pretty much suicidal in terms of the chance this trade had of succeeding. If I were trading this I would have probably went long as soon as price broke out of the triangle. I would encourage you, any time you are ready to make a trade, also check what patterns may be forming or getting ready to break out. This helps give you that much more of a trading edge and that much clearer of a picture of the price story.
Nice find guys, obviously Iām already in short but noticed an ascending triangle on this pair last week which I believed broke lower. If you begin the line of the triangle from an earlier point you will see what I mean. I suppose itās all about interpretation.
That wouldnāt have been an ascending triangle yet because when you started drawing the trend line from that first bottom swing, a second swing high hadnāt been established yet. The triangle didnāt form until 3 candles ago when you officially had 2 equal highs and 2 higher lows that formed.
<<ā¦but now I am I will stick with the plan>> I think as time goes & price moves on & with new info unfolds we shd play by the ears and act according to new situation in our best interest. Our original plan shd not be cast rigidly on stone.
<<ā¦how would I feel if it then went my wayā¦>> This I am afraid is going to happen in fx trading. We probably need to get used to it.
Itās a probability game. Focus on the forest. Donāt be obsessed with a tree. Itās the long term results that count, not isolated trades.
[QUOTE=ākrugman25;611196ā] That wouldnāt have been an ascending triangle yet because when you started drawing the trend line from that first bottom swing, a second swing high hadnāt been established yet. The triangle didnāt form until 3 candles ago when you officially had 2 equal highs and 2 higher lows that formed.[/QUOTE]
Thanks Aaron, I didnāt know that. Would I be correct in thinking the 4hr showed an ascending triangle?
Ok So this formation has more of a chance of breaking up but doesnāt mean it wontā break below either. Price is near the end so IT MAY BE REALLY SOON that we shall see some bullish/bearish PA but you will want to see some high/ultra high volume in the PA to validate the rally otherwise a low volume bar will likely mean it would be a false break to shake out traders.
If your feeling liberal, you could set a buy limit above the highest wick of the shooting star and a S/L bellow the triangle with a tp set to either the next KHL on the W1, FIBO 161 or no tp set.
Personally Iām going to wait for more conformation.
[QUOTE=āHenry9986;611208ā]<<ā¦but now I am I will stick with the plan>> I think as time goes & price moves on & with new info unfolds we shd play by the ears and act according to new situation in our best interest. Our original plan shd not be cast rigidly on stone. <<ā¦how would I feel if it then went my wayā¦>> This I am afraid is going to happen in fx trading. We probably need to get used to it. Itās a probability game. Focus on the forest. Donāt be obsessed with a tree. Itās the long term results that count, not isolated trades. [/QUOTE]
As a member of an elite crack commando unit, all I know are plans. We once built a tank out of walnut shells and masking tape and burst out of a factory surrounded by bad guys. We donāt say we love it when a plan comes together for nothing sucka!
Hmmmm I am actually wondering the exact same thingā¦ things are moving soooo slowly these past few weeks, itās incredibly boring! Perhaps Iām guilty of wanting some action from the market which is almost never a good thing to want, but here I am, wanting
If the market is slow its most like the big market makers are waiting for some news so that they can manipulate the market to there bias as it will most like be with BIG volume which if they did out of the blue everyone would notice and join the makers and thatās the last thing they want.
Be patient in these times and instead of jumping into something soon rather do what my old pal would do
āso If I had six hours to chop down a tree, Iād spend the first four sharpening the axe. ā Abraham Lincolnā
[QUOTE=āHenry9986;611357ā]Market is quiet. What are the smart $$ waiting for? [/QUOTE]
The dollar seems to be bottoming, gold refuses to let go if 1350$, rates are on the rise and markets are very volatile and refusing to move higher.
I believe right now many institutional traders are waiting to see if the stock market party is over, if it is then you will see tons of cash pouring into safer investments such as gold and the dollar. If that happens you would most likely see the dollar pop up and also gold. Right now the planets are somewhat aligning as most markets are at major inflection points.
