30.07.2012

Greetings!

Alexander Shevelev is in touch.

Traders are constantly on the lookout for profitable trading strategies. Everyone is looking for special patterns on the charts. Of course, now we are not talking about adherents of fundamental analysis (more about them), they do not need figures on the charts.

For techies, models, figures, patterns are the basis of trading. If you deal with these concepts, then everything is clear with the model and the figure. These are Russian words, and at least their meaning is clear, but the pattern is more interesting. In fact, the pattern is the same model or figure. In English, this word will sound exactly like this: “pattern”.

Now it becomes clear that models, figures, patterns are one and the same, and each person calls it the way he likes best.

Now let's deal with the main thing - the meaning of these concepts.

In trading, a model, a figure, a pattern is a set of certain elements that flow from each other and increase the probability of a positive outcome of a transaction after opening a position. In this case, absolutely any type of analysis can be used. The most common graphic configurations.

For example, let's take the well-known head and shoulders chart pattern. In fact, this figure represents three peaks on the chart, located in a certain way. A trader who trades according to this model knows what it looks like, knows its features, and as soon as he sees this figure, he begins to plan his trading operation, because the chance that the market will move in the predicted direction increases. Patterns of this kind are also called price models, since they are formed on the price chart.

There are other kinds of models, for example, models based on the work of indicators. This is what novice traders are most often interested in, not realizing that all kinds of indicators are secondary information that is converted from a price chart. But how can you resist, if everywhere: in almost all books, articles on the Internet, posts on forums - novice traders cloud their minds???

1000 indicators... It is this massive attack that leads to the fact that you start thinking not about “should I use indicators or not?”, but about “which indicator is better to use”?

Fans of Japanese graphical analysis use candlestick patterns in their trading. This is another type of trading patterns.

Trading models can be not only purely price or based purely on the work of indicators. They can also be mixed.

For example, the market movement above the moving average can be used in conjunction with the “double bottom” chart pattern, which will make it possible to determine a more optimal point for entering the market.

Particular attention should also be paid to the volume analysis. There are a huge number of patterns based on the analysis of volume - the psychological component of the market. This is exactly what many novice traders come to only after a few years of hard work.

Thus, Japanese candlestick figures can be combined with volume indicators. All this will only improve the quality of the trading signal.

In short, any trading signal should most often be a mixed pattern. Only this approach will increase the probability of a positive outcome after opening a position.

You can earn money with any approach to the market. The main thing is to have a clear idea of ​​what and why you are doing all this. All your trading patterns should be based on the logic of the market, then the probability of a positive outcome of the transaction will not make you reap.

Happy trading! And see you in the next articles.

Alexander Shevelev was with you.

Technical analysis on the basis of graphical figures gives a good idea to the trader about the price dynamics. The price is what is most important on the chart, and what every successful trader should be interested in. This training section contains the main technical analysis patterns that you should know, describes the criteria for their formation, trading signals, trading methods, as well as tips on stock selection and risk management. The main tool of an active trader is technical analysis, the effectiveness of which comes with practice.

Why should a swing trader study technical analysis patterns if he trades pullbacks? The fact is that each pattern is formed clearly between support and resistance. And one of the most profitable and cost-effective methods to trade pullbacks is to buy from a support level and sell from a resistance level. General information on technical analysis figures, which will be very helpful in the future, is presented in this post.

The head and shoulders is perhaps the most well-known pattern in technical analysis. For me, it is not my favorite pattern for two reasons. First, it does not appear on charts as often as others. Secondly, very often the neck line (the level of support or resistance from which we trade a pullback) has a slope, which I do not really like. But, the head and shoulders is one of the most powerful figures and its detailed description is given on this page.

These are my favorite trend reversal patterns. Double and triple tops are the most common on the chart. What I like the most is when the last top is slightly higher than the previous one (someone is gaining a serious position), and the RSI indicator (or other oscillator) shows a divergence. In general, all the technical aspects of these figures are described here.

The double and triple bottom is a mirror image of the double and triple top. The strongest situations occur when the last bottom falls slightly below the previous one, and the RSI indicator shows convergence. The high frequency of occurrence of these figures and excellent profitability just force you to learn more about them here.

Triangles are my favorite trend continuation patterns. Their advantage is that they develop over a relatively long period, which gives their support and resistance levels more weight. I prefer ascending (bullish) and descending (bearish) triangles because they have horizontal levels. You can learn more about the technical analysis of these patterns in the presented article.

You will see the flag and pennant on the charts most often. These are short-term patterns that occur during strong trends and indicate their continuation. How the flag and pennant look on the chart, how to find and trade them, you can find out in this post.

I'm not sure if traders knew about this pattern before William O'Neill talked about it. As he claims, based on his observations, most of the biggest moves in stocks arose after the appearance of a cup with a handle on the chart. Do not trust According to this person, I, personally, do not. Read more about this pattern of technical analysis here

To be honest, I don't often find a wedge pattern on the chart because I just don't look for it. Well, everyone has elements they like the least. In short, the wedge looks like a symmetrical triangle, only its apex is not directed strictly to the side, but somewhat at an angle up or down. How to conduct a technical analysis of this figure, read on the presented page.

• Swing Trading: The Basics
• Where is the best place to learn trading?
• Swing trading strategy
• Advanced swing trading
• Risk management
• Thinkorswim - learning to trade
• Japanese candles
• Trading instruments
• Technical analysis: figures (patterns, models)
• Technical Analysis: Indicators
• Stock
• Equity Market Analysis
• Stock Exchange
• Trading
• Trader Tips
• Movies and books

• What is swing trading and its basic principles
• How and where to learn trading?
• Top 10 best candle patterns
• The Holy Grail in trading exists!
• The whole truth about technical indicators
• Can you make a living trading stocks?
• Position Sizing - Taming Volatility
• The answer to the reader's question: how much money do you need to start trading?
• Is it worth keeping a trader's diary?
• Trading books worth reading
• Candlestick analysis in a concise and accessible form

• Sharpe Ratio and Determination of Trading System Risks
• Where to learn trading?
• 10 things you should know about moving averages
• Andrews Pitchfork and 5 Rules for Using Them
• Doji candle: one man is not a warrior. Or...?
• Analysis of Japanese candlesticks: what do they talk about and what are they silent about?
• Answers to readers' questions: trading robots, the Russian market, volume-based trading
• How are stock dividends paid and how can we use them?
• Trading or investment? Does a trader need to be an investor?
• What is margin? Full definition of the term
• How to use pending orders to open a position?
• Stop Loss and Take Profit: Debunking the Myth

Good afternoon, dear readers! Andrey Mamontov is with you, we have the 2nd article from the series about Japanese candlesticks for beginners. After reading it, you will be armed with popular Japanese candlestick patterns, with which you will improve your trading performance and learn to understand the dynamics of the market. Today we will talk about Japanese candlestick combinations analysis. In 1992, the fund " Quantum", under the direction of George Soros, collapsed the British pound. The day before this event (September 15), a clear candlestick pattern “ Bearish engulfing". Everyone who read this market signal was able to make money with Soros. The rest of the participants simply watched this well-planned financial manipulation.

11.05. 2017 year on the pound / dollar chart, the situation repeats itself. I have already entered a short trade, moved the position to a small plus, and next week I expect the candlestick pattern to work out " Takeover model».

We will look at ten formations that, according to my personal rating, are considered the best. If you have your own version, I will be happy to test it. Illustrate your patterns in the comments below the article, and let's develop together.

What do you need to know before reading?

The first article from the cycle about Japanese candles for beginners "" will help to fully understand the topic. With its help, you will learn:

• how to read japanese candles and why it is possible to track the actions of large stock players with their help;
• why you should not use short time intervals and trade only on assets with a high level of volatility.

Be sure to study the proposed material and only after that start choosing candlestick reversal patterns.

Additionally, it can help you. In addition, you will need . Below is a series of articles that you can read in your spare time.

Let's move on to the review of candlestick combinations.

Combinations

Hammer/hanged man

This is a single candle with a small body and a long lower tail. The appearance of this formation warns of proximity of a strong level able to stop the current trend.

Model Features

• The body is placed at the top;
• The lower shadow is at least twice as long as the body;
• The upper shadow is absent or has a small size;
• The body color of the figure is not taken into account during the analysis.

Formation Strengthening Factors

• Long shadow, 5 or more times the size of the body;
• The appearance of 2-3 hammers / hanged in a row.

Note by Steve Neeson

The signal formed by the pattern " Hanged», needs additional verification. You can do this using one of the following filters:

• the new candle should be black;
• The opening price of a new candle was lower than the closing price of the Hanged Man.

Model variations

These are weak candlestick patterns that require an indicator or other technical analysis tools to work with. Remember them and try not to use them in your trading.

Absorption

This is a powerful reversal signal that forms a combination of two contrasting candles. For a long time, this model could be used as an independent trading strategy.

Model Features

• Several candles are always involved in the formation of a figure;
• The candle bodies of this combination always have a different color;
• The first candle must completely dissolve in the body of the second.

Formation Strengthening Factors

• The second body is 4 times larger than the first;
• The pattern was formed after a sharp impulse movement in the direction of growth or fall;
• Several bodies dissolved in the second candle.

My observations

Unfortunately, in 2017 the situation changed and the formation is no longer considered reliable. Here's why it happened:

1. On the history of the graph " Absorption» is worked out somewhere in 70% of cases;
2. Due to its high accuracy, most beginners take this formation into service;
3. Major players have tracked such activity and now, with every obvious “ Absorption» try to work against the crowd.

Daily chart of the couple dollar/Canadian dollar. All failed models are marked with a yellow rectangle. Takeovers”: after their appearance, the market practically did not react or went against the expected forecast.

In order not to become a victim of market maker manipulation, I recommend using this combination only in combination with strong horizontal levels.

These are trend reversal candlestick patterns that display a sharp change in market sentiment. Very strong signal which is worth looking at.

Model Features

• This pattern is always formed by two candles;
• Candle bodies should have a different color;
• The second candlestick should cover part of the body of the first candlestick with its closing.

Formation Strengthening Factors

• The second candlestick covered more than 50% of the body of the first one;
• With an uptrend, the second candle opened without a shadow up, and with a downtrend, without a shadow down;
• In an uptrend, the second candle closed below the resistance level, and in a downtrend, it closed above the support.

The "" pattern has sufficient strength and can be used as a separate trading strategy. To enhance signal accuracy, do the following:

1. Wait for this candle combination to appear;
2. In the middle of the second candle model "Clouds" draw a horizontal level;
3. Place a pending order to buy or sell in the marked area.

Such a maneuver will somewhat reduce the number of transactions, but significantly improve their quality.

Stars

This candlestick pattern displays gradual change in market sentiment: dominance of one side, fracture, interception of the initiative and movement in the opposite direction.

Model Features

• The pattern is always formed by three candles;
• The second candle consists of a short body and small shadows;
• The color of the second candle during the analysis of the combination is not taken into account;
• The closing candle should cover most of the body of the first candle.

Formation Strengthening Factors

• The second candle is in the form Dodge", that is, its opening and closing occurred at the same level;
• The second candle is not located on the same level as the first and third, but has formed a price gap up or down;
• The third candle covered almost the entire body of the first.

I pay attention to Stars only when all three reinforcing factors combine. The resulting formation is called "". If you combine it with strong horizontal levels, then the probability of processing the signal increases to 70%.

"- an enhanced version of the patterns" morning Star" And " Evening Star».

Ricochet

These are very unusual reversal patterns that occur quite rarely and usually cause major players to intervene or publish unexpected economic forecasts.

Model Features

• In an uptrend, three successively rising candles are formed, the bodies of which do not intersect with each other. In a downtrend, this rule is worked out in a mirror order;
• The fourth candle opens with a gap and does not intersect with the body of the third candle;
• With a downtrend the fourth candle must meet two conditions: open above the close of the second candle and close above the open of the second candle;
• With an uptrend the fourth candle must meet two conditions: open below the close of the second candle and close below the open of the second candle.

For this model, there is no need to look for additional factors that enhance its significance. If you see a similar combination on a daily or weekly chart, then I recommend immediately entering a trade at the market price. In most cases, for Ricochet» follows strong price momentum where you can make good money.

This is an easily recognizable combination that resembles a pregnant woman in appearance. Harami is considered an early signal that warns of imminent market instability. After the appearance of this pattern, it is desirable take profit and with the help of indicators to wait for the emergence of new conditions.

Model Features

• Always consists of at least two candles;
• A large candle completely dissolves the second and all subsequent candles in its body;
• The closing candle has a small body and short shadows. The color of this candle itself is not important and is not taken into account during the analysis.

Formation Strengthening Factors

• The closing candle looks like " Dodge". This formation is called Harami cross» and usually occurs in the area of ​​strong price levels;
• More than 5 closing candles have dissolved in the body of the mother candle;
• After the appearance of the "" pattern, a control candle appeared. It should be white during a downtrend and black during an uptrend.

These are two or more candles that have formed equal price highs or lows on the same market interval.

Model Features

• Tweezers must consist of at least two candles;
• A group of candles participating in a combination must go sequentially one after another;
• Each candle must exactly repeat the low/high of the previous one.

Formation Strengthening Factors

The "" pattern becomes more significant if it is part of another reversal candle combination. Below you can see some examples of how this can happen.

My observations

” is a great model that tells traders location of significant horizontal level. I check this combination with indicators readings, and if the value is confirmed, I place pending limit orders at the minimum / maximum.

Candle capture refers to a large single candle that occurs in opposition to the current trend. This pattern should not be confused with "" where the two candlesticks are approximately the same size. " capture" - This contrasting candle, which is visually easy to determine on the graph.

Model Features

• It is always one candle that looms against the trend;
• If the trend descending, then a white candlestick without a lower shadow should appear. If the movement ascending, then you need to expect a black candlestick with a cut top;
• The pattern should open with a price gap, and the closing point should cover most of the previous candle.

Formation Strengthening Factors

• « capture» appeared after a long unidirectional movement;
• In one price zone, two large candles appeared against the current trend (a " Double grip»);
• After " Bullish capture» the next candle turned out to be white, and after « Bear grip» - black.

« capture" is an aggressive pattern, after which you need to open a deal against the trend. This option is suitable only for experienced traders who know how to correctly control risk and find the optimal entry point.

These are two contrasting candles, in which the closing points are at the same price level, called " balance line».

Model Features

• Two oppositely colored candles with approximately the same body size formed;
• The closing candle always opens with a price gap that matches the main trend;
• The bodies of the candles involved in the combination do not overlap and always close at the same level point.

Formation Strengthening Factors

• On the way of the price movement, a round level with a doubled or tripled zero (1.1000, 1.2500) was formed;
• After the appearance of a new candle, the pattern "" moved into the formation "";
• The next candle after " Bearish counterattack”, closed under “ balance line". For " Bullish counterattack» the new candlestick should fix above the « balance line».

to content

Model Features

• Three candles should follow each other and be painted in the same color;
• Each subsequent candle should set a new price high / low;
• All three candles have approximately the same body size.

Be extremely careful

At the pattern " Offensive"There is a variation called "". The appearance of this model indicates that the market has been time correction, and the old trend continues.

• « bullish offensive" or " Three soldiers» - purchase (for "Three Methods"- sale);
• « bear offensive" or " Three crows» - sale (for "Three Methods"- purchase).

Working with the pattern " Offensive», always wait for the close of the fourth candle. This simple action will somewhat reduce the number of entries, but will allow you to protect yourself from the "" model and opening a deal against the trend.

Summary

Friends, have you learned 10 strongest candle combinations that can help you earn today. Unfortunately, until you put this knowledge into practice, they will not bring any benefit. To prevent this from happening, I recommend that you do the following:

1. Review the article again;
2. Create your own ranking rate all patterns on a scale from 1 to 10;
3. Leave the first three positions, and cross out everything else;
4. Open a demo account and test the selected patterns. The best stock broker - , great forex broker - ;
5. Evaluate the result and leave only one candlestick formation for work, which showed maximum result;
6. Switch to trading on a real account;
7. Share examples of several successful deals in the comments under this article.

Thanks to all. I hope that the proposed material contained only useful information for you. Don't act like the hero of this meme

As always, it's all up to you. See you in new articles!

If you find a mistake in the text, please highlight a piece of text and click Ctrl+Enter. Thanks for helping my blog get better!

5 (100%) 7 vote[s]

As the history of the markets has shown, combinations of Japanese candlesticks make it possible to predict further movements in all existing financial markets. This trend has existed for over 100 years in Japan. During this time, many candlestick patterns have been created. In this article, we will look at the most famous and working ones, as well as give examples at real auctions.

1. Strategies based on Japanese candlesticks

Japanese candlesticks are truly a unique tool in all types of financial markets. They allow you to compactly view the history of trading and at the same time make it possible to build trading strategies only on candlestick patterns.

3.1. Description and examples of the pattern "Hammer"

3.2. Description and examples of the shooting star pattern

3.3. Description and examples of the Absorption pattern

The wider the candle, the stronger the signal. Sometimes such days are called "wide range". In my opinion, this type of pattern is one of the most reliable types of trading signals.

Finally, we will give parting words and good advice when trading candlestick patterns:

1 Candlestick patterns carry more weight when using larger timeframes (four-hour, daily, weekly) as they give much more reliable signals.

2 Patterns are not the final signal to open or close a position. There are many false signals. For example, at the moment when there is a stable long-term trend in the market, it will not end instantly and opening positions against its main direction will be an expensive mistake.

Perhaps this is due to the fact that Forex is traded around the clock and there are no gaps on it. This is also due to the fact that all combinations were originally developed for securities trading.

4 At the moment when the Japanese candlestick has not yet formed, many false signals may occur. Therefore, it is worth waiting for the end of the formation of the candle in order to draw some conclusions and actions.

I will try to do without water and list only the facts and my own achievements.

Description of the pattern 1-2-3

The 1-2-3 pattern, well known in trading circles, has securely staked out the title of one of the best reversal patterns in trading. The formation is well known not only in the Forex market, but also to traders trading futures, stocks, etc.

Why did the pattern find application in such different markets? The thing is that it perfectly reflects the nature of the current situation and makes it absolutely clear who exactly dominates at the moment.

Since the pattern is a reversal, by definition, it is easy to spot at the beginning of a nascent move. Usually these zones are associated with previous reactions and the formation of various levels of resistance and support, so one of the most important filters will be the presence of such an area.

Like everything in trading needs confirmation, the 1-2-3 pattern is no exception. Use any indicators for filtering. It doesn’t matter at all whether it’s an oscillator or a trend indicator, the main thing is to find a signal, but I’ll tell you about it and show it below.

There are two types of pattern. It's not hard to guess, because these are bearish and bullish signals. Here we will talk about them further.

A bearish signal appears after an upward movement and consists of three points: 1, 2 and 3. The formation indicates the weakness of the bulls and is confirmed by the presence of several factors:

1. Point 3. A new attempt by the bulls to update the local maximum should not be successful, but if the bulls manage to throw the market above point 1, the bearish pattern 1-2-3 is cancelled.

If the above points are in place, then we are dealing with a bearish pattern.

Bullish 1-2-3 pattern

The bullish signal appears after the downward movement and consists of three points: 1, 2 and 3. The formation indicates the weakness of the bears and is confirmed by the presence of several factors:

1. Point 1. Look for near important price levels. The situation can develop according to different scenarios, the price can either bounce off the level or falsely break through it, the important thing is that it is at point 1 that volatility increases several times, and on the chart, sometimes, clearly increased candles appear.
2. Point 2. During the price movement from 1 to 2, the price should be calm, without any sharp fluctuations or consolidations. Everything should point to a planned rollback.
3. Point 3. A new attempt by the bulls to update the local minimum should not be successful, but if the bulls manage to push the market below point 1, the bullish pattern 1-2-3 is cancelled.

If the above points are in place, then we are dealing with a bullish pattern.

How to trade the 1-2-3 pattern

From the classic description, trading the 1-2-3 pattern has two main ways of trading: aggressive and conservative. Both methods have their pros and cons.

conservative way

The proverb: "Measure seven times, cut once" very well reflects conservative trading. This method involves checking and rechecking all signals, so that if you open a deal, it’s so certain.

When trading conservatively, you should wait for the explicit formation of points 1, 2 and 3, and then place a BuyStop breakout order above point 2 and StopLoss below point 1 for a bullish model:

or place a SellStop breakout order below point 2, with a stop above point 1 for a bearish pattern.

By the way, the method of setting a stop above / below point 1 is a controversial point, since many people believe that with the right pattern, StopLoss can be set beyond point 3. You will have to analyze this point yourself and make an individual decision.

We will take profit according to the following scheme: segment 1 -> 2, postponed from point 3, where x1 will be the first, and x2 the second TakeProfit. For a bullish signal, the markup would look like this:

For a bearish signal, the markup will look like this:

The advantage of this approach is that when point 2 is broken through, the trader visually sees a change in trend, which increases the chances of a positive outcome of the transaction. The disadvantages include an increased stop and too small x1 profit.

Aggressive way

The advantage of this method is certainly a small StopLoss and a clearly increased profit. In this case, money management prevails. The negative side is not a very reliable entry from point 3. In fact, the pattern has not been formed yet, there is only a possibility and the deal will open what is called luck.

Examples of trades according to the 1-2-3 pattern

Theory is theory, but I want to see how this signal is processed on real charts. I confess honestly, I didn’t look for 100% hits, what caught my eye, I took a screen. The trading method was chosen conservative. Look what came of it.

An example of how the 1-2-3 signal works on the AUDUSD currency pair

The sell signal came from the resistance zone, approaching which the pair failed to make the necessary efforts to break up, after which the bears seized the initiative.

Separately, I want to note point 1. As mentioned above, this area is not only the beginning of the formation of a pattern, but also must show the weakness of buyers. That is exactly what happened. I have already said that at this point, the volatility rises and what we see is the last bullish candle, many times larger than the previous ones. In addition, the local high was broken and a sharp return began.

A combination of factors, namely the presence of a resistance zone + a similar nature of the movement, indicates the removal of sellers' stops, which is in our favor.

A conservative entry involves placing a breakout order below point 2, which was done. The moving average with a popular period of 200 became a confirming factor. When the price moved from 2 to 3, MA served as resistance, which could not be ignored.

An example of the operation of the 1-2-3 signal on the EURUSD currency pair

A very recent example on the EURUSD pair. We determine an important level (do not forget that an important level is not some separate price, but a certain area) from which the price bounced in the past. This area will be a support level at which we will wait for some actions from buyers.

It is possible that buyers would have ignored this area and continued to fall, but my task is not to guess, but to monitor the price movement.

Again, I draw attention to point 1. Again, when it is formed, volatility increases, which indicates a certain panic. It seems like the price starts to run away, we jump into the outgoing train. The result is a market reversal.

Point 3 is located in the region of 50% of the 1 -> 2 movement, plus the presence of divergence on the MACD oscillator is an amplifying factor.

The combination of factors confirms the desire of the market to turn around, and this is what we need. We set a breakout pending order above point 2, calculate the wavelength 1 -> 2 and postpone it from point 3 to identify areas for taking profit.

An example of how the 1-2-3 signal works on the USDJPY currency pair

In the end, I will give perhaps the most obvious example, but at the same time dangerous.

The formation of point 1, as we have already remembered, is confirmed by an increase in volatility and the presence of an important level. Point 3 is formed in the region of 50% of the segment 1 -> 2, well, then we already know what to do. Stop below point 1, profit is calculated equal to the movement of segment 1 -> 2.

The main problem with this position was that in this case, StopLoss would have to be set well, very large, but the profit is many times greater than in the previous examples. To be honest, I would have missed this trade, I don’t like such stops, but still the option is working, then think for yourself. Doesn't trade your risk management rules, work hard, it's not worth the risk.

In the given examples, the hourly timeframe was taken as a basis. This was done by accident. After creating screenshots, I paid attention to this and decided to test the signal on other TFs. I was not very surprised when it turned out that both on the lower and on the older TFs, the formation is worked out in the same way.

Don't neglect indicators. Of course, they do not play the most important role when working on the 1-2-3 system, but extra confirmation will not hurt.

Rules for applying the 1-2-3 pattern

Summing up all the above, I will try to formulate simple and understandable rules that will allow you to more effectively apply the 1-2-3 pattern in your work.

1. It is vitally important to pattern directly at the important level. If you set out to rotate the chart in the hope of finding the described pattern, you will find a huge number of non-working signals. All these signals are united by one nuance, that they were formed in the "air", that is, in a place that does not imply a reversal movement.
2. You should not trade on the signals of the 1-2-3 model in flat and consolidation. There are other rules at work.
3. It is not enough to find the level and the formed pattern. Trading involves working with probabilities, which means that in each transaction there must be a potential of more than 1, at least to 2, and preferably to 4. Therefore, there is no move for the price, it doesn’t matter, there is a signal, there is none, you should not enter the market .
4. The formation of point 1 must necessarily be accompanied by increased volatility. It is the increased volatility that confirms that there is some kind of panic in the market, and this is a great time to make money.
5. The price movement from 1 to 2 should not be flat. Let me remind you that the presence of a flat indicates an attempt to gain a position at the price of interest. The pattern does not take into account such a set, so it may well work out incorrectly.
6. Point 3 should not exceed 50% - 61.8% of the move 1 -> 2 and even more so should not update point 1.
7. Try to filter the trade with one of the indicators. I deliberately do not write which one to use, since it is absolutely not important. In this situation, it is important to get a signal, who will give it, the fifth thing. If you don’t know which one is better to use, I suggest going to the Indicators section and familiarizing yourself with each one after reading the description and how to use it in trading.
8. Conservative trading calls for entering a trade at the breakdown of point 2, aggressive trading requires entering at point 3.
9. Try to deal with the stop yourself. He talked about two options: placing a stop behind point 1 or 3. Test and choose the trading option that suits you.
10. We set two profits, the first is equal to the length of the segment 1 -> 2 (x1), the second is the length of the segment 1 -> 2 multiplied by 2 (x2) and is plotted from point 3.

I will wrap up on this. Test the pattern and write your feedback.