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[[Technical Trading Strategies]] typically form the initial basis for [[Pre-Trade_Considerations | trading decisions]] by [[Institutional_and_Retail_Traders#What_is_a_Retail_Trader? | retail traders]] when they enter the [[Forex]] market for the first [[Forex Market Hours | time]]. Understanding [[Technical Trading Strategies]] is a good place to learn how to [[Developing_your_Trading_Process | enter and exit trades]]. In this WIki, we will explore many different [[Technical Trading Strategies]] and how you might go about employing them within [[The Basic Cycle]] of all markets.
[[Technical Trading Strategies]] typically form the initial basis for [[Pre-Trade_Considerations | trading decisions]] by [[Institutional_and_Retail_Traders#What_is_a_Retail_Trader? | retail traders]] when they enter the [[Forex]] market for the first [[Forex Market Hours | time]]. Understanding [[Technical Trading Strategies]] is a good place to learn how to [[Developing_your_Trading_Process | enter and exit trades]]. In this WIki, we will explore many different [[Technical Trading Strategies]] and how you might go about employing them within [[The Basic Cycle]] of all markets.


'''NOTE:''' No one [[Technical Analysis | technical]] [[Fundamental and Sentiment Trading Strategies | strategy]] is going to work all of the [[Forex Market Hours | time]] in all the various [[Price_Action_Analysis | market structures]] and environments. For example, [[Breakouts_and_Breakdowns | Breakout strategies]] will tend to work in [[Trends | trending]] environments but get chopped up in uncertain or [[Breakouts_and_Breakdowns#The_Sideways_Time_Correction | sideways markets]]. This means that understanding where you are in the context of [[The Basic Cycle]] and the overall [[Trends | trend]] will benefit you greatly when executing a [[Technical Analysis | technical]] [[Fundamental and Sentiment Trading Strategies | strategy]] in live market situations.  
'''NOTE:''' No one [[Technical Analysis | technical]] strategy is going to work all of the time in all the various [[Price_Action_Analysis | market structures]] and environments. For example, [[Breakouts_and_Breakdowns | Breakout strategies]] will tend to work in [[Trends | trending]] environments but get chopped up in uncertain or [[Breakouts_and_Breakdowns#The_Sideways_Time_Correction | sideways markets]]. This means that understanding where you are in the context of [[The Basic Cycle]] and the overall [[Trends | trend]] will benefit you greatly when executing a [[Technical Analysis | technical]] strategy in live market situations.  


'''NOTE:''' All technical [[Fundamental and Sentiment Trading Strategies | strategies]] will benefit from understanding the big picture [[Fundamental_Analysis | Fundamental Trend]] and the [[Sentiment_Analysis | prevailing Sentiment]] that is driving [[Price_Action_Analysis | market prices]] in the current [[Forex_Trading_Sessions | trading session]]. A good idea is to use [[Technical Analysis | technical trading]] [[Fundamental and Sentiment Trading Strategies | strategies]] as a ''"Timing tool"'' to find smart places to [[Pre-Trade Considerations | enter trades]] in the direction of the [[Sentiment_Analysis | Sentiment]] that is currently driving [[Price_Action_Analysis | prices]].
'''NOTE:''' All technical strategies will benefit from understanding the big picture [[Fundamental_Analysis | Fundamental Trend]] and the [[Sentiment_Analysis | prevailing Sentiment]] that is driving [[Price_Action_Analysis | market prices]] in the current [[Forex_Trading_Sessions | trading session]]. A good idea is to use technical trading strategies as a ''"Timing tool"'' to find smart places to [[Pre-Trade Considerations | enter trades]] in the direction of the [[Sentiment_Analysis | Sentiment]] that is currently driving [[Price_Action_Analysis | prices]].


'''WARNING:''' As with any [[Fundamental and Sentiment Trading Strategies | trading strategy]], you need to take the [[Forex Market Hours | time]] to vigorously test each [[Fundamental and Sentiment Trading Strategies | strategy]] in a simulated market situation before putting any of your money to work in the markets. Not doing the necessary [[Tick Data for Backtesting and Algo Trading | backtesting]] may result in financial losses. All [[Fundamental and Sentiment Trading Strategies | strategies]] in this Wiki or on Volatility.red are for information and education purposes only and are not in any way intended as financial advice.
'''WARNING:''' As with any trading strategy, you need to take the [[Forex Market Hours | time]] to vigorously test each strategy in a simulated market situation before putting any of your money to work in the markets. Not doing the necessary [[Tick Data for Backtesting and Algo Trading | backtesting]] may result in financial losses. All strategies in this Wiki or on Volatility.red are for information purposes only and are not in any way intended as financial advice.




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='''Basic Technical Trading Strategies'''=
='''[[Basic Technical Trading Strategies]]'''=


Many retail traders gravitate towards [[Technical Trading Strategies]] because they are visually simple to understand and execute in live market situations. In this Wiki, we are going to take a look at some very basic technical trading strategies that you can experiment with and see if any of them are a good fit for your trading plan such as:


=='''The 3-5 Candle Drop'''==
* [[Basic_Technical_Trading_Strategies#The_3-5_Candle_Drop_and_Pop | The 3-5 Candle Drop and Pop]]
* [[Basic_Technical_Trading_Strategies#The_Breakout_and_Breakdown | The Breakout and Breakdown]]
* [[Basic_Technical_Trading_Strategies#Bullish_and_Bearish_Momentum_Stall | Bullish and Bearish Momentum Stall]]
* [[Basic_Technical_Trading_Strategies#Matched_Move_Higher_and_Lower | Matched Move Higher and Lower]]
* [[Basic_Technical_Trading_Strategies#Climactic_Buy_and_Sell | Climactic Buy and Sell]]
* [[Basic_Technical_Trading_Strategies#The_3-5_Candle_Drop_and_Pop_Moving_Average_Plays | The 3-5 Candle Drop and Pop Moving Average Plays]]
* [[Basic_Technical_Trading_Strategies#Moving_Average_Buy_and_Sell_Zones | Moving Average Buy and Sell Zones]]
* [[Basic_Technical_Trading_Strategies#Major_Support_Buy_and_Major_Resistance_Sell_Zones | Major Support Buy and Major Resistance Sell Zones]]


The 3-5 candle drop is a [[Fundamental and Sentiment Trading Strategies | strategy]] that attempts to take advantage of a market in an [[Trends#The_Uptrend | uptrend]] that has experienced a 3-5 [[Japanese Candlesticks | candlestick]] drop or [[Retracements | retracement]].  The main objective of a [[Trader Types | trader]] is to find a [[Safe Haven Flows | safe spot]] to get into an advancing market.  The [[Retracements | retracement]] should be no more than 60% of the prior advance to remain a viable and [[Safe Haven Flows | safe]] buy setup.


You can access the main Wiki on [[Basic Technical Trading Strategies]] [[Basic Technical Trading Strategies | HERE.]]


'''Criteria of the 3-5 Candle Drop (see Figure 1.1):'''


* The stock or market should have 3 or more consecutive lower highs (each of the last 3 [[Japanese Candlesticks | candles]] should have lower highs, we are not talking about [[Pivots | pivots]] here) or 3 or more red [[Japanese Candlesticks | candles]].  Having both lower highs and red [[Japanese Candlesticks | candlesticks]] will make the setup more potent as this shows that the market has blown off a good amount of steam but the fact that it is less than a 60% [[Retracements | retracement]] shows the strength is still on the buy side.
='''[[Every Market has a Strategy]]'''=
* 3 or more consecutive lower lows.  Make sure that the down [[Japanese Candlesticks | candles]] are controlled and not aggressive.
* A reversal [[Japanese Candlesticks | candlestick]] on or after the third [[Japanese Candlesticks | candlestick]] lower.
* There must be a nice tradable price void, free of consolidation areas, for the stock to move up easily through after the [[Risk_Management#Entries_and_Exits | entry]] buy has been taken.
* There must be some sort of [[Support and Resistance | support]] or [[Supply and Demand | demand]] to the left that the market is attempting to bounce higher from in the form of a congestion area, prior [[Pivots | pivot]], 40-60% [[Retracements | retracement]], a rising [[Technical_Analysis#Moving_Averages | moving average]] or any other areas that can be considered a place of [[Monetary_Policy_Tools#Interest_Rates | interest]] where [[Supply and Demand | demand]] for the market is present.
* The market should be in an [[Trends#The_Uptrend | uptrend]] for this [[Fundamental and Sentiment Trading Strategies | strategy]] to have good accuracy.  If not there should be at least one higher low [[Pivots | pivot]] that has held above the prior [[Pivots | pivot]] low.  This will at least show that the market is attempting to transition to a possible [[Trends#The_Uptrend | uptrend]].


https://i.imgur.com/JprtONn.png
Every Market has a Strategy! What we will do in this Wiki is break down when the best time to trade the [[Basic Technical Trading Strategies]] found in the [[Basic Technical Trading Strategies]] Wiki are and how you can apply these timing concepts to your trading including:


''Figure 1.1 – Criteria of the 3-5 candle drop.''
* [Every_Market_has_a_Strategy#When_to_Trade_Technical_Strategies | [When to Trade Technical Strategies]]
* [[Every_Market_has_a_Strategy#Trading_Strategies_and_the_Stages_of_the_Basic_Cycle | Trading Strategies and the Stages of the Basic Cycle]]
* [[Every_Market_has_a_Strategy#Strategies_and_the_Basic_Cycle | Strategies and the Basic Cycle]]




'''Entry (see Figure 1.2):'''
You can access the main Wiki for [[Every Market has a Strategy]] [[Every Market has a Strategy | HERE]].


* A buy is placed when the stock or market [[Pre-Trade Considerations | trades]] above the prior candle's high after the 3-5 candle drop.


https://i.imgur.com/3xUQntK.png
='''[[Intermediate Technical Trading Strategies]]'''=


''Figure 1.2 – The [[Risk_Management#Entries_and_Exits | entry]] of the 3-5 candle drop with [[Risk_Management#Stop_Losses | Stop loss]] area.''
Building on the [[Basic Technical Trading Strategies]] Wiki, in the following Wiki we will take a look at a few more [[Intermediate Technical Trading Strategies]] including:


* [[Intermediate_Technical_Trading_Strategies#The_Trend_Trade | The Trend Trade]]
* [[Intermediate_Technical_Trading_Strategies#The_Profile_Trade | The Profile Trade]]
* [[Intermediate_Technical_Trading_Strategies#5_Minute_Candlestick_Trade | 5 Minute Candlestick Trade]]


'''Initial Stop (see Figure 1.2):'''


* Place the initial [[Risk_Management#Stop_Losses | stop]] below the [[Risk_Management#Entries_and_Exits | entry]] candle's low or the prior [[Japanese Candlesticks | candles]] low, whichever is lower.  This is the initial [[Risk_Management#Stop_Losses | stop]] that can and will be moved as new market information happens.  [[Trader Types | Traders]] will constantly need to update [[Risk_Management#Stop_Losses | Stop loss]] orders to lock in gains.
You can access the main Wiki for [[Intermediate Technical Trading Strategies]] [[Intermediate Technical Trading Strategies | HERE]].
* The low of the newly formed [[Pivots | pivot]] can also be used.
* The initial [[Risk_Management#Stop_Losses | stop]] must be placed on whatever [[Forex Market Hours | time]] frame that the 3-5 candle drop buy setup was found and [[Pre-Trade Considerations | traded]].
 
 
'''Profit Target (see Figure 1.3):'''
 
* Establish a minimum target prior to [[Risk_Management#Entries_and_Exits | entering]] the [[Trading | trade]] at or slightly above the prior [[Pivots | pivot]] high or the next area of [[Support and Resistance | resistance]].  The objective of the target will depend on the how deep the prior [[Retracements | retracement]] was and how aggressive it came down.
* Take into consideration how strong the [[Pivots | pivot]] was and determine if the market should continue higher.
* [[Trader Types | Traders]] may want to only take a portion of the [[Trading | trade]]-off the table if it has been determined that the market has a high probability of moving higher than the prior [[Pivots | pivot]] high.
 
https://i.imgur.com/BD7CeaI.png
 
''Figure 1.3 – [[Risk_Management#Entries_and_Exits | Profit target]] of the 3-5 Candle drop.''
 
 
'''Trailing Exit Procedures:'''
 
* After 2 [[Japanese Candlesticks | candles]] are complete the stop may be moved from the initial [[Risk_Management#Stop_Losses | Stop loss]] area.
* You may choose to start trailing your [[Risk_Management#Stop_Losses | Stop loss]] under each [[Japanese Candlesticks | candlestick]] once the market or stock has moved at least 75% of the way to the [[Risk_Management#Entries_and_Exits | profit target]].  This is a good idea to help protect your hard earned gains.  There is nothing worse than watching a good winning [[Trading | trade]] turn into a stop out for a loss.  Protect your gains, not all [[Pre-Trade Considerations | trades]] will make it to the [[Risk_Management#Entries_and_Exits | profit target]].
* [[Trader Types | Trader]] can drop one [[Forex Market Hours | time]] frame lower and start trailing under each [[Pivots | pivot]] on that lower [[Forex Market Hours | time]] frame to lock in gains.
* If the [[Trader Types | trader]] has been in the position for a few [[Japanese Candlesticks | candles]] and momentum increases in the direction the market is moving, consider dropping one [[Forex Market Hours | time]] frame and trailing under each bar until stopped out.
* Once you have taken part of the position off for a profit you should never lose money on the [[Trading | trade]].  Any [[Risk_Management#Stop_Losses | Stop loss]] adjustment that you make at this point should always be for a profit.
* It is always a good idea to take part of your profit at the profit objective.  This relieves the emotional need to take a profit and it allows the [[Trader Types | trader]] to think clearly.  However, you never really know how far a move will go so having some of your position still on can lead to substantial gains in the event you catch a really large move higher.
 
 
'''3-5 Candle Drop Notes:'''
 
* The 3-5 candle drop has better odds of achieving the profit objective if the [[Japanese Candlesticks | candles]] do not overlap each other.  Overlapping [[Japanese Candlesticks | candles]] have less predictability than [[Japanese Candlesticks | candles]] that are moving fluidly in a single direction.  Overlapping [[Japanese Candlesticks | candles]] lead to congestion areas that typically lead to erratic movements.
* The preceding 3-5 candle drop should be controlled and not as steep as the prior advance in order to be buyable setup.
* The 3-5 candle drop can be [[Trading | traded]] in all [[Forex Market Hours | time]] frames.
* There can be more than 5 [[Japanese Candlesticks | candles]] in the down move but at some point, the [[Trader Types | trader]] will need to make a judgement call on whether this is becoming a consolidation or a failed attempt to move higher.  The longer the down move takes place the lower the odds of follow through higher on any up move.
* It is always more reliable to have any number of power events on in conjunction to increase the accuracy of this setup.
 
 
=='''The 3-5 Candle Pop'''==
 
The 3-5 candle pop is a [[Fundamental and Sentiment Trading Strategies | strategy]] that attempts to take advantage of a market in a [[Trends#The_Downtrend | downtrend]] and has experienced a 3-5 [[Japanese Candlesticks | candlestick]] [[The_Basic_Cycle#Stage_2:_Rally/Greed | rally]] or [[Retracements | retracement]].  The main objective of a [[Trader Types | trader]] is to find a [[Safe Haven Flows | safe spot]] to get into a declining market.  The [[Retracements | retracement]] should be no more than 60% of the prior [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]] to remain a viable and [[Safe Haven Flows | safe]] sell setup.
 
 
'''Criteria of the 3-5 Candle Pop (see Figure 2.1):'''
 
* The stock or market should have 3 or more consecutive higher lows (each of the last 3 [[Japanese Candlesticks | candles]] should have higher lows, we are not talking about [[Pivots | pivots]] here) or 3 or more green [[Japanese Candlesticks | candles]].  Having both higher lows and green candlesticks will make the setup more potent as this shows that the market has blown off a good amount of steam but the fact that it is less than a 60% [[Retracements | retracement]] shows the strength is still on the sell side.
* 3 or more consecutive higher highs.  Make sure that the up [[Japanese Candlesticks | candles]] are controlled and not aggressive.
* A reversal [[Japanese Candlesticks | candlestick]] on or after the third [[Japanese Candlesticks | candlestick]] higher.
* There must be a nice tradable price void, free of consolidation areas, for the stock to move down easily through after the short [[Risk_Management#Entries_and_Exits | entry]] has been taken.
* There must be some sort of [[Support and Resistance | resistance]] or [[Supply and Demand | supply]] to the left that the market is attempting to move lower from in the form of a congestion area, prior [[Pivots | pivot]], 40-60% [[Retracements | retracement]], a declining [[Technical_Analysis#Moving_Averages | moving average]] or any other areas that can be considered a place of [[Monetary_Policy_Tools#Interest_Rates | interest]] where overhead [[Supply and Demand | supply]] is present.
* The market should be in a [[Trends#The_Downtrend | downtrend]] for this [[Fundamental and Sentiment Trading Strategies | strategy]] to have good accuracy.  If not there should be at least one lower high [[Pivots | pivot]] that has held below the prior [[Pivots | pivot]] high. This will at least show that the market is attempting to transition to a possible [[Trends#The_Downtrend | downtrend]].
 
https://i.imgur.com/NsmHJN7.png
 
''Figure 2.1 – Criteria of the 3-5 candle pop.''
 
 
'''Entry (see Figure 2.2):'''
 
* A short sell is placed when the stock or market [[Pre-Trade Considerations | trades]] below the prior candle's low after the 3-5 candle pop.
 
https://i.imgur.com/GJgDjxL.png
 
''Figure 2.2 – The [[Risk_Management#Entries_and_Exits | entry]] of the 3-5 candle pop with [[Risk_Management#Stop_Losses | Stop loss]] area.''
 
 
'''Initial Stop (see Figure 2.2):'''
 
* Place the initial [[Risk_Management#Stop_Losses | stop]] above the [[Risk_Management#Entries_and_Exits | entry]] candle's high or the prior [[Japanese Candlesticks | candles]] high, whichever is higher.  This is the initial [[Risk_Management#Stop_Losses | stop]] that can and will be moved as new market information happens.  [[Trader Types | Traders]] will constantly need to update [[Risk_Management#Stop_Losses | Stop loss]] orders to lock in gains.
* The high of the newly formed [[Pivots | pivot]] can also be used.
* The initial [[Risk_Management#Stop_Losses | stop]] must be placed on whatever [[Forex Market Hours | time]] frame that the 3-5 candle pop short sell setup was found and traded.
 
 
'''Profit Target (see Figure 2.3):'''
 
* Establish a minimum target prior to [[Risk_Management#Entries_and_Exits | entering]] the [[Trading | trade]] at or slightly below the prior [[Pivots | pivot]] low or the next area of [[Support and Resistance | support]].  The objective of the target will depend on the how deep the prior [[Retracements | retracement]] was and how aggressive it moved up.
* Take into consideration how strong the [[Pivots | pivot]] was and determine if the market should continue lower.
* [[Trader Types | Traders]] may want to only take a portion of the [[Trading | trade]]off the table if it has been determined that the market has a high probability of moving lower than the prior [[Pivots | pivot]] low.
 
https://i.imgur.com/TAQuy8K.png
 
''Figure 2.3 – [[Risk_Management#Entries_and_Exits | profit target]]t of the 3-5 Candle pop.''
 
 
'''Trailing Exit Procedures:'''
 
* After 2 [[Japanese Candlesticks | candles]] are complete the [[Risk_Management#Stop_Losses | stop]] may be moved from the initial [[Risk_Management#Stop_Losses | Stop loss]] area.
* You may choose to start trailing your [[Risk_Management#Stop_Losses | Stop loss]] above each candlestick once the market or stock has moved down at least 75% of the way to the [[Risk_Management#Entries_and_Exits | profit target]].  This is a good idea to help protect your hard earned gains.  There is nothing worse than watching a good winning [[Trading | trade]] turn into a stop out for a loss.  Protect your gains, not all [[Pre-Trade Considerations | trades]] will make it to the [[Risk_Management#Entries_and_Exits | profit target]].
* [[Trader Types | Traders]] can drop one [[Forex Market Hours | time]] frame lower and start trailing above each [[Pivots | pivot]] on that lower [[Forex Market Hours | time]] frame to lock in gains.
* If the [[Trader Types | trader]] has been in the position for a few [[Japanese Candlesticks | candles]] and momentum increases in the direction the market is moving, consider dropping one [[Forex Market Hours | time]] frame and trailing above each bar until stopped out.
* Once you have taken part of the position off for a profit you should never lose money on the [[Trading | trade]].  Any [[Risk_Management#Stop_Losses | Stop loss]] adjustment that you make at this point should always be for a profit.
* It is always a good idea to take part of your profit at the profit objective.  This relieves the emotional need to take a profit and it allows the [[Trader Types | trader]] to think clearly.  However, you never really know how far a move will go so having some of your position still on can lead to substantial gains in the event you catch really large move lower.
 
 
'''3-5 Candle Pop Notes:'''
 
* The 3-5 candle pop has better odds of achieving the profit objective if the [[Japanese Candlesticks | candles]] do not overlap each other.  Overlapping [[Japanese Candlesticks | candles]] have less predictability than [[Japanese Candlesticks | candles]] that are moving fluidly in a single direction.  Overlapping [[Japanese Candlesticks | candles]] lead to congestion areas that typically lead to erratic movements.
* The preceding 3-5 candle pop should be controlled and not as steep as the prior [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]] in order to be shortable setup.
* The 3-5 candle pop can be traded in all [[Forex Market Hours | time]] frames.
* There can be more than 5 [[Japanese Candlesticks | candles]] in the up move but at some point the [[Trader Types | trader]] will need to make a judgment call on whether this is becoming a consolidation or a failed attempt to move lower.  The longer the up move takes place the lower the odds of follow through higher on any down move.
* It is always more reliable to have any number of power events on in conjunction to increase the accuracy of this setup.
 
 
=='''[[Breakouts_and_Breakdowns#The_Breakout | The Breakout]]'''==
 
[[Breakouts_and_Breakdowns#The_Breakout | The breakout]] attempts to take advantage of any financial instrument that is in a strong stage 2 [[Trends#The_Uptrend | uptrend]].  There are two potential areas that [[Trader Types | trader]] can [[Risk_Management#Entries_and_Exits | enter]] a long buy position with great reliability.
 
 
'''[[Breakouts_and_Breakdowns#The_Breakout | The Breakout]] Criteria (see Figure 3.1):'''
 
* A base or consolidation must be forming somewhere in an ongoing stage 2 [[Trends#The_Uptrend | uptrend]] with no major overhead [[Supply and Demand | supply]] or [[Support and Resistance | resistance]] to the left that could slow or halt a new move higher. 
* A void between this new base or [[Supply and Demand | demand]] point and the next congestion or [[Supply and Demand | supply]] point should exist.  A nice price void.
* More power will be given to this setup if there is a major or minor [[Technical_Analysis#Moving_Averages | moving average]] that is rising towards the low of this new base.  The low of the base could be pushed higher by the minor 10 SMA while above the major 20 SMA.  Or it could be 2 major [[Technical_Analysis#Moving_Averages | moving averages]] like the 20 SMA and the 200SMA.
* The new consolidation should be above its major [[Technical_Analysis#Moving_Averages | moving averages]] in order to be considered lower risk.  If it is extended too far from its major [[Technical_Analysis#Moving_Averages | moving average]] the odds of a failed [[Breakouts_and_Breakdowns#The_Breakout | breakout]] increase.
* Volume should be lower in the base than in the prior [[The_Basic_Cycle#Stage_2:_Rally/Greed | rally]] if you are trading a stock or a market.  If volume is higher in the base than it was on the up move it could put that up move into question and the market could be distributing, ready to transition into an ugly stage 4 [[Trends#The_Downtrend | downtrend]].
* More power is added if the [[Breakouts_and_Breakdowns#The_Breakout | breakout]] occurs at or near a reversal [[Forex Market Hours | time]] but is not necessary.
* Refer to the Wiki in [[Price Action Analysis | Market Mechanics]] on [[Breakouts_and_Breakdowns#The_Breakout | Breakouts]] for more information.
 
https://i.imgur.com/ZpXbs0q.png
 
''Figure 3.1 – Criteria of The [[Breakouts_and_Breakdowns#The_Breakout | Breakout]].'' 
 
Keep in mind that although the 20 and 200 SMAs are used in this example you could also use any combination of major and major or major and minor [[Technical_Analysis#Moving_Averages | moving averages]] you want.  A general rule of thumb is to use shorter [[Technical_Analysis#Moving_Averages | moving averages]] on the lower [[Forex Market Hours | time]] frames like the 1/2, 5 and 15 minute [[Forex Market Hours | time]] frames while using longer [[Technical_Analysis#Moving_Averages | moving averages]] on the higher [[Forex Market Hours | time]] frames.  A combination of having higher [[Forex Market Hours | time]] frames and lower [[Forex Market Hours | time]] frames is always the best.
 
 
'''The [[Breakouts_and_Breakdowns#The_Breakout | Breakout]] Initial Entry (see Figure 3.2):'''
 
* The Initial [[Breakouts_and_Breakdowns#The_Breakout | Breakout]]:  The market moves above the [[Support and Resistance | resistance]] created in the base.
* Buy slightly above the base.  It’s a good sign to see volume pick up soon after [[Risk_Management#Entries_and_Exits | entry]] if you are trading stocks or a market that has volume.
* For very aggressive and advanced [[Trader Types | traders]] you can place a buy around the area where the [[Technical_Analysis#Moving_Averages | moving average]] starts to push the market higher.  A [[Japanese_Candlesticks#Tails,_Wicks,_and_Shadows | bottoming tail]] at this [[Technical_Analysis#Moving_Averages | moving average]] is a very bullish signal that the [[Breakouts_and_Breakdowns#The_Breakout | breakout]] will occur  Keep in mind that this is a pre-emptive [[Risk_Management#Entries_and_Exits | entry]] and can result in a larger amount of [[Risk_Management#Stop_Losses | Stop losses]] being take but when the market is in an aggressive [[Trends#The_Uptrend | uptrend]] this will often work and may produce higher [[Risk_Management#Entries_and_Exits | profits]].
 
https://i.imgur.com/C3r3fF2.png
 
''Figure 3.2 – The first [[Breakouts_and_Breakdowns#The_Breakout | breakout]] takes place when the price breaks the high of the newly created base.  The initial [[Risk_Management#Stop_Losses | stop]] is placed below the low of that base.'' 
 
 
'''Initial Stop on the First [[Breakouts_and_Breakdowns#The_Breakout | Breakout]] (see Figure 3.2):'''
 
* The initial [[Risk_Management#Stop_Losses | Stop loss]] will be placed below the low of the base.
* Do not place it at the exact low.  Give it a bit of room to wiggle.  Many [[Forex Market Hours | time]] the market will come down and test the low of the base again before it continues higher.  You don’t want to be [[Risk_Management#Stop_Losses | stopped]] out in a good move because you were trying to save a penny or two.  Placing [[Risk_Management#Stop_Losses | stops]] is a bit of an art that will become easier with real trading experience.
* Always attempt to place a [[Risk_Management#Stop_Losses | stop]] in a spot that the market should not go to if you are correct in your assessment of the market.
 
 
'''Initial Profit Target for the First [[Breakouts_and_Breakdowns#The_Breakout | Breakout]]:'''
 
* The [[Risk_Management#Entries_and_Exits | profit target]] is a bit more difficult to define than the [[Risk_Management#Stop_Losses | Stop loss]] is.  There are more variables involved.  Some [[Breakouts_and_Breakdowns#The_Breakout | breakouts]] take off and never look back, some come back to the base and some fail.  It would be impossible to figure out which [[Breakouts_and_Breakdowns#The_Breakout | breakout]] will do exactly what which is why we need to be reasonable and objective about where the [[Risk_Management#Entries_and_Exits | profit target]] should be and how we will take [[Risk_Management#Entries_and_Exits | profits]].
* It is always a good idea to have 2 [[Risk_Management#Entries_and_Exits | profit targets]] or have one [[Risk_Management#Entries_and_Exits | profit target]] and a method of trailing.  We have found that it is a very professional way to [[Trading | trade]] by taking a reasonable profit on the first half of your position and defining a trailing method for the other half in case the market continues to move in your favour.
* [[Trader Types | Traders]] can take the length of the base and project it upward to get the initial potential [[Risk_Management#Entries_and_Exits | profit target]].
* Any area of [[Support and Resistance | resistance]] or [[Supply and Demand | supply]] that may be strong enough to halt the [[Breakouts_and_Breakdowns#The_Breakout | breakout]].
* Remember that [[Risk_Management#Entries_and_Exits | profit targets]] are areas and not exact numbers so don't be too rigid in your [[Risk_Management#Entries_and_Exits | profit target]].
 
 
'''The Second [[Breakouts_and_Breakdowns#The_Breakout | Breakout]] Entry (see Figure 3.3):'''
 
* In the second [[Breakouts_and_Breakdowns#The_Breakout | breakout]] the market moves above the high made on the initial [[Breakouts_and_Breakdowns#The_Breakout | breakout]]. Buying at this point is not the [[Safe Haven Flows | safest place]] to buy but it does confirm the strength of the [[Breakouts_and_Breakdowns#The_Breakout | breakout]] and is a confirmation that the market is likely going to continue higher.   
* The best place to buy on the second [[Breakouts_and_Breakdowns#The_Breakout | breakout]] is buying above the high of the first reversal candle as shown in figure 3.3.  The [[Risk_Management#Stop_Losses | Stop loss]] will be placed below the low of the reversal candle. 
* The initial [[Risk_Management#Entries_and_Exits | profit target]] of the second [[Breakouts_and_Breakdowns#The_Breakout | breakout]] will be the high created after the first [[Breakouts_and_Breakdowns#The_Breakout | breakout]]. 
* If you placed a buy [[Trading | trade]] at the initial [[Breakouts_and_Breakdowns#The_Breakout | breakout]] point and you did not take our any [[Risk_Management#Entries_and_Exits | profits]] you might consider selling part of your position at the first [[Retracements | retracement]] high to lock in [[Risk_Management#Entries_and_Exits | profits]]. 
 
https://i.imgur.com/Ux3x42T.png
 
''Figure 3.3 – Shows the full [[Breakouts_and_Breakdowns#The_Breakout | breakout]] including the second [[Breakouts_and_Breakdowns#The_Breakout | breakout]] and second [[Breakouts_and_Breakdowns#The_Breakout | breakout]] [[Risk_Management#Stop_Losses | Stop loss]].''
 
 
'''Trailing Exit Procedures:'''
 
* After 2 [[Japanese Candlesticks | candles]] are complete you may move the [[Risk_Management#Stop_Losses | stop]].  [[Trader Types | Traders]] should give the market a bit of [[Forex Market Hours | time]] to prove it will move higher and confirm the [[Breakouts_and_Breakdowns#The_Breakout | breakout]].  Don't expect the [[Breakouts_and_Breakdowns#The_Breakout | breakout]] to always start moving instantly as soon as you [[Risk_Management#Entries_and_Exits | enter]] the [[Trading | trade]].  Sometimes the market will take its [[Forex Market Hours | time]].
* You may choose to start trailing your [[Risk_Management#Stop_Losses | Stop loss]] under each [[Japanese Candlesticks | candlestick]] once the market or stock has moved at least 75% of the way to the [[Risk_Management#Entries_and_Exits | profit target]].  This is a good idea to help protect your hard earned gains.  There is nothing worse than watching a good winning [[Trading | trade]] turn into a [[Risk_Management#Stop_Losses | stop out]] for a loss.  Protect your gains, not all [[Pre-Trade Considerations | trades]] will make it to the [[Risk_Management#Entries_and_Exits | profit target]].
* Once you have taken part of the position off for a profit you should never lose money on the [[Trading | trade]].  Any [[Risk_Management#Stop_Losses | Stop loss]] adjustment that you make at this point should always be for a profit.
* It is always a good idea to take part of your profit at the profit objective.  This relieves the emotional need to take a profit and it allows the [[Trader Types | trader]] to think clearly.  However, you never really know how far a move will go so having some of your position still on can lead to substantial gains in the event you catch really large move higher.
 
 
'''Notes:'''
 
* A rising 20 SMA can be an explosive catalyst to start the first [[Breakouts_and_Breakdowns#The_Breakout | breakout]] of the base.  At the price point of contact with the rising 20 SMA the stock should [[Breakouts_and_Breakdowns#The_Breakout | breakout]] higher.  If it does not then beware of this [[Breakouts_and_Breakdowns#The_Breakout | breakout]] as it could be the first warning sign that the [[Trends | trend]] is over or your analysis is not correct.
* If the prior [[The_Basic_Cycle#Stage_2:_Rally/Greed | rally]] took the market far away from its major [[Technical_Analysis#Moving_Averages | moving averages]] it may be a warning sign that the market is running out of momentum to continue higher.  If the market has a failed [[Breakouts_and_Breakdowns#The_Breakout | breakout]] or simply breaks down there could be a viable shorting opportunity.
* Generally, wide moves away from the major [[Technical_Analysis#Moving_Averages | moving averages]] can lead to a snap back to the major [[Technical_Analysis#Moving_Averages | moving average]].  When the move back is [[Trends#The_Sideways_Trend | sideways]], meaning the [[Technical_Analysis#Moving_Averages | moving average]] had enough [[Forex Market Hours | time]] to catch up to price, and the major [[Technical_Analysis#Moving_Averages | moving average]] goes flat instead of pushing the stock higher; a [[Trends | trend]] reversal may be near.  Be alert to potential changes
 
 
=='''The [[Breakouts_and_Breakdowns#The_Breakdown | Breakdown]]'''==
 
The breakdown attempts to take advantage of any financial instrument that is in a strong stage 4 [[Trends#The_Downtrend | downtrend]].  There are two potential areas that [[Trader Types | traders]] can [[Risk_Management#Entries_and_Exits | enter]] a short sell position with great reliability.
 
 
'''The [[Breakouts_and_Breakdowns#The_Breakdown | Breakdown]] Criteria (see Figure 4.1):'''
 
* A base or consolidation must be forming somewhere in an ongoing stage 4 [[Trends#The_Downtrend | downtrend]] with no major [[Supply and Demand | demand]] below or [[Support and Resistance | support]] to the left that could slow or halt a new move lower. 
* A void between this new base or [[Supply and Demand | supply]] point and the next congestion or [[Supply and Demand | demand]] point should exist.  A nice price void.
* More power will be given to this setup if there is a major or minor [[Technical_Analysis#Moving_Averages | moving average]] that is declining towards the high of this new base.  The high of the base could be pushed lower by the minor 10 SMA while below the major 20 SMA.  Or it could be 2 major [[Technical_Analysis#Moving_Averages | moving averages]] like the 20 SMA and the 200SMA.
* The new consolidation should be below its major [[Technical_Analysis#Moving_Averages | moving averages]] in order to be considered lower risk.  If it is extended too far from its major [[Technical_Analysis#Moving_Averages | moving average]] the odds of a failed [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] increase.
* Volume should be lower in the base than it was in the prior [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]] if you are trading a stock or a market. 
* More power is added if the [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] occurs at or near a reversal [[Forex Market Hours | time]] but is not necessary.
* Refer to the Wiki on [[Price Action Analysis | Market Mechanics]] on [[Breakouts_and_Breakdowns#The_Breakdown | Breakdowns]] for more information.
 
https://i.imgur.com/KkYQ76V.png
 
''Figure 4.1 – Criteria of The [[Breakouts_and_Breakdowns#The_Breakdown | Breakdown]].'' 
 
 
Keep in mind that although the 20 and 200 SMAs are used in this example you could also use any combination of major and major or major and minor [[Technical_Analysis#Moving_Averages | moving averages]] you want.  A general rule of thumb is to use shorter [[Technical_Analysis#Moving_Averages | moving averages]] on the lower [[Forex Market Hours | time]] frames like the 1/2, 5 and 15 minute [[Forex Market Hours | times]] frames while using longer [[Technical_Analysis#Moving_Averages | moving averages]] on the higher [[Forex Market Hours | time]] frames.  A combination of having higher [[Forex Market Hours | time]] frames and lower [[Forex Market Hours | time]] frames is always the best.
 
 
'''The [[Breakouts_and_Breakdowns#The_Breakdown | Breakdown]] Initial Entry (see Figure 4.2):'''
 
* The Initial [[Breakouts_and_Breakdowns#The_Breakdown | Breakdown]]:  The market moves below the [[Support and Resistance | support]] created in the base.
* Short sell slightly below the base.  It’s a good sign to see volume pick up soon after [[Risk_Management#Entries_and_Exits | entry]] if you are trading stocks or a market that has volume.
* For very aggressive and advanced [[Trader Types | traders]] you can place a short sell around the area where the [[Technical_Analysis#Moving_Averages | moving average]] starts to push the market lower.  A [[Japanese_Candlesticks#Tails,_Wicks,_and_Shadows |topping tail]] at this [[Technical_Analysis#Moving_Averages | moving average]] is a very bearish signal that the [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] will occur.  Keep in mind that this is a pre-emptive [[Risk_Management#Entries_and_Exits | entry]] and can result in a larger amount of [[Risk_Management#Stop_Losses | Stop losses]] being take but when the market is in an aggressive [[Trends#The_Downtrend | downtrend]] this will often work and may produce higher [[Risk_Management#Entries_and_Exits | profits]].
 
https://i.imgur.com/jH4ZuLx.png
 
''Figure 4.2 – The first [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] takes place when price breaks the low of the newly created base.  The initial [[Risk_Management#Stop_Losses | stop]] is placed above the high of that base.'' 
 
 
'''Initial Stop on the First [[Breakouts_and_Breakdowns#The_Breakdown | Breakdown]] (see Figure 4.2):'''
 
* The initial [[Risk_Management#Stop_Losses | Stop loss]] will be placed above the high of the base.
* Do not place it at the exact high.  Give it a bit of room to wiggle.  Many [[Forex Market Hours | times]] the market will come back up and test the high of the base again before it continues lower.  You don’t want to be [[Risk_Management#Stop_Losses | stopped]] out in a good move because you were trying to save a penny or two.  Placing [[Risk_Management#Stop_Losses | stops]] is a bit of an art that will become easier with real trading experience.
* Always attempt to place a [[Risk_Management#Stop_Losses | stop]] in a spot that the market should not go to if you are correct in your assessment of the market.
 
 
'''Initial Profit Target for the First [[Breakouts_and_Breakdowns#The_Breakdown | Breakdown]]:'''
 
* The [[Risk_Management#Entries_and_Exits | profit target]] is a bit more difficult to define than the [[Risk_Management#Stop_Losses | Stop loss]] is.  There are more variables involved.  Some [[Breakouts_and_Breakdowns#The_Breakdown | breakdowns]] start falling and never look back, some come back to the base and some fail.  It would be impossible to figure out which [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] will do exactly what which is why we need to be reasonable and objective about where the [[Risk_Management#Entries_and_Exits | profit target]] should be and how we will [[Risk_Management#Entries_and_Exits | take profits]].
* It is always a good idea to have 2 [[Risk_Management#Entries_and_Exits | profit target]]s or have one [[Risk_Management#Entries_and_Exits | profit target]] and a method of trailing.  We have found that it is a very professional way to [[Trading | trade]] by taking a reasonable profit on the first half of your position and defining a trailing method for the other half in case the market continues to move in your favour.
* [[Trader Types | Traders]] can take the length of the base and project it upward to get the initial potential [[Risk_Management#Entries_and_Exits | profit target]].
* Any area of [[Support and Resistance | support]] or [[Supply and Demand | demand]] that may be strong enough to halt the [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]].
* Remember that [[Risk_Management#Entries_and_Exits | profit target]]s are areas and not exact numbers so don't be too rigid in your [[Risk_Management#Entries_and_Exits | profit target]].
 
 
'''The Second [[Breakouts_and_Breakdowns#The_Breakdown | Breakdown]] Entry (see Figure 4.3):'''
 
* In the second [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] the market moves above the low made on the initial [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]]. Shorting at this point is not the [[Safe Haven Flows | safest place]] to sell short but it does confirm the weakness of the [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] and is a confirmation that the market is likely going to continue lower. 
* The best place to short sell on the second [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] is selling below the low of the first reversal candle as shown in figure 4.3.  The [[Risk_Management#Stop_Losses | Stop loss]] will be placed above the high of the reversal candle.
* The initial [[Risk_Management#Entries_and_Exits | profit target]] of the second [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] will be the low created after the first [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]].
* If you placed a short sell [[Trading | trade]] at the initial [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] point and you did not take our any [[Risk_Management#Entries_and_Exits | profits]] you might consider buying back part of your position at the first [[Retracements | retracement]] low to lock in [[Risk_Management#Entries_and_Exits | profits]].
https://i.imgur.com/Q5fNJ1L.png
 
''Figure 4.3 – Shows the full [[Breakouts_and_Breakdowns#The_Breakout | breakout]] including the second [[Breakouts_and_Breakdowns#The_Breakout | breakout]] and second [[Breakouts_and_Breakdowns#The_Breakout | breakout]] [[Risk_Management#Stop_Losses | Stop loss]].''
 
 
'''Trailing Exit Procedures:'''
 
* After 2 [[Japanese Candlesticks | candles]] are complete you may move the [[Risk_Management#Stop_Losses | stop]].  [[Trader Types | Traders]] should give the market a bit of [[Forex Market Hours | time]] to prove it will move lower and confirm the [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]].  Don't expect the [[Breakouts_and_Breakdowns#The_Breakdown | breakdowns]] to always start moving instantly as soon as you [[Risk_Management#Entries_and_Exits | enter]] the [[Trading | trade]].  Sometimes the market will take its [[Forex Market Hours | time]].
* You may choose to start trailing your [[Risk_Management#Stop_Losses | Stop loss]] above each [[Japanese Candlesticks | candlestick]] once the market or stock has moved at least 75% of the way to the [[Risk_Management#Entries_and_Exits | profit target]].  This is a good idea to help protect your hard earned gains.  There is nothing worse than watching a good winning [[Trading | trade]] turn into a [[Risk_Management#Stop_Losses | stop out]] for a loss.  Protect your gains, not all [[Pre-Trade Considerations | trades]] will make it to the [[Risk_Management#Entries_and_Exits | profit target]].
* Once you have taken part of the position off for a profit you should never lose money on the [[Trading | trade]].  Any [[Risk_Management#Stop_Losses | Stop loss]] adjustment that you make at this point should always be for a profit.
* It is always a good idea to take part of your profit at the profit objective.  This relieves the emotional need to take a profit and it allows the [[Trader Types | trader]] to think clearly.  However, you never really know how far a move will go so having some of your position still on can lead to substantial gains in the event you catch really large move lower.
 
 
'''Notes:'''
 
* A declining 20 SMA can be an explosive catalyst to start the first [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] out of the base.  At the price point of contact with the declining 20 SMA the stock should [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]]  lower.  If it does not then beware of this [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] as it could be the first warning sign that the [[Trends | trend]] is over or your analysis is not correct.
* If the prior [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]] took the market far away from its major [[Technical_Analysis#Moving_Averages | moving averages]] it may be a warning sign that the market is running out of momentum to continue lower.  If the market has a failed [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] or simply breaks out higher there could be a viable buying opportunity.
* Generally, wide moves away from the major [[Technical_Analysis#Moving_Averages | moving averages]] can lead to a snap back to the major [[Technical_Analysis#Moving_Averages | moving average]].  When the move back is [[Trends#The_Sideways_Trend | sideways]], meaning the [[Technical_Analysis#Moving_Averages | moving average]] had enough [[Forex Market Hours | time]] to catch up to price, and the major [[Technical_Analysis#Moving_Averages | moving average]] goes flat instead of pushing the stock lower, a [[Trends | trend]] reversal may be near.  Be alert to potential changes
 
 
=='''Bullish Momentum Stall'''==
 
'''Criteria (see Figure 9.1):'''
 
* The first [[Japanese Candlesticks | candlestick]] must be a bullish wide range candle.  This is the [[Japanese Candlesticks | candles]] that dictate the direction of the [[Trading | trade]].  In this case the direction is higher.
* The second [[Japanese Candlesticks | candlestick]] must stay within the top 30% of the first wide range candle without trading above its high.
* The high of the second candle should be equal or near equal with the high of the first candle. This establishes a mini double top which will represent a weak [[Supply and Demand | supply]] or price [[Support and Resistance | resistance]] point.
* Preferably, the second [[Japanese Candlesticks | candles]] close is below its opening price.  This creates a negative candle which will fuel the failed expectations of [[Trader Types | traders]] when the break above the two [[Japanese Candlesticks | candles]] high takes place.
 
https://i.imgur.com/p9CRxKJ.png
 
''Figure 9.1 – Showing four different scenarios for the bullish momentum stall.  There can be many variations of the bullish momentum stall; these are just a few as guidelines.  There can even be more than on stall candlestick.''
 
 
'''Entry (see Figure 9.2):'''
 
* Go long when the third candle [[Pre-Trade Considerations | trades]] above the highs of the first and second [[Japanese Candlesticks | candles]].  This signifies that a mini [[Breakouts_and_Breakdowns#The_Breakout | breakout]] through [[Support and Resistance | resistance]] has occurred.
* If there is more than one stall candle go long above the consolidation of highs.  No more than three stall [[Japanese Candlesticks | candles]] though, too many become a different kind of [[Fundamental and Sentiment Trading Strategies | strategy]] that may not be as effective.
 
 
'''Initial Stop (see Figure 9.2):'''
 
* Place the initial [[Risk_Management#Stop_Losses | stop]] below the low of the second candle or the stall candle.
 
https://i.imgur.com/tjuvDhD.png
 
''Figure 9.2 – Showing multiple types of stall [[Japanese Candlesticks | candles]] as well as the buy area and [[Risk_Management#Stop_Losses | stop]] area.''
 
 
'''Target:'''
 
* Any area of price [[Support and Resistance | resistance]] or congestion to the left that may slow the momentum.  Wherever you see [[Supply and Demand | supply]].
* If there is a wide range [[Japanese Candlesticks | candlestick]] on the third candle that is equal to or greater than the first wide range candle, consider [[Risk_Management#Entries_and_Exits | taking profits]] on half the position and/or trailing very tight to the market.
 
 
'''Trailing Stop Procedures:'''
 
* This is a momentum type [[Fundamental and Sentiment Trading Strategies | strategy]] and is best used as a low risk and high reward [[Fundamental and Sentiment Trading Strategies | strategy]] that produces [[Risk_Management#Entries_and_Exits | profits]] quickly.  Unless there are other [[Fundamental and Sentiment Trading Strategies | strategies]] involved [[Risk_Management#Entries_and_Exits | profits]] should be taken aggressively.
* Trail your [[Risk_Management#Stop_Losses | stop]] under each [[Japanese Candlesticks | candlestick]] after it completes.
* The [[Risk_Management#Stop_Losses | stop]] can be moved after one full [[Japanese Candlesticks | candlestick]] is complete on the [[Forex Market Hours | time]] frame you are trading.
 
 
'''Notes:'''
 
* This wide range [[Japanese Candlesticks | candlestick]] can be out of a base or congestion but it should have [[Supply and Demand | demand]] below that will help to push the stock or market higher.
* You can use this [[Fundamental and Sentiment Trading Strategies | strategy]] to add more shares to an already existing and profitable position.
* This [[Fundamental and Sentiment Trading Strategies | strategy]] can be applied in any [[Forex Market Hours | time]] frame.  This is particularly effective at creating [[Risk_Management#Entries_and_Exits | profits]] quickly for day and [[Trader_Types#Scalpers | scalp traders]].
* This trading tactic helps [[Trader Types | traders]] jump on a strong [[Trends#The_Uptrend | uptrend]] already in progress.
 
 
=='''Bearish Momentum Stall'''==
 
'''Criteria (see Figure 10.1):'''
 
* The first [[Japanese Candlesticks | candlestick]] must be a bearish wide range candle.  This is the [[Japanese Candlesticks | candles]] that dictate the direction of the [[Trading | trade]].  In this case the direction is lower.
* The second [[Japanese Candlesticks | candlestick]] must stay within the bottom 30% of the first wide range candle without trading below its low.
* The low of the second candle should be equal or near equal with the low of the first candle. This establishes a mini double bottom which will represent a weak [[Supply and Demand | demand]] or price [[Support and Resistance | support point]].
* Preferably, the second [[Japanese Candlesticks | candles]] close is above its opening price.  This creates a positive candle which will fuel the failed expectations of [[Trader_Types | traders]] when the break below the two [[Japanese Candlesticks | candles]] low takes place.
 
https://i.imgur.com/dvC4Qex.png
 
''Figure 9.1 – Showing four different scenarios for the bearish momentum stall.  There can be many variations of the bearish momentum stall; these are just a few as guidelines.  There can even be more than on stall [[Japanese Candlesticks | candlestick]].''
 
 
'''Entry (see Figure 10.2):'''
 
Go short when the third candle [[Pre-Trade Considerations | trades]] below the lows of the first and second [[Japanese Candlesticks | candles]].  This signifies that a mini [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] through [[Support and Resistance | support]] has occurred.
If there is more than one stall candle go short below the consolidation of lows.  No more than three stall [[Japanese Candlesticks | candles]] though, too many become a different kind of [[Fundamental and Sentiment Trading Strategies | strategy]] that may not be as effective.
 
 
'''Initial Stop (see Figure 10.2):'''
 
* Place the initial [[Risk_Management#Stop_Losses | stop]] above the high of the second candle or the stall candle.
 
https://i.imgur.com/apZHknd.png
 
''Figure 10.2 – Showing multiple types of stall [[Japanese Candlesticks | candles]] as well as the sell area and [[Risk_Management#Stop_Losses | Stop loss]] area.''
 
 
'''Target:'''
 
* Any area of price [[Support and Resistance | support]] or congestion to the left that may slow the momentum.  Wherever you see [[Supply and Demand | demand]].
* If there is a wide range candle on the third candle that is equal to or greater than the first wide range candle, consider [[Risk_Management#Entries_and_Exits | taking profits]] on half the position and/or trailing very tight to the market.
 
 
'''Trailing Stop Procedures:'''
 
* This is a momentum type [[Fundamental and Sentiment Trading Strategies | strategy]] and is best used as a low risk and high reward [[Fundamental and Sentiment Trading Strategies | strategy]] that produces [[Risk_Management#Entries_and_Exits | profits]] quickly.  Unless there are other [[Fundamental and Sentiment Trading Strategies | strategies]] involved [[Risk_Management#Entries_and_Exits | profits]] should be taken aggressively.
* Trail your [[Risk_Management#Stop_Losses | stop]] above each [[Japanese Candlesticks | candlestick]] after it completes.
* The [[Risk_Management#Stop_Losses | stop]] can be moved after one full [[Japanese Candlesticks | candlestick]] is complete on the time frame you are trading.
 
 
'''Notes:'''
 
* This wide range [[Japanese Candlesticks | candlestick]] can be out of a base or congestion but it should have [[Supply and Demand | supply]] overhead that will help to push the stock or market lower.
* You can use this [[Fundamental and Sentiment Trading Strategies | strategy]] to add more shares to an already existing and profitable position.
* This [[Fundamental and Sentiment Trading Strategies | strategy]] can be applied in any [[Forex Market Hours | time]] frame.  This is particularly effective at creating [[Risk_Management#Entries_and_Exits | profits]] quickly for day and scalp [[Trader_Types | traders]].
* This trading tactic helps [[Trader_Types | traders]] jump on a strong [[Trends#The_Downtrend | downtrend]] already in progress.
 
 
=='''Matched Move Higher'''==
 
The Matched move higher attempts to profit from the failed expectations of other [[Trader_Types | traders]].  These failed expectations come from the reversal [[Japanese Candlesticks | candles]] and the [[Trader_Types | traders]] that have placed [[Pre-Trade Considerations | trades]] based on these reversal signals.  What these [[Trader_Types | traders]] do not realize is that they are trading against the momentum of a well-established [[Trends#The_Uptrend | uptrend]] which is always dangerous.
 
This is a [[Breakouts_and_Breakdowns#The_Breakout | breakout]] that does not attempt to [[Retracements | retrace]] lower back to the base.
 
 
'''Criteria (see Figure 11.1):'''
 
* An initial [[The_Basic_Cycle#Stage_2:_Rally/Greed | rally]] starts from a consolidation area or base pattern.
* A reversal [[Japanese Candlesticks | candlestick]] forms at an area of [[Support and Resistance | resistance]].  This [[Support and Resistance | resistance]] area can be subjective or objective.
* The stock or market moves [[Trends#The_Sideways_Trend | sideways]] briefly possibly forming a couple reversal [[Japanese Candlesticks | candles]] lower.  However, these reversal [[Japanese Candlesticks | candles]] do not [[Retracements | retrace]] any more than 10% of the prior [[The_Basic_Cycle#Stage_2:_Rally/Greed | rally]].
* The reversal [[Japanese Candlesticks | candles]] lower fail and the market continues to move higher.
 
https://i.imgur.com/JYRpHNf.png
 
''Figure 11.1 – An aggressive [[Breakouts_and_Breakdowns#The_Breakout | breakout]] occurs from an area of [[Supply and Demand | demand]] and rallies or several [[Japanese Candlesticks | candles]].  A reversal candle forms but there is no real follow through to the downside.  Momentum has slowed but is not reversing.''
 
 
'''Entry (see Figure 11.2):'''
 
* Buy above the high made on the [[The_Basic_Cycle#Stage_2:_Rally/Greed | rally]].
* Alternatively, you may buy above the high of the last reversal candle that formed.  This will create more risk as the market has not yet proved to have continued in the prior up direction.
 
 
'''Initial Stop (see Figure 11.2):'''
 
* The initial [[Risk_Management#Stop_Losses | stop]] should be placed below the low of the lowest reversal candle in the pattern.
* [[Trader_Types | Traders]] may also choose to use the low of the [[Risk_Management#Entries_and_Exits | entry]] bar.  Keep good [[Risk Management | money management]] in mind when placing any [[Risk_Management#Stop_Losses | Stop loss]] order.
 
https://i.imgur.com/dQmMytS.png
 
''Figure 11.2 – Showing the where to buy and place a [[Risk_Management#Stop_Losses | Stop loss]] order when trading a matched move.''
 
 
'''Target'''
 
* Measure the distance from where the [[Breakouts_and_Breakdowns#The_Breakout | breakout]] took place to where the reversal [[Japanese Candlesticks | candles]] formed.  Project that price upward from the low of the lowest reversal candle and that is your initial target.
* Any area of price [[Support and Resistance | resistance]] or congestion to the left that may slow the momentum.  Wherever you see [[Supply and Demand | supply]].
* If there is an aggressive wide range [[Japanese Candlesticks | candlestick]] that is looking to be climactic consider [[Risk_Management#Entries_and_Exits | taking profits]] on half the position and/or trailing very tight to the market.
 
 
'''Trailing Stop Procedures:'''
 
* This is a momentum type [[Fundamental and Sentiment Trading Strategies | strategy]] and is best used as a low risk and high reward [[Fundamental and Sentiment Trading Strategies | strategy]] that produces [[Risk_Management#Entries_and_Exits | profits]] quickly.  Unless there are other [[Fundamental and Sentiment Trading Strategies | strategies]] involved [[Risk_Management#Entries_and_Exits | profits]] should be taken aggressively.
* Trail your [[Risk_Management#Stop_Losses | stop]] under each [[Japanese Candlesticks | candlestick]] after it completes.
* The [[Risk_Management#Stop_Losses | stop]] can be moved after one full [[Japanese Candlesticks | candlestick]] is complete on the [[Forex Market Hours | time]] frame you are trading.  This [[Japanese Candlesticks | candlestick]] must break the high created on the last [[The_Basic_Cycle#Stage_2:_Rally/Greed | rally]] in order to move the [[Risk_Management#Stop_Losses | stop]].  If it does not break the high then you will need to wait for the next candle to break the high.
 
 
'''Notes:'''
 
* This [[Trading | trade]] will work best if the initial [[Support and Resistance | resistance]] that caused the reversal [[Japanese Candlesticks | candles]] was a subjective area of [[Support and Resistance | resistance]] like a [[Technical_Analysis#Moving_Averages | moving average]] or [[Technical_Analysis#Fibonacci | Fibonacci retracement]].
* Like all good [[Fundamental and Sentiment Trading Strategies | strategies]] you need a clear price void above for the market to be able to [[Trading | trade]] within.
* If there is a wide range [[Japanese Candlesticks | candlestick]] that was the initial [[Breakouts_and_Breakdowns#The_Breakout | breakout]]  candle from the base and the market has not [[Retracements | retraced]] from the initial reversal [[Japanese Candlesticks | candles]] this is a strong sign that the market will continue aggressively higher in the short term as the strength in the market is with the buyers.
* The key to the Matched Move is that the sell setup created by the reversal [[Japanese Candlesticks | candles]] in the [[Support and Resistance | resistance]] area (subjective or actual) sets up [[Trader_Types | traders]]’ expectations of a [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]] in price.  It’s the failure of these expectations that ignites the next move higher.  The [[Trader_Types | traders]] who sold short have stop buy orders that get hit which helps the market move higher.
 
 
=='''Matched Move Lower'''==
 
The Matched move lower attempts to profit from the failed expectations of other [[Trader_Types | traders]].  Some [[Trader_Types | traders]] believe that the market will head higher.  These failed expectations come from the reversal [[Japanese Candlesticks | candles]] and the [[Trader_Types | traders]] that have placed [[Pre-Trade Considerations | trades]] based on these reversal signals.  What these [[Trader_Types | traders]] do not realize is that they are trading against the downward momentum of a well-established [[Trends#The_Downtrend | downtrend]] which is always dangerous.
 
This is a [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] that does not attempt to [[Retracements | retrace]] higher back to the base.
 
 
'''Criteria (see Figure 12.1):'''
 
* An initial [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]] starts from a consolidation area or base pattern.
* A reversal [[Japanese Candlesticks | candlestick]] forms at an area of [[Support and Resistance | support]].  This [[Support and Resistance | support]] area can be subjective or objective.
* The stock or market moves [[Trends#The_Sideways_Trend | sideways]] briefly possibly forming a couple reversal [[Japanese Candlesticks | candles]] higher.  However, these reversal [[Japanese Candlesticks | candles]] do not [[Retracements | retrace]] any more than 10% of the prior [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]].
* The reversal [[Japanese Candlesticks | candles]] higher fail and the market continue to move lower.
 
https://i.imgur.com/mvFsdsJ.png
 
''Figure 12.1 – An aggressive [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] occurs from an area of [[Supply and Demand | supply]] and [[The_Basic_Cycle#Stage_4:_Decline/Fear | declines]] or several [[Japanese Candlesticks | candles]].  A reversal candle higher forms but there is no real follow through to the upside.  Momentum has slowed but is not reversing.''
 
 
'''Entry (see Figure 12.2):'''
 
* Sell short below the low made on the initial [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]].
* Alternatively, you may sell short below the low of the last reversal candle that formed.  This will create more risk as the market has not yet proved to have continue in the prior down direction.
 
 
'''Initial Stop (see Figure 11.2):'''
 
* The initial [[Risk_Management#Stop_Losses | stop]] should be placed above the high of the highest reversal candle in the pattern.
* [[Trader_Types | Traders]] may also choose to use the high of the [[Risk_Management#Entries_and_Exits | entry]] bar.  Keep good [[Risk Management | money management]] in mind when placing any [[Risk_Management#Stop_Losses | Stop loss]] order.
 
https://i.imgur.com/HuS2kqa.png
 
''Figure 11.2 – Showing where to short sell and place a [[Risk_Management#Stop_Losses | Stop loss]] order when trading a matched move.''
 
 
'''Target:'''
 
* Measure the distance from where the [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] took place to where the reversal [[Japanese Candlesticks | candles]] formed.  Project that price downward from the high of the highest reversal candle and that is your initial target.
* Any area of price [[Support and Resistance | support]] or congestion to the left that may slow the momentum.  Wherever you see [[Supply and Demand | demand]].
* If there is an aggressive wide range [[Japanese Candlesticks | candlestick]] higher that looks to be getting climactic consider [[Risk_Management#Entries_and_Exits | taking profits]] on half the position and/or trailing very tight to the market.
 
 
'''Trailing Stop Procedures:'''
 
* This is a momentum type [[Fundamental and Sentiment Trading Strategies | strategy]] and is best used as a low risk and high reward [[Fundamental and Sentiment Trading Strategies | strategy]] that produces [[Risk_Management#Entries_and_Exits | profits]] quickly.  Unless there are other [[Fundamental and Sentiment Trading Strategies | strategies]] involved [[Risk_Management#Entries_and_Exits | profits]] should be taken aggressively.
* Trail your [[Risk_Management#Stop_Losses | stop]] above each [[Japanese Candlesticks | candlestick]] after it completes.
* The [[Risk_Management#Stop_Losses | stop]] can be moved after one full [[Japanese Candlesticks | candlestick]] is complete on the [[Forex Market Hours | time]] frame you are trading.  This [[Japanese Candlesticks | candlestick]] must break the low created on the last [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]] in order to move the [[Risk_Management#Stop_Losses | stop]].  If it does not break the low then you will need to wait for the next candle to break the low before moving your [[Risk_Management#Stop_Losses | stop]].
 
 
'''Notes:'''
 
* This [[Trading | trade]] will work best if the initial [[Support and Resistance | support]] that caused the reversal [[Japanese Candlesticks | candles]] was a subjective area of [[Support and Resistance | support]] like a [[Technical_Analysis#Moving_Averages | moving average]] or [[Technical_Analysis#Fibonacci | Fibonacci retracement]].
* Like all good [[Fundamental and Sentiment Trading Strategies | strategies]] you need a clear price void below for the market to be able to [[Trading | trade]] within.
* If there is a wide range [[Japanese Candlesticks | candlestick]] that was the initial [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] candle from the base and the market has not [[Retracements | retraced]] from the initial reversal [[Japanese Candlesticks | candles]] this is a strong sign that the market will continue aggressively lower in the short term as the strength in the market is with the sellers.
* The key to the Matched Move is that the buy setup created by the reversal [[Japanese Candlesticks | candles]] in the [[Support and Resistance | support area]] (subjective or actual) sets up [[Trader_Types | traders]]’ expectations of a [[The_Basic_Cycle#Stage_2:_Rally/Greed | rally]] in price. It’s the failure of these expectations that ignites the next move lower.  The [[Trader_Types | traders]] who bought have stop sell orders that get hit which help the market move lower.
 
 
=='''Climactic Buy'''==
 
The climactic buy [[Fundamental and Sentiment Trading Strategies | strategy]] attempts to take advantage of markets that have experienced an extreme downward move that is far too overextended.  This [[Fundamental and Sentiment Trading Strategies | strategy]], by its very nature of trading against the [[Trends | trend]], has a high degree of risk.  However, with high risk can come high reward and when executed properly the climactic buy can produce [[Risk_Management#Entries_and_Exits | profits]] faster than any other [[Fundamental and Sentiment Trading Strategies | strategy]] we know of. 
 
 
'''Criteria (see Figure 13.1):'''
 
* There must be at least 5 consecutive [[Japanese Candlesticks | candlesticks]] with lower highs.
* At least 5 [[Japanese Candlesticks | candlesticks]] that are red.
* There must be a reversal candle formed as the potential low.
* If you are using [[Technical_Analysis#Moving_Averages | moving averages]] as a guide, the stock or market should be extended far below the major [[Technical_Analysis#Moving_Averages | moving average]] (2% or more is a simple guideline).
* If you are trading instruments that measure volume then there should be a sharp increase of volume on the last few [[Japanese Candlesticks | candles]].
* It is preferred, for stock and index trading, that the climactic buy setup be in the area of a potent reversal [[Forex Market Hours | time]].
 
https://i.imgur.com/9x05qsO.png
 
''Figure 13.1 – Highlights a typical climactic buy trade setup.  You can see that the [[Japanese Candlesticks | candles]] become more aggressive to the down side as the market picks up momentum lower.  Notice how volume also picks up until its crescendos into the climax reversal candle.''
 
 
'''Entry (see Figure 13.2):'''
 
* Buy when the stock or market [[Pre-Trade Considerations | trades]] above the reversal [[Japanese Candlesticks | candles]]  high.
 
 
'''Initial Stop (see Figure 13.2):'''
 
* The initial [[Risk_Management#Stop_Losses | stop]] will be placed below the low of the reversal [[Japanese Candlesticks | candlestick]] or the lowest low made on the rapid [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]].
 
https://i.imgur.com/AhJyg37.png
 
''Figure 13.2 – The climactic buy trade setup showing the potential buy and [[Risk_Management#Stop_Losses | Stop loss]] areas.''
 
 
'''Profit Target:'''
 
* Any reversal candle that forms will potentially be a spot to take profit on at least part of the position.
* You can use the 40-60% [[Retracements | retracement]] from the low created on the climactic bottom.
* If the stock or market gets back up to its major [[Technical_Analysis#Moving_Averages | moving average]] this could be the [[Forex Market Hours | time]] to take off some profit.
 
 
'''Trailing Exit Procedures:'''
 
* This is a momentum type [[Fundamental and Sentiment Trading Strategies | strategy]] that can have a high reward that produces [[Risk_Management#Entries_and_Exits | profits]] quickly.  Unless there are other [[Fundamental and Sentiment Trading Strategies | strategies]] involved [[Risk_Management#Entries_and_Exits | profits]] should be taken aggressively because there is a lot of risk involved.
* Trail your [[Risk_Management#Stop_Losses | stop]] under each [[Japanese Candlesticks | candlestick]] after it completes.
* The [[Risk_Management#Stop_Losses | stop]] can be moved after one full [[Japanese Candlesticks | candlestick]] is complete on the [[Forex Market Hours | time]] frame you are trading.  This [[Japanese Candlesticks | candlestick]] must break the high of the last candle in order to move the [[Risk_Management#Stop_Losses | stop]].  If it does not break the high then you will need to wait for the next candle to break the high.
* Climactic buy setups will tend to move quickly when they are properly identified.  If the stock or market that you are trading has not moved up within 2 or 3 [[Japanese Candlesticks | candles]] it may be that the market is not actually climactic and further downside is a possibility.
 
 
'''Notes:'''
 
* This [[Fundamental and Sentiment Trading Strategies | strategy]] is best left to [[Trader_Types | traders]] who are experienced and profitable at the other [[Fundamental and Sentiment Trading Strategies | strategies]] they employ in the financial markets.  This is not the type of trading tactic that a [[Trader_Types | trader]] will want to start out with.
* Find this setup in the longer time frame and [[Trading | trade]] it in the shorter [[Forex Market Hours | time]] frame.  Timing is extremely important on this type of trade setup.  You need to be in as early as possible.
* The climactic buy is a great [[Fundamental and Sentiment Trading Strategies | strategy]] when the market is in a stage 2 [[Trends#The_Uptrend | uptrend]] on the highest [[Forex Market Hours | time]] frame that the [[Trader_Types | trader]] watches.  If you see that there is a well-established [[Trends#The_Uptrend | uptrend]] and the market panics by selling aggressively, there could be a large bounce higher once all the weak holders are out of the stock.  Once emotions are no longer extreme the hope is the [[Trends#The_Uptrend | uptrend]] will continue higher.
* This is an extreme momentum move [[Fundamental and Sentiment Trading Strategies | strategy]] where if you wait for too much confirmation you will likely miss the majority or the best part of the move.  If you miss it walk away and find something else to [[Trading | trade]].
* The reversal candle at the bottom of the climactic buy [[Fundamental and Sentiment Trading Strategies | strategy]] tells us that major buying has stepped into the market.  When this happens it usually is the professionals doing the buying, not the dumb money.  When the big professional money steps into the market you want to be trading in the direction of their order flow.  Let them move the market for you.
* [[Trader_Types | Traders]] will need to know their trading tools intimately in order to be able to act very fast if the market starts to move against their position.
* Volume will typically be lighter as the market rises of the climax bottom.  However it will likely be more than the market is typically used to on an advance.  Many shares are changing hands.
* If a [[Trader_Types | trader]] is going to [[Trading | trade]] against the [[Trends | trend]]this is the one counter [[Trends | trend]] [[Trading | trade]] we have found to be effective.
* The climactic buy can be traded in all [[Forex Market Hours | time]] frames and will work best if the stock is in a stage 2 [[Trends#The_Uptrend | uptrend]]
* Once the market has signs of being climactic the worst of price destruction has taken place.  There may still be further downside to come but the most aggressive down move should be over.  The odds of a move higher have increased.
* Having high volume can be optional at [[Forex Market Hours | times]] as long as the market is much extended from its major [[Technical_Analysis#Moving_Averages | moving averages]] and any areas of [[Supply and Demand | supply]].
* Having [[Supply and Demand | demand]] or a [[Support and Resistance | support area]] to the left will add a tremendous amount of power to this trade setup.
 
 
=='''Climactic Sell'''==
 
The climactic sell [[Fundamental and Sentiment Trading Strategies | strategy]] attempts to take advantage of markets that have experienced an extreme upward move that is far too overextended.  This [[Fundamental and Sentiment Trading Strategies | strategy]], by its very nature of trading against the established [[Trends | trend]], has a high degree of risk.  However with high risk can come high reward and when executed properly the climactic sell can produce [[Risk_Management#Entries_and_Exits | profits]] faster than any other [[Fundamental and Sentiment Trading Strategies | strategy]] we know of. 
 
 
'''Criteria (see Figure 14.1):'''
 
* There must be at least 5 consecutive [[Japanese Candlesticks | candlesticks]] with higher lows.
* At least 5 [[Japanese Candlesticks | candlesticks]] that are green.
* There must be a reversal candle formed as the potential high.
* If you are using [[Technical_Analysis#Moving_Averages | moving averages]] as a guide, the stock or market should be extended far above the major [[Technical_Analysis#Moving_Averages | moving average]] (2% or more is a simple guideline).
* If you are trading instruments that measure volume then there should be a sharp increase of volume on the last few [[Japanese Candlesticks | candles]].
* It is preferred, for stock and index trading, that the climactic sell setup be in the area of a potent reversal [[Forex Market Hours | time]].
 
https://i.imgur.com/S4wXFFH.png
 
''Figure 14.1 – Highlights a typical climactic sell trade setup.  You can see that the [[Japanese Candlesticks | candles]] become more aggressive to the up side as the market picks up momentum higher.  Notice how volume also picks up until its crescendos into the climax reversal candle.''
 
 
'''Entry (see Figure 14.2):'''
 
* Sell short when the stock or market [[Pre-Trade Considerations | trades]] below the reversal [[Japanese Candlesticks | candles]] low.
 
 
'''Initial Stop (see Figure 14.2):'''
 
* The initial [[Risk_Management#Stop_Losses | stop]] will be placed above the high of the reversal [[Japanese Candlesticks | candlestick]] or the highest high made on the rapid advance.
 
https://i.imgur.com/yXbKILt.png
 
''Figure 14.2 – The climactic sell trade setup showing the potential sell and [[Risk_Management#Stop_Losses | Stop loss]] areas.''
 
 
'''Profit Target:'''
 
* Any reversal candle that forms will potentially be a spot to take profit on at least part of the position.
* You can use the 40-60% [[Retracements | retracement]] from the high created on the climactic top.
* If the stock or market gets back down to its major [[Technical_Analysis#Moving_Averages | moving average]] this could be the [[Forex Market Hours | time]] to take off some profit.
 
 
'''Trailing Exit Procedures:'''
 
* This is a momentum type [[Fundamental and Sentiment Trading Strategies | strategy]] that can have a high reward that produces [[Risk_Management#Entries_and_Exits | profits]] quickly.  Unless there are other [[Fundamental and Sentiment Trading Strategies | strategies]] involved [[Risk_Management#Entries_and_Exits | profits]] should be taken aggressively because of the high level of risk involved.
* Trail your [[Risk_Management#Stop_Losses | stop]] above each [[Japanese Candlesticks | candlestick]] after it completes.
* The [[Risk_Management#Stop_Losses | stop]] can be moved after one full [[Japanese Candlesticks | candlestick]] is complete on the [[Forex Market Hours | time]] frame you are trading.  This [[Japanese Candlesticks | candlestick]] must break the low of the previous candle in order to move the [[Risk_Management#Stop_Losses | stop]].  If it does not break the low then you will need to wait for the next candle to break the low.
* Climactic sell setups will tend to move quickly when they are properly identified.  If the stock or market that you are trading has not moved down within 2 or 3 [[Japanese Candlesticks | candles]] it may be that the market is not actually climactic and further upside is a possibility.
 
 
'''Notes:'''
 
* This [[Fundamental and Sentiment Trading Strategies | strategy]] is best left to [[Trader_Types | traders]] who are experienced and profitable at the other [[Fundamental and Sentiment Trading Strategies | strategies]] they employ in the financial markets.  This is not the type of trading tactic that a [[Trader_Types | trader]] will want to start out with.
* Find this setup in the longer [[Forex Market Hours | time]] frame and [[Trading | trade]] it in the shorter [[Forex Market Hours | time]] frame.  Timing is extremely important on this type of trade setup.  You need to be in the [[Trading | trade]] as early as possible.
* The climactic sell is a great [[Fundamental and Sentiment Trading Strategies | strategy]] when the market is in a stage 4 [[Trends#The_Downtrend | downtrend]] on the highest [[Forex Market Hours | time]] frame that the [[Trader_Types | trader]] watches.  If you see that there is a well-established [[Trends#The_Downtrend | downtrend]] and the market participants buy too aggressively, there could be a large [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]] once all the weak holders are out of the stock.  Once emotions are no longer extreme the [[Trends#The_Downtrend | downtrend]] will continue lower.
* This is an extreme momentum move [[Fundamental and Sentiment Trading Strategies | strategy]] where if you wait for too much confirmation you will likely miss the majority or the best part of the move.  If you miss it walk away and find something else to [[Trading | trade]].
* The reversal candle at the top of the climactic sell [[Fundamental and Sentiment Trading Strategies | strategy]] tells us that major selling has stepped into the market.  When this happens it usually is the professionals doing the selling, not the dumb money.  When the big professional money steps into the market you want to be trading in the direction of their order flow.  Let them move the market for you.
* [[Trader_Types | Traders]] will need to know their trading tools intimately in order to be able to act very fast if the market starts to move against their position.
* Volume will typically be lighter as the market [[The_Basic_Cycle#Stage_4:_Decline/Fear | declines]] from the climax high.  However, it will likely be more than the market is typically used to on a [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]].  Many shares are changing hands.
* If a [[Trader_Types | trader]] is going to [[Trading | trade]] against the [[Trends | trend]] this is the one counter [[Trends | trend]] [[Trading | trade]] we have found to be effective.
* The climactic sell can be [[Trading | traded]] in all [[Forex Market Hours | time]] frames and will work best if the stock is in a stage 4 [[Trends#The_Downtrend | downtrend]]
* Once the market has signs of being climactic most of the advance has taken place.  There may still be further upside to come but the most aggressive up move should be over.  Odds of a move lower have increased.
* Having high volume can be optional at [[Forex Market Hours | times]] as long as the market is much extended from its major [[Technical_Analysis#Moving_Averages | moving averages]] and any areas of [[Supply and Demand | demand]].
* Having [[Supply and Demand | supply]] or a [[Support and Resistance | resistance]] area to the left will add a tremendous amount of power to this trade setup.
 
 
=='''The 3-5 Candle Drop Moving Average Play'''==
 
The 3-5 candle drop with [[Technical_Analysis#Moving_Averages | moving average]] play is an add on [[Fundamental and Sentiment Trading Strategies | strategy]] to the regular 3-5 candle drop.  We could have just told you that adding a [[Technical_Analysis#Moving_Averages | moving average]] to this [[Fundamental and Sentiment Trading Strategies | strategy]] would make it a more potent trade setup but we feel that this [[Fundamental and Sentiment Trading Strategies | strategy]] can be so effective that we should give it the full respect of being its own [[Fundamental and Sentiment Trading Strategies | strategy]]. 
 
 
'''Criteria (see Figure 15.1):'''
 
* The stock or market should have 3 or more consecutive lower highs or 3 or more red [[Japanese Candlesticks | candles]].  Having both lower highs and red [[Japanese Candlesticks | candlesticks]] will make the setup more potent.
* 3 or more consecutive lower lows.
* A reversal candle on or after the third candle lower.
* There must be a rising major [[Technical_Analysis#Moving_Averages | moving average]] in the area of the reversal candle.
* There must be a nice tradable price void, free of consolidation areas, for the stock to move up easily through after the [[Risk_Management#Entries_and_Exits | entry]] buy has been taken.
* The market should be in a stage 2 [[Trends#The_Uptrend | uptrend]] for this [[Fundamental and Sentiment Trading Strategies | strategy]] to have good accuracy.  If not there should be at least one higher low [[Pivots | pivot]] that has held above the prior [[Pivots | pivot]] low.  This will at least show that the market is attempting to transition to a possible [[Trends#The_Uptrend | uptrend]].
 
https://i.imgur.com/nbkcbRU.png
 
''Figure 15.1 – Criteria of the 3-5 candle drop with a rising 20 simple [[Technical_Analysis#Moving_Averages | moving average]].''
 
 
'''Entry (see Figure 15.2):'''
 
* A buy is placed when the stock or market [[Pre-Trade Considerations | trades]] above the prior candle's high (reversal candle) after the 3-5 candle drop.
 
https://i.imgur.com/gWRltLk.png
 
''Figure 15.2 – The [[Risk_Management#Entries_and_Exits | entry]] of the 3-5 candle drop [[Technical_Analysis#Moving_Averages | moving average]] play showing buy and [[Risk_Management#Stop_Losses | Stop loss]] area.''
 
 
'''Initial Stop (see Figure 15.2):'''
 
* Place the initial [[Risk_Management#Stop_Losses | stop]] below the [[Risk_Management#Entries_and_Exits | entry]] candle's low or the reversal [[Japanese Candlesticks | candles]] low, whichever is lower. 
* The low of the newly formed [[Pivots | pivot]] can also be used which may be a larger loss amount but will provide the most consistency.
 
 
'''Profit Target (see Figure 15.3):'''
 
* Establish a minimum target prior to [[Risk_Management#Entries_and_Exits | entering]] the [[Trading | trade]] at or slightly above the prior [[Pivots | pivot]] high or the next area of [[Support and Resistance | resistance]].  The objective of the target will depend on the how deep the prior [[Retracements | retracement]] was and how aggressive it came down.
* Take into consideration how strong the [[Pivots | pivot]] at the prior high was and determine if the market should continue higher through that [[Pivots | pivot]].
* [[Trader_Types | Traders]] may want to only take a portion of the [[Trading | trade]] off the table if it has been determined that the market has a high probability of moving higher than the prior [[Pivots | pivot]] high.
 
https://i.imgur.com/4bdSD8B.png
 
''Figure 15.3 – Initial [[Risk_Management#Entries_and_Exits | profit target]] of the 3-5 candle drop [[Technical_Analysis#Moving_Averages | moving average]] play.''
 
 
'''Trailing Exit Procedures:'''
 
* After 2 [[Japanese Candlesticks | candles]] are complete the [[Risk_Management#Stop_Losses | stop]] may be moved from the initial [[Risk_Management#Stop_Losses | Stop loss]] area.
* You may choose to start trailing your [[Risk_Management#Stop_Losses | Stop loss]] under each [[Japanese Candlesticks | candlestick]] once the market or stock has moved at least 75% of the way to the [[Risk_Management#Entries_and_Exits | profit target]]. 
 
 
'''Notes:'''
 
* Adding the rising [[Technical_Analysis#Moving_Averages | moving average]] brings more [[Trader_Types | traders]] into the market as many [[Trader_Types | traders]] are trained to follow [[Technical_Analysis#Moving_Averages | moving averages]]. 
* It is also important to note that [[Trader_Types | traders]] are not stuck using a 20 simple [[Technical_Analysis#Moving_Averages | moving average]].  This is just an example.  It is preferred that a major [[Technical_Analysis#Moving_Averages | moving average]] is used.  The [[Trader_Types | trader]] will need to determine which [[Technical_Analysis#Moving_Averages | moving averages]] will work best for the types of markets they prefer to [[Trading | trade]].  A 20 may work well for stocks but maybe you will need to adjust for currencies.  Do a little testing and refer to the Wiki on [[Technical_Analysis#Moving_Averages | moving averages]] for more guidance.
* Using the 40-60% [[Retracements | retracement]] concept with the rising [[Technical_Analysis#Moving_Averages | moving average]] can create a very high odds of success trading scenario.
* The 3-5 candle drop has better odds of achieving the profit objective if the [[Japanese Candlesticks | candles]] do not overlap each other.  Overlapping [[Japanese Candlesticks | candles]] have less predictability than [[Japanese Candlesticks | candles]] that are moving fluidly in a single direction.  Overlapping [[Japanese Candlesticks | candles]] lead to congestion areas that typically lead to erratic movements.
* The preceding 3-5 candle drop should be controlled and not as steep as the prior advance in order to be buyable setup.  We want to see that the strength in the market is supporting this potential new move higher.
* The 3-5 candle drop [[Technical_Analysis#Moving_Averages | moving average]] play can be [[Trading | traded]] in all [[Forex Market Hours | time]] frames.
* There can be more than 5 [[Japanese Candlesticks | candles]] in the down move but at some point the [[Trader_Types | trader]] will need to make a judgement call whether this is becoming a consolidation or a failed attempt to move higher.  The longer the down move takes place the lower the odds of follow through higher on any up move.
* It is always more reliable to have any number of power events on in conjunction to increase the accuracy of this setup.
 
 
=='''The 3-5 Candle Pop Moving Average Play'''==
 
The 3-5 candle pop with [[Technical_Analysis#Moving_Averages | moving average]] play is an add on [[Fundamental and Sentiment Trading Strategies | strategy]] to the regular 3-5 candle pop.  We could have just told you that adding a [[Technical_Analysis#Moving_Averages | moving average]] to this [[Fundamental and Sentiment Trading Strategies | strategy]] would make it a more potent trade setup but we feel that this [[Fundamental and Sentiment Trading Strategies | strategy]] can be so effective that we should give it the full respect of being its own [[Fundamental and Sentiment Trading Strategies | strategy]]. 
 
 
'''Criteria (see Figure 16.1):'''
 
* The stock or market should have 3 or more consecutive higher lows or 3 or more green [[Japanese Candlesticks | candles]].  Having both higher lows and green [[Japanese Candlesticks | candlesticks]]will make the setup more potent.
* 3 or more consecutive higher highs.
* A reversal candle on or after the third candle higher.
* There must be a declining major [[Technical_Analysis#Moving_Averages | moving average]] in the area of the reversal candle.
* There must be a nice tradable price void, free of consolidation areas, for the stock to move up easily through after the [[Risk_Management#Entries_and_Exits | entry]] short sell has been taken.
* The market should be in an stage 4 [[Trends#The_Downtrend | downtrend]] for this [[Fundamental and Sentiment Trading Strategies | strategy]] to have good accuracy.  If not there should be at least one lower high [[Pivots | pivot]] that has held below the prior [[Pivots | pivot]] high.  This will at least show that the market is attempting to transition to a possible [[Trends#The_Downtrend | downtrend]].
 
https://i.imgur.com/Ann938g.png
 
''Figure 16.1 – Criteria of the 3-5 candle pop with a declining 20 simple [[Technical_Analysis#Moving_Averages | moving average]].''
 
 
'''Entry (see Figure 16.2):'''
 
* A short sell is placed when the stock or market [[Pre-Trade Considerations | trades]] below the prior candle's low (reversal candle) after the 3-5 candle pop.
 
https://i.imgur.com/EKyHspw.png
 
''Figure 16.2 – The [[Risk_Management#Entries_and_Exits | entry]] of the 3-5 candle pop [[Technical_Analysis#Moving_Averages | moving average]] play showing short sell and [[Risk_Management#Stop_Losses | Stop loss]] area.''
 
 
'''Initial Stop (see Figure 16.2):'''
 
* Place the initial [[Risk_Management#Stop_Losses | stop]] above the [[Risk_Management#Entries_and_Exits | entry]] candle's high or the reversal [[Japanese Candlesticks | candles]] high, whichever is higher. 
* The high of the newly formed [[Pivots | pivot]] can also be used which may be a larger loss amount but will provide the most consistency.
 
 
'''Profit Target (see Figure 16.3):'''
 
* Establish a minimum target prior to [[Risk_Management#Entries_and_Exits | entering]] the [[Trading | trade]] at or slightly below the prior [[Pivots | pivot]] low or the next area of [[Support and Resistance | support]].  The objective of the target will depend on the how deep the prior [[Retracements | retracement]] was and how aggressive it came up.
* Take into consideration how strong the [[Pivots | pivot]] at the prior low was and determine if the market should continue lower through that [[Pivots | pivot]].
* [[Trader_Types | Traders]] may want to only take a portion of the [[Trading | trade]] off the table if it has been determined that the market has a high probability of moving lower than the prior [[Pivots | pivot]] low.
 
https://i.imgur.com/xFkJZ4v.png
 
''Figure 16.3 – Initial [[Risk_Management#Entries_and_Exits | profit target]] of the 3-5 candle pop [[Technical_Analysis#Moving_Averages | moving average]] play.''
 
 
'''Trailing Exit Procedures:'''
 
* After 2 [[Japanese Candlesticks | candles]] are complete the [[Risk_Management#Stop_Losses | stop]] may be moved from the initial [[Risk_Management#Stop_Losses | Stop loss]] area.
* You may choose to start trailing your [[Risk_Management#Stop_Losses | Stop loss]] above each [[Japanese Candlesticks | candlestick]] once the market or stock has moved at least 75% of the way to the [[Risk_Management#Entries_and_Exits | profit target]]. 
 
 
'''Notes:'''
 
* Adding the declining [[Technical_Analysis#Moving_Averages | moving average]] brings more [[Trader_Types | traders]] into the market as many [[Trader_Types | traders]] are trained to follow [[Technical_Analysis#Moving_Averages | moving average]] signals.
* It is also important to note that [[Trader_Types | traders]] are not stuck using a 20 simple [[Technical_Analysis#Moving_Averages | moving average]]. This is just an example.  It is preferred that a major [[Technical_Analysis#Moving_Averages | moving average]] is used.  The [[Trader_Types | trader]] will need to determine which [[Technical_Analysis#Moving_Averages | moving averages]] will work best for the types of markets they prefer to [[Trading | trade]].  A 20 may work well for stocks but maybe you will need to adjust for currencies.  Do a little testing and refer to the Wiki on [[Technical_Analysis#Moving_Averages | moving averages]] for more guidance.
* Using the 40-60% [[Retracements | retracement]] concept with the declining [[Technical_Analysis#Moving_Averages | moving average]] can create a very high odds of success trading scenario.
* The 3-5 candle pop has better odds of achieving the profit objective if the [[Japanese Candlesticks | candles]] do not overlap each other.  Overlapping [[Japanese Candlesticks | candles]] have less predictability than [[Japanese Candlesticks | candles]] that are moving fluidly in a single direction.  Overlapping [[Japanese Candlesticks | candles]] lead to congestion areas that typically lead to erratic movements.
* The preceding 3-5 candle pop should be controlled and not as steep as the prior [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]] in order to be shortable setup.  We want to see that the weakness in the market is fuelling this potential new move lower.
* The 3-5 candle pop [[Technical_Analysis#Moving_Averages | moving average]] play can be [[Trading | traded]] in all [[Forex Market Hours | time]] frames.
* There can be more than 5 [[Japanese Candlesticks | candles]] in the up move but at some point the [[Trader_Types | traders]] will need to make a judgement call weather this is becoming a consolidation or a failed attempt to move lower.  The longer the up move takes place the lower the odds of follow through lower on any down move.
* It is always more reliable to have any number of power events on in conjunction to increase the accuracy of this setup.
 
 
=='''Moving Average Buy Zone'''==
 
You can probably tell that many trading [[Fundamental and Sentiment Trading Strategies | strategies]] build on top of each other, starting from simple to adding more elements for increased accuracy.  The [[Technical_Analysis#Moving_Averages | moving average]] buy zone is a [[Fundamental and Sentiment Trading Strategies | strategy]] that attempts to take advantage of a stock or market that has experienced an aggressive [[Retracements | pullback]] that is quickly being reversed.  The stock or market still remains bullish because it should not have [[Retracements | pulled back]] far enough to question the [[Trends#The_Uptrend | uptrend]].
 
The idea behind this [[Fundamental and Sentiment Trading Strategies | strategy]] is that market participants overreacted and panicked selling out of their long positions forcing the market lower very quickly.  Once emotions have been put back in check the market will be free to continue its [[Trends#The_Uptrend | uptrend]].
 
 
'''Criteria (see Figure 17.1):'''
 
* The stock or market should have 3 or more consecutive lower highs in a momentum type of move.
* The downward momentum move should halt in between 2 rising major [[Technical_Analysis#Moving_Averages | moving averages]], In this case we will use the 20 and 50 SMA.
* An aggressive reversal candle must form on or after the third candle lower.
* This rapid [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]] creates a nice tradable price void, free of consolidation areas, for the stock to move up easily through.
* The market should be in a stage 2 [[Trends#The_Uptrend | uptrend]] for this [[Fundamental and Sentiment Trading Strategies | strategy]] to have good accuracy.  If not there should be at least one higher low [[Pivots | pivot]] that has held above the prior [[Pivots | pivot]] low.  This will at least show that the market is attempting to transition to a possible [[Trends#The_Uptrend | uptrend]].
 
https://i.imgur.com/Z2w6p5j.png
 
''Figure 17.1 – Criteria of the [[Technical_Analysis#Moving_Averages | moving average]] buy zone with rising 20 and 50 simple [[Technical_Analysis#Moving_Averages | moving averages]].''
 
 
'''Entry (see Figure 17.2):'''
 
* A buy is placed when the stock or market [[Pre-Trade Considerations | trades]] above the reversal candle high between the two [[Technical_Analysis#Moving_Averages | moving averages]].
* Sometimes there will be a candle inside the reversal candle.  [[Trader_Types | Traders]] can buy above the high of a candle after the reversal candle provided the [[Japanese Candlesticks | candles]] low is not lower than the reversal candle low.
 
https://i.imgur.com/1QwvGfs.png
 
''Figure 17.2 – The [[Risk_Management#Entries_and_Exits | entry]] of the [[Technical_Analysis#Moving_Averages | moving average]] buy zone showing the buy and [[Risk_Management#Stop_Losses | Stop loss]] area.''
 
 
'''Initial Stop (see Figure 17.2):'''
 
* Place the initial [[Risk_Management#Stop_Losses | stop]] below the [[Risk_Management#Entries_and_Exits | entry]] candle's low or the reversal [[Japanese Candlesticks | candles]] low, whichever is lower. 
* The low of the newly formed [[Pivots | pivot]] can also be used which may be a larger loss amount but will provide the most consistency.
 
 
'''Profit Target (see Figure 17.3):'''
 
* Establish a minimum target prior to [[Risk_Management#Entries_and_Exits | entering]] the [[Trading | trade]] at or slightly below the prior [[Pivots | pivot]] high or the next area of [[Support and Resistance | resistance]].  We don't want to see that the market sold off more than 60% of the prior [[The_Basic_Cycle#Stage_2:_Rally/Greed | rally]].
* Take into consideration how strong the [[Pivots | pivot]] at the prior high was and determine if the market should continue higher through that [[Pivots | pivot]].
* [[Trader_Types | Traders]] may want to only take a portion of the [[Trading | trade]] off the table if it has been determined that the market has a high probability of moving higher than the prior [[Pivots | pivot]] high.
 
https://i.imgur.com/7ZisRE5.png
 
''Figure 17.3 – Initial [[Risk_Management#Entries_and_Exits | profit target]] of the [[Technical_Analysis#Moving_Averages | moving average]] buy zone [[Fundamental and Sentiment Trading Strategies | strategy]].''
 
 
'''Trailing Exit Procedures:'''
 
* After 2 [[Japanese Candlesticks | candles]] are complete the [[Risk_Management#Stop_Losses | stop]] may be moved from the initial [[Risk_Management#Stop_Losses | Stop loss]] area.
* You may choose to start trailing your [[Risk_Management#Stop_Losses | Stop loss]] under each [[Japanese Candlesticks | candlestick]] once the market or stock has moved at least 75% of the way to the [[Risk_Management#Entries_and_Exits | profit target]]t. 
 
 
'''Notes:'''
 
* You can use a minor and a major [[Technical_Analysis#Moving_Averages | moving average]] for the [[Technical_Analysis#Moving_Averages | moving average]] buy zone [[Fundamental and Sentiment Trading Strategies | strategy]].  This is more common on shorter [[Forex Market Hours | time]] frames like the 1, 5, and 15 minute [[Trading_Tools#Charting_Software | charts]].
* Large [[Japanese_Candlesticks#Tails,_Wicks,_and_Shadows |bottoming tails]] are always a good sign that a lot of [[Supply and Demand | demand]] has stepped into the market and [[Trader_Types | traders]] will want to follow the flow of money.
* When the stock or market is in a strong stage 2 [[Trends#The_Uptrend | uptrend]] is the best [[Forex Market Hours | time]] to [[Trading | trade]] this [[Fundamental and Sentiment Trading Strategies | strategy]].  There will often be [[Forex Market Hours | times]] when markets will overreact to the downside and this is when great [[Trader_Types | traders]] step into the market when everyone else is scared.
* This type of [[Fundamental and Sentiment Trading Strategies | strategy]] will often occur shortly after a [[Breakouts_and_Breakdowns#The_Breakout | breakout]] when the market has continued a [[The_Basic_Cycle#Stage_2:_Rally/Greed | rally]] higher after having a brief [[Trends#The_Sideways_Trend | sideways]] pause.
* It is also important to note that [[Trader_Types | traders]] are not stuck using a 20 simple [[Technical_Analysis#Moving_Averages | moving average]].  This is just an example.  It is preferred that a major [[Technical_Analysis#Moving_Averages | moving average]] is used.  The [[Trader_Types | trader]] will need to determine which [[Technical_Analysis#Moving_Averages | moving averages]] will work best for the types of markets they prefer to [[Trading | trade]].  A 20 may work well for stocks but maybe you will need to adjust for currencies.  Do a little testing and refer to the Wiki on [[Technical_Analysis#Moving_Averages | moving averages]] for more guidance.
* Using the 40-60% [[Retracements | retracement]] concept with the rising [[Technical_Analysis#Moving_Averages | moving average]] can create a very high odds of success trading scenario.
* The [[Technical_Analysis#Moving_Averages | moving average]] buy zone [[Fundamental and Sentiment Trading Strategies | strategy]] can be [[Trading | traded]] in all [[Forex Market Hours | time]] frames.
* We do not want to see more than 5 down [[Japanese Candlesticks | candles]] in this [[Fundamental and Sentiment Trading Strategies | strategy]] as this means that the market participants were not panicking enough.  The stock or market should be deeply oversold.  The key to this [[Fundamental and Sentiment Trading Strategies | strategy]] is getting rid of the weak holders of long [[Pre-Trade Considerations | trades]] quickly so that the market will move up quickly. 
* Rallies should move quickly in this [[Fundamental and Sentiment Trading Strategies | strategy]] due to an extreme reversal.  If the market does not start to move in your favour within 2-4 [[Japanese Candlesticks | candles]] start to evaluate candle by candle and possibly tighten up your [[Risk_Management#Stop_Losses | Stop loss]].  It could be a failed pattern.
 
 
=='''Moving Average Sell Zone'''==
 
You can probably tell that many trading [[Fundamental and Sentiment Trading Strategies | strategies]] build on top of each other, starting from simple to adding more elements for increased accuracy.  The [[Technical_Analysis#Moving_Averages | moving average]] sell zone is a [[Fundamental and Sentiment Trading Strategies | strategy]] that attempts to take advantage of a stock or market that has experienced an aggressive [[The_Basic_Cycle#Stage_2:_Rally/Greed | rally]] in a [[Trends#The_Downtrend | downtrend]] that is quickly being reversed.  The stock or market still remains bearish because it should not have rallied far enough to question the [[Trends#The_Downtrend | downtrend]].
 
The idea behind this [[Fundamental and Sentiment Trading Strategies | strategy]] is that market participants overreacted and aggressively bought out of their short positions forcing the market higher very quickly.  Once emotions have been put back in check the market will be free to continue its [[Trends#The_Downtrend | downtrend]].
 
 
'''Criteria (see Figure 18.1):'''
 
* The stock or market should have 3 or more consecutive higher lows in a momentum type of move.
* The upward momentum move should halt in between 2 declining major [[Technical_Analysis#Moving_Averages | moving averages]]; in this case we will use the 20 and 50 SMA.
* An aggressive reversal candle must form on or after the third candle higher.
* This rapid advance creates a nice tradable price void, free of consolidation areas, for the stock to move down easily through.
* The market should be in a stage 4 [[Trends#The_Downtrend | downtrend]] for this [[Fundamental and Sentiment Trading Strategies | strategy]] to have good accuracy.  If not there should be at least one lower high [[Pivots | pivot]] that has held below the prior [[Pivots | pivot]] high.  This will at least show that the market is attempting to transition to a possible [[Trends#The_Downtrend | downtrend]].
 
https://i.imgur.com/tYGb7bL.png
 
''Figure 18.1 – Criteria of the [[Technical_Analysis#Moving_Averages | moving average]] sell zone with declining 20 and 50 simple [[Technical_Analysis#Moving_Averages | moving averages]].''
 
 
Entry (see Figure 18.2):
 
* A short sell [[Trading | trade]] is placed when the stock or market [[Pre-Trade Considerations | trades]] below the reversal candle low between the two [[Technical_Analysis#Moving_Averages | moving averages]].
* Sometimes there will be a candle inside the reversal candle.  [[Trader_Types | Traders]] can short sell below the low of a candle after the reversal candle provided the [[Japanese Candlesticks | candles]] high is not higher than the reversal candle high.
 
https://i.imgur.com/VQVir8K.png
 
''Figure 18.2 – The [[Risk_Management#Entries_and_Exits | entry]] of the [[Technical_Analysis#Moving_Averages | moving average]] sell zone showing the short sell area and [[Risk_Management#Stop_Losses | Stop loss]] area.''
 
 
'''Initial Stop (see Figure 18.2):'''
 
* Place the initial [[Risk_Management#Stop_Losses | stop]] above the [[Risk_Management#Entries_and_Exits | entry]] candle's high or the reversal [[Japanese Candlesticks | candles]] high, whichever is higher. 
* The high of the newly formed [[Pivots | pivot]] can also be used which may be a larger loss amount but will provide the most consistency.
 
 
'''Profit Target (see Figure 18.3):'''
 
* Establish a minimum target, prior to [[Risk_Management#Entries_and_Exits | entering]] the [[Trading | trade]], at or slightly above the prior [[Pivots | pivot]] low or the next area of [[Support and Resistance | support]].  We don't want to see that the market rallied more than 60% of the prior [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]].
* Take into consideration how strong the [[Pivots | pivot]] at the prior low was and determine if the market should continue lower through that [[Pivots | pivot]].
* [[Trader_Types | Traders]] may want to only take a portion of the [[Trading | trade]] off the table if it has been determined that the market has a high probability of moving lower than the prior [[Pivots | pivot]] low.
 
https://i.imgur.com/mEHDSA8.png
 
''Figure 18.3 – Initial [[Risk_Management#Entries_and_Exits | profit target]] of the [[Technical_Analysis#Moving_Averages | moving average]] sell zone [[Fundamental and Sentiment Trading Strategies | strategy]].''
 
 
'''Trailing Exit Procedures:'''
 
* After 2 [[Japanese Candlesticks | candles]] are complete the [[Risk_Management#Stop_Losses | stop]] may be moved from the initial [[Risk_Management#Stop_Losses | Stop loss]] area.
* You may choose to start trailing your [[Risk_Management#Stop_Losses | Stop loss]] above each [[Japanese Candlesticks | candlestick]] once the market or stock has moved at least 75% of the way to the [[Risk_Management#Entries_and_Exits | profit target]]. 
 
 
'''Notes:'''
 
* You can use a minor and a major [[Technical_Analysis#Moving_Averages | moving average]] for the [[Technical_Analysis#Moving_Averages | moving average]] sell zone [[Fundamental and Sentiment Trading Strategies | strategy]].  This is more common on shorter [[Forex Market Hours | time]] frames like the 1, 5, and 15 minute [[Trading_Tools#Charting_Software | charts]].
* Large [[Japanese_Candlesticks#Tails,_Wicks,_and_Shadows |topping tails]] are always a good sing that a lot of [[Supply and Demand | supply]] has stepped into the market and [[Trader_Types | traders]] will want to follow the flow of money.
* When the stock or market is in a strong stage 4 [[Trends#The_Downtrend | downtrend]] is the best [[Forex Market Hours | time]] to [[Trading | trade]] this [[Fundamental and Sentiment Trading Strategies | strategy]].  There will often be [[Forex Market Hours | times]] when markets will overreact to the upside and this is when great [[Trader_Types | traders]] step into the market when everyone else is scared.
* This type of [[Fundamental and Sentiment Trading Strategies | strategy]] will often occur shortly after a [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] when the market has continued a [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]] after having a brief [[Trends#The_Sideways_Trend | sideways]] pause.
* It is also important to note that [[Trader_Types | traders]] are not stuck using a 20 simple [[Technical_Analysis#Moving_Averages | moving average]].  This is just an example.  It is preferred that a major [[Technical_Analysis#Moving_Averages | moving average]] is used.  The [[Trader_Types | trader]] will need to determine which [[Technical_Analysis#Moving_Averages | moving averages]] will work best for the types of markets they prefer to [[Trading | trade]].  A 20 may work well for stocks but maybe you will need to adjust for currencies.  Do a little testing and refer to the Wiki on [[Technical_Analysis#Moving_Averages | moving averages]] for more guidance.
* Using the 40-60% [[Retracements | retracement]] concept with the declining [[Technical_Analysis#Moving_Averages | moving average]] can create very high odds of success trading scenario.
* The [[Technical_Analysis#Moving_Averages | moving average]] sell zone [[Fundamental and Sentiment Trading Strategies | strategy]] can be [[Trading | traded]] in all [[Forex Market Hours | time]] frames.
* We do not want to see more than 5 up [[Japanese Candlesticks | candles]] in this [[Fundamental and Sentiment Trading Strategies | strategy]] as this means that the market participants were not greedy enough.  The stock or market should be deeply overbought.  The key to this [[Fundamental and Sentiment Trading Strategies | strategy]] is getting rid of the weak holders of short [[Pre-Trade Considerations | trades]] quickly so that the market will move down quickly. 
* [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]] should move quickly in this [[Fundamental and Sentiment Trading Strategies | strategy]] due to an extreme reversal.  If the market does not start to move in your favour within 2-4 [[Japanese Candlesticks | candles]] start to evaluate candle by candle and possibly tighten up your [[Risk_Management#Stop_Losses | Stop loss]].  It could be a failed pattern.
 
 
=='''Major Support Buy Zone'''==
 
The major [[Support and Resistance | support]] buy zone [[Fundamental and Sentiment Trading Strategies | strategy]] attempts to capitalize and create [[Risk_Management#Entries_and_Exits | profits]] from a stock or market that is in a stage 1 [[[[Trends#The_Sideways_Trend |  sideways trend]].  The [[Fundamental and Sentiment Trading Strategies | strategy]] is not meant to capture large gains over the course of months but instead can be a good income producing style of trading when the market is not presenting a [[Trends | trend]] trading opportunity.  It is essential to master this [[Fundamental and Sentiment Trading Strategies | strategy]] because the market spends roughly 60-70% of its [[Forex Market Hours | time]] trapped in [[Trends#The_Sideways_Trend | sideways trading ranges]].
 
 
'''Criteria (see Figure 19.1):'''
 
* The stock must be approaching a major [[Support and Resistance | support]] area (see the Wiki on [[Support and Resistance | support and resistance]]).
* There should be at least three [[Japanese Candlesticks | candles]] with lower lows and lower highs.  Having both these criteria makes the setup more oversold and the major [[Support and Resistance | support]] will have better odds of holding the [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]].  The [[Japanese Candlesticks | candles]] should be red in colour.
* A reversal candle must form in the area of the major [[Support and Resistance | support]].
 
https://i.imgur.com/I3emUED.png
 
''Figure 19.1 – Criteria of the major [[Support and Resistance | support]] buy zone trade setup.''
 
 
'''Entry (see Figure 19.2):'''
 
* Buy above the high of the reversal candle.
* If there was more than one reversal candle, buy above the high of the highest reversal candle.
 
 
'''Initial Stop Loss (see Figure 19.2):'''
 
* Place the initial [[Risk_Management#Stop_Losses | stop]] below the lowest low where the current reversal has formed at the major [[Support and Resistance | support area]].
 
https://i.imgur.com/6J9K95d.png
 
''Figure 19.2 – Showing the buy [[Risk_Management#Entries_and_Exits | entry]] and the initial [[Risk_Management#Stop_Losses | Stop loss]] area.''
 
 
'''Profit Target (19.3):'''
 
The [[Risk_Management#Entries_and_Exits | profit target]] will be the last major [[Support and Resistance | resistance]] area or any series of highs that form a congestion area.
 
https://i.imgur.com/GfKZ5MR.png
 
''Figure 19.3 – Showing the [[Risk_Management#Entries_and_Exits | profit target]] area.''
 
 
'''Trailing Exit Procedures:'''
 
* After 2 [[Japanese Candlesticks | candles]] are complete the [[Risk_Management#Stop_Losses | stop]] may be moved from the initial [[Risk_Management#Stop_Losses | Stop loss]] area.
* You may choose to start trailing your [[Risk_Management#Stop_Losses | Stop loss]] under each [[Japanese Candlesticks | candlestick]] once the market or stock has moved at least 75% of the way to the [[Risk_Management#Entries_and_Exits | profit target]]. 
* If [[Pivots | pivots]] are forming you can trail under each [[Pivots | pivot]] until your target is reached or the [[Trading | trade]] is [[Risk_Management#Stop_Losses | stopped]] out.
 
 
'''Notes:'''
 
* Keep in mind that [[Trader_Types | traders]] can [[Trading | trade]] the major [[Support and Resistance | support]] buy zone in both a stage 1 and a stage 3.  Be very aware of changes in the market if it breaks down below the major [[Support and Resistance | support]] .  This could one of the first warning signs that you are incorrect in your assessment of the market or the [[Trends | trend]] is changing from a [[Trends#The_Sideways_Trend | sideways trend]] to a directional [[Trends | trend]].
* It can be common for stocks to reverse easily in these [[Trends#The_Sideways_Trend | sideways ranges]] and your biggest concern will be your initial [[Risk_Management#Stop_Losses | Stop loss]] to protect your capitol in case you get in the [[Trading | trade]] at a [[Forex Market Hours | time]] when the market is transitioning out of the [[Trends#The_Sideways_Trend | sideways range]].
* All [[Trends#The_Sideways_Trend | sideways]] trends will eventually [[Breakouts_and_Breakdowns#The_Breakout | breakout]] to a stage 2 [[Trends#The_Uptrend | uptrend]] or [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] into an ugly stage 4 [[Trends#The_Downtrend | downtrend]].
* Major Price [[Support and Resistance | support]] is never a single price point.  Rather, it’s an area or zone, rather than an exact number, from where a [[The_Basic_Cycle#Stage_2:_Rally/Greed | rally]] began. 
* [[Trader_Types | Traders]] that had a profitable trading experience at the prior [[Support and Resistance | support or resistance area]] like to repeat their profitable actions if and when price comes back to that area.  There is a certain degree of memory held in [[Support and Resistance | support and resistance]] areas and this can sometimes help to create other major [[Support and Resistance | support or resistance areas]].
 
=='''Major Resistance Sell Zone'''==
 
The major [[Support and Resistance | resistance]] sell zone [[Fundamental and Sentiment Trading Strategies | strategy]] attempts to capitalize and create [[Risk_Management#Entries_and_Exits | profits]] from a stock or market that is in a stage 3 [[Trends#The_Sideways_Trend | sideways trend]].  The [[Fundamental and Sentiment Trading Strategies | strategy]] is not meant to capture large gains over the course of months but instead can be a good income producing style of trading when the market is not presenting a [[Trends | trend]] trading opportunity.  It is essential to master this [[Fundamental and Sentiment Trading Strategies | strategy]] because the market spends roughly 60-70% of its [[Forex Market Hours | time]] trapped in [[Trends#The_Sideways_Trend | sideways trading ranges]].
 
 
'''Criteria (see Figure 20.1):'''
 
* The stock must be approaching a major [[Support and Resistance | resistance]] area (see the Wiki on [[Support and Resistance | support and resistance]]).
* There should be at least three [[Japanese Candlesticks | candles]] with higher highs and higher lows.  Having both these criteria makes the setup more overbought and the major [[Support and Resistance | resistance]] will have better odds of holding the [[The_Basic_Cycle#Stage_2:_Rally/Greed | rally]].  The [[Japanese Candlesticks | candles]] should be green in colour.
* A reversal candle must form in the area of the major [[Support and Resistance | resistance]].
 
https://i.imgur.com/urgPTLO.png
 
''Figure 20.1 – Criteria of the major [[Support and Resistance | resistance]] sell zone trade setup.''
 
 
'''Entry (see Figure 20.2):'''
 
* Sell below the low of the reversal candle.
* If there was more than one reversal candle, sell below the low of the lowest reversal candle.
 
 
'''Initial Stop Loss (see Figure 20.2):'''
 
* Place the initial [[Risk_Management#Stop_Losses | stop]] above the highest high where the current reversal has formed at the major [[Support and Resistance | resistance]] area.
 
https://i.imgur.com/2HvTCwo.png
 
''Figure 20.2 – Showing the sell [[Risk_Management#Entries_and_Exits | entry]] and the initial [[Risk_Management#Stop_Losses | Stop loss]] area.''
 
 
'''Profit Target (20.3):'''
 
* The [[Risk_Management#Entries_and_Exits | profit target]] will be the last major [[Support and Resistance | support]] area or any series of lows that formed a congestion area.
 
https://i.imgur.com/7vZOihv.png
 
''Figure 20.3 – Showing the [[Risk_Management#Entries_and_Exits | profit target]] area.''
 
 
'''Trailing Exit Procedures:'''
 
* After 2 [[Japanese Candlesticks | candles]] are complete the [[Risk_Management#Stop_Losses | stop]] may be moved from the initial [[Risk_Management#Stop_Losses | Stop loss]] area.
* You may choose to start trailing your [[Risk_Management#Stop_Losses | Stop loss]] above each [[Japanese Candlesticks | candlestick]] once the market or stock has moved at least 75% of the way to the [[Risk_Management#Entries_and_Exits | profit target]]. 
* If [[Pivots | pivots]] are forming you can trail above each [[Pivots | pivot]] until your target is reached or the [[Trading | trade]] is [[Risk_Management#Stop_Losses | stopped]] out.
 
 
'''Notes:'''
 
* Keep in mind that [[Trader_Types | traders]] can [[Trading | trade]] the major [[Support and Resistance | resistance]] sell zone in both a stage 1 and a stage 3.  Be very aware of changes in the market if it breaks out above the major [[Support and Resistance | resistance]] .  This could one of the first warning signs that you are incorrect in your assessment of the market or the [[Trends | trend]] is changing from a [[Trends#The_Sideways_Trend | sideways trend]] to a directional [[Trends | trend]].
* It can be common for stocks to reverse easily in these [[Trends#The_Sideways_Trend | sideways ranges]] and your biggest concern will be your initial [[Risk_Management#Stop_Losses | Stop loss]] to protect your capitol in case you get in the trade at a [[Forex Market Hours | time]] when the market is transitioning out of the [[Trends#The_Sideways_Trend | sideways range]].
* All [[Trends#The_Sideways_Trend | sideways trends]] will eventually [[Breakouts_and_Breakdowns#The_Breakout | breakout]] to a stage 2 [[Trends#The_Uptrend | uptrend]] or [[Breakouts_and_Breakdowns#The_Breakdown | breakdown]] into an ugly stage 4 [[Trends#The_Downtrend | downtrend]].
* Major Price [[Support and Resistance | resistance]] is never a single price point.  It’s an area or zone, rather than an exact number, from where a [[The_Basic_Cycle#Stage_4:_Decline/Fear | decline]] began. 
* [[Trader_Types | Traders]] that had a profitable trading experience at the prior [[Support and Resistance | support or resistance]] area like to repeat their profitable actions if and when price comes back to that area.  There is a certain degree of memory held in [[Support and Resistance | support and resistance]] areas and this can sometimes help to create other major [[Support and Resistance | support or resistance]] areas.
 
='''Every Market has a Strategy'''=
 
 
=='''When to Trade Technical Strategies'''==
 
It is always important to know when each different [[Fundamental and Sentiment Trading Strategies | strategy]] will have the best odds of a successful outcome.  The odds of making consistent [[Risk_Management#Entries_and_Exits | profits]] will always be trading with the overall direction of the [[Macro_Trend_Analysis | macro trend]].  This is where an intimate understanding of [[The Basic Cycle | the basic cycle]] will help [[Trader_Types | traders]] stay on the right side of the professional market.
 
Before we go into which [[Fundamental and Sentiment Trading Strategies | strategies]] will work best with which specific stage, we will make [[Fundamental and Sentiment Trading Strategies | strategy]] abbreviations as outlined in figure 21.1.  Think of it as adding ticker symbols to the [[Fundamental and Sentiment Trading Strategies | strategies]] as if they were listed stocks on an exchange
 
https://i.imgur.com/1NhuOKy.png
 
''Figure 21.1 – All the [[Fundamental and Sentiment Trading Strategies | strategies]] we have looked at in this Wiki so far.''
 
 
=='''Trading Strategies and the Stages of [[The Basic Cycle | the Basic Cycle]]'''==
 
As you can see there are many more [[Fundamental and Sentiment Trading Strategies | strategies]] for stage 2 and stage 4.  This is because stages 2 and 4 are [Trends | trending]] stages and when the market is [Trends | trending]] in one direction or the other there are predictable turning points that [[Trader_Types | traders]] can place a [[Trading | trade]] with a higher degree of certainty than [[Trends#The_Sideways_Trend | sideways stages]].
 
Once a [[Trader_Types | trader]] has identified what stage the market is in the only thing the [[Trader_Types | traders]] need to focus on are what [[Fundamental and Sentiment Trading Strategies | strategies]] they are comfortable with that work best with the stage that the market is currently trading in.
 
Keep in mind that there are literally hundreds of global markets with thousands and thousands of different trading products to choose from.  If you are more comfortable trading a stage 2 then find a market or product that is currently trading in a stage 2 and focus on that market until it changes stages. 
 
 
'''Stage 1 Strategies:'''
 
* Major Support Buy Zone - MSBZ
* Matched Move Higher - MMH
* Climactic Buy - CB
 
 
'''Stage 2 Strategies:'''
 
* The 3-5 Candle Drop - 35D
* The 3-5 Candle Drop Moving Average Play - DMAP
* Moving Average Buy Zone - MABZ
* The Breakout - BO
* Bullish Momentum Stall - BLMS
* Matched Move Higher - MMH
* Climactic Buy - CB
* Major Support Buy Zone - MSBZ
 
 
'''Stage 3 Strategies:'''
 
* Major Resistance Sell Zone - MRSZ
* Matched Move Lower - MML
* Climactic Sell - CS
 
 
'''Stage 4 Strategies:'''
 
* The 3-5 Candle Pop - 35P
* The 3-5 Candle Pop Moving Average Play - PMAP
* Moving Average Sell Zone - MASZ
* The Breakdown - BD
* Bearish Momentum Stall - BRMS
* Matched Move Lower - MML
* Climactic Sell - CS
* Major Resistance Sell Zone - MRSZ
 
 
=='''Strategies and [[The Basic Cycle | the Basic Cycle]]'''==
 
Let’s have a quick reminder of [[The Basic Cycle | the Basic Cycle]] as shown in figure 21.2 and 21.3.  These are the simplest pictures that we can use to define all market movements.  It is absolutely essential to understand these basic pictures before you can train your eyes to understand more complex market events in the live markets.
 
https://i.imgur.com/K5twt99.png
 
''Figure 21.2 – [[The Basic Cycle | The Basic Cycle]] in its simplest form.''
 
 
https://i.imgur.com/pfE2HbL.png
 
''Figure 21.3 – [[The Basic Cycle | The Basic Cycle]] with the 3 [[Trends | trend]].''
 
 
We can now define what [[Fundamental and Sentiment Trading Strategies | trading strategies]] will work best in which stage of [[The Basic Cycle | the Basic Cycle]]. 
 
Always remember that you are never limited to the [[Fundamental and Sentiment Trading Strategies | strategies]] presented in this Wiki.  If you feel that you are ready and advanced enough to start exploring more complex [[Fundamental and Sentiment Trading Strategies | strategies]] based on the elements that you have learned in this Wiki then do it.  However, smart [[Risk Management | money management]] is a key to success in any [[Fundamental and Sentiment Trading Strategies | trading strategy]] weather basic or complex.
 
https://i.imgur.com/wSPLf3g.png
 
''Figure 21.4 – [[The Basic Cycle | The Basic Cycle]] highlighting all the [[Fundamental and Sentiment Trading Strategies | strategies]] looked at in this Wiki and what stage to apply each [[Fundamental and Sentiment Trading Strategies | strategy]] in.''
 
 
'''Strategy Notes:'''
 
* Keep in mind that the criteria, [[Risk_Management#Entries_and_Exits | entry]], initial [[Risk_Management#Stop_Losses | stop]], [[Risk_Management#Entries_and_Exits | profit target]] and trailing [[Risk_Management#Entries_and_Exits | exit procedures]] can be used interchangeably from one [[Fundamental and Sentiment Trading Strategies | strategy]] to the other as long as you are using buy guidelines with buy setups and sell guidelines with sell setups. 
* Strategies will continue to work until they stop working.  This is one of the earliest signs that the market may be setting up a potential change in [[Trends | trend]], even if that change in [[Trends | trend]]is to a [[Trends#The_Sideways_Trend | sideways trend]].
* Once the [[Trader_Types | trader]] has identified what stage the market is in his only job is to [[Trading | trade]] the [[Fundamental and Sentiment Trading Strategies | strategies]] that will work best for that [[Fundamental and Sentiment Trading Strategies | strategy]].
 
 
='''Intermediate Technical Trading Strategies'''=
 
 
=='''The Trend Trade'''==
 
This [[Fundamental and Sentiment Trading Strategies | strategy]] works best when combined with [[Fundamental and Sentiment Trading Strategies]].
 
The [[Trends | trend]] [[Trading | trade]] attempts to capture a [[Trading | trade]] in the direction of the overall market [[Trends | trend]].  This is a [[Trading | trade]] that should be in line with the current sentiment driving the particular currency and tends to be a day [[Trading | trade]] because it uses [[Pivots | pivots]] and [[Pivots | pivots]] change every trading day.
 
Trade Setup:
 
* In an [[Trends#The_Uptrend | uptrend]] wait for the market to [[Retracements | pull back]]. 
* Apply the [[Technical_Analysis#Fibonacci | Fibonacci]] [[Retracements | retracement]] tool from the extreme low to the extreme high. 
* Apply [[Trader_Types | trader]] [[Pivots | pivot]] points.
 
 
What we are looking for is a confluence of one of the [[Technical_Analysis#Fibonacci | Fibonacci]] [[Retracements | retracement levels]] to match with one of the [[Pivots | pivot]] points in the buying zone. 
 
There should be less than 10 [[Futures_Market#Ticks_and_Pips | pips]] between the Fib level and the [[Pivots | pivot]] point.  The fewer amounts of [[Futures_Market#Ticks_and_Pips | pips]] between the 2 levels the better the setup. 
 
The pros are that you can use a small [[Risk_Management#Stop_Losses | Stop loss]] and have good pinpoint accuracy with the [[Risk_Management#Entries_and_Exits | entry]].  The cons are that price may not [[Retracements | pullback]] for you to get a trigger.  Sometimes a confluence will be hard to find. 
 
The same [[Risk Management | trade management]] would apply to this [[Trading | trade]] as pretty much all other [[Pre-Trade Considerations | trades]].  We would look to target just before the prior extreme high and place the [[Risk_Management#Stop_Losses | stop]] in an area that the market should not hit if you are correct in your analysis.
 
The [[Trading | trade]] works in the exact same manner in reverse for a short trade.
 
 
=='''The Profile Trade'''==
 
This [[Fundamental and Sentiment Trading Strategies | strategy]] works best when combined with [[Fundamental and Sentiment Trading Strategies]].
 
The profile [[Trading | trade]] [[Fundamental and Sentiment Trading Strategies | strategy]] involves buying or shorting the break of the most recent [[Technical_Analysis#Fractals | fractal]].  We talked earlier about how you can take advantage of the market profile changing as a way to get you back into the [[Fundamental Analysis | fundamental]] trend after it has had a period of price action going against the overall big picture.
 
Trade Setup:
 
* Identify the most recent [[Technical_Analysis#Fractals | fractal]] swing high and wait for the price to break that high by one [[Futures_Market#Ticks_and_Pips | pip]] then [[Risk_Management#Entries_and_Exits | enter]] a long position.  This applies to [[Fundamental Analysis | fundamentally]] strong pairs. 
* Identify the most recent [[Technical_Analysis#Fractals | fractal]] swing low and wait for price to break that low by one [[Futures_Market#Ticks_and_Pips | pip]] then go short if the [[Fundamental Analysis | fundamentals]] are pointing down. 
* The [[Risk_Management#Stop_Losses | stop loss]] placement goes on the other side of the opposite most recent [[Technical_Analysis#Fractals | fractal]] swing. 
 
 
One of the best way to use this [[Fundamental and Sentiment Trading Strategies | strategy]] is with the overnight [[Pre-Trade Considerations | trades]].  For example, if there was a strong news release and the London [[Trader_Types | traders]] moved a currency up through the [[Forex_Trading_Sessions#The_London_Session | London session]] then look to get in on a break of a [[Technical_Analysis#Fractals | fractal]] swing high during the [[Forex_Trading_Sessions#The_New_York_Session | US session]].  The break of the high during the [[Forex_Trading_Sessions#The_New_York_Session | US session]] gives us confirmation that the US [[Trader_Types | traders]] are going to buy the pair up as well.
 
This [[Fundamental and Sentiment Trading Strategies | strategy]] is best on a 5 minute [[Trading_Tools#Charting_Software | chart]] for intra-day trading but can be on any [[Forex Market Hours | time]] frame. 
 
The 4 hour [[Forex Market Hours | time]] frame is a nice [[Forex Market Hours | time]] frame to get an idea of how price is behaving in relation to the big picture.  Sometimes a break of the 4 hour [[Technical_Analysis#Fractals | fractal]] back in the direction of the [[Fundamental Analysis | fundamentals]] can signal to us that the market is done moving price in the opposite direction and ready to start trading the pair back in line with the big picture.
 
 
=='''5 Minute Candlestick Trade'''==
 
Another [[Fundamental and Sentiment Trading Strategies | strategy]] that you can use is one that has a high probability of success and is also extremely simple.  The caveat is that it can only be used when there is an extreme deviation or surprise that the markets absolutely did not see coming. 
 
The easiest way to see whether or not this has occurred is to [[Trading_Tools#Research_Articles | research]] each risk event and find out what the market is expecting so that if the opposite happens you know that it will cause a large sustained reaction.  The key word here is sustained because lots of minor deviations cause reactions but these are typically quickly [[Retracements | retraced]] and within a few hours things are all back to normal and it’s as if nothing happened at all with the exception of a spike on the [[Trading_Tools#Charting_Software | charts]].  Lots of new and [[Institutional_and_Retail_Traders#What_is_a_Retail_Trader? | retail traders]] get sucked into those moves and end up buying at the top or selling at the bottom only to watch the market move against them dramatically. 
 
An example of a [[Forex Market Hours | time]] that we can apply this [[Trading | trade]] is when a [[Central banks | central bank]] announces a rate adjustment when the market was expecting no change.  In these circumstances it’s hard to see a [[Trading | trade]] ever losing but these instances are also rare. 
 
Another example is if something really unexpected happens completely out of the blue.  For example, if a [[Central banks | central bank member]] was giving a speech and then said something totally unexpected and out of character this would also get the market moving in a sustained manner. 
 
This trade setup should not be used on small data points that have a deviation from the expected figure because it is better to [[Trading | trade]] those on [[Retracements | pullbacks]]. 
 
We also need the sentiment at the [[Forex Market Hours | time]] in the right order to get any kind of tradeable move such as positive sentiment that is suddenly and instantly changed to negative from whatever the news was.  As long as the event was extremely unexpected and had a direct impact on the markets expectations for the [[Central banks | central bank’s]] [[Monetary Policy Tools | monetary policy]] then you are probably good to consider this type of trade setup. 
 
The method for taking advantage of this is rather simple.  You make sure that you [[Risk_Management#Entries_and_Exits | enter]] the market right before or at the close of the first 5 minute [[Technical_Analysis#Japanese_Candlesticks | candle]] after this surprise event has taken place.  [[Risk_Management#Stop_Losses | Stops]] can be placed either at the halfway point of the [[Technical_Analysis#Japanese_Candlesticks | candle]] or just above or below the 5 minute [[Technical_Analysis#Japanese_Candlesticks | candle]] away from your [[Risk_Management#Entries_and_Exits | entry]].  This will be something that you perfect over [[Forex Market Hours | time]] with practice with this type of [[Trading | trade]]. 
 
Targets should be based on normal things such as old highs or lows and [[Technical_Analysis#Average_Daily_Range | average daily range]] of the pair.  You can also hold for longer if there is a solid [[Fundamental Analysis |
fundamental reason]] supporting the move and the market has a clear expectation of where the price of the pair could get to in the long run. 
 
The main point is that you should be getting in within 5 minutes of the initial event to ensure that you make some [[Futures_Market#Ticks_and_Pips | pips]] from it.  This requires you to watch and listen to the news feeds intensely but when you get a few [[Pre-Trade Considerations | trades]] like this each month it will be worth it.




Latest revision as of 12:11, 21 November 2023

Technical Trading Strategies typically form the initial basis for trading decisions by retail traders when they enter the Forex market for the first time. Understanding Technical Trading Strategies is a good place to learn how to enter and exit trades. In this WIki, we will explore many different Technical Trading Strategies and how you might go about employing them within The Basic Cycle of all markets.

NOTE: No one technical strategy is going to work all of the time in all the various market structures and environments. For example, Breakout strategies will tend to work in trending environments but get chopped up in uncertain or sideways markets. This means that understanding where you are in the context of The Basic Cycle and the overall trend will benefit you greatly when executing a technical strategy in live market situations.

NOTE: All technical strategies will benefit from understanding the big picture Fundamental Trend and the prevailing Sentiment that is driving market prices in the current trading session. A good idea is to use technical trading strategies as a "Timing tool" to find smart places to enter trades in the direction of the Sentiment that is currently driving prices.

WARNING: As with any trading strategy, you need to take the time to vigorously test each strategy in a simulated market situation before putting any of your money to work in the markets. Not doing the necessary backtesting may result in financial losses. All strategies in this Wiki or on Volatility.red are for information purposes only and are not in any way intended as financial advice.


This Wiki is a part of our Essential Forex Trading Guide. Be sure to check that out HERE.



Basic Technical Trading Strategies

Many retail traders gravitate towards Technical Trading Strategies because they are visually simple to understand and execute in live market situations. In this Wiki, we are going to take a look at some very basic technical trading strategies that you can experiment with and see if any of them are a good fit for your trading plan such as:


You can access the main Wiki on Basic Technical Trading Strategies HERE.


Every Market has a Strategy

Every Market has a Strategy! What we will do in this Wiki is break down when the best time to trade the Basic Technical Trading Strategies found in the Basic Technical Trading Strategies Wiki are and how you can apply these timing concepts to your trading including:


You can access the main Wiki for Every Market has a Strategy HERE.


Intermediate Technical Trading Strategies

Building on the Basic Technical Trading Strategies Wiki, in the following Wiki we will take a look at a few more Intermediate Technical Trading Strategies including:


You can access the main Wiki for Intermediate Technical Trading Strategies HERE.


Chart Patterns

Utilizing Chart Patterns is a very old and time-tested practice in virtually all financial markets. We are not going to reinvent the wheel in this Wiki but we will introduce you to some of the most common forms of Chart Patterns that have stood the test of time and are worth you taking the time to learn and understand.

In the following Wiki on Chart Patterns we will explore:

You can access the main Wiki for Chart Patterns HERE.


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