Hello traders! I’ve just come from our beautiful Woodland Hills, California office, and one of our veteran students asked me a question about Japanese candlesticks, specifically referring to an article I wrote a couple of years ago. With his questions in mind, I’d like to expand on how I use weekly candles to give me a bias for the following week. Let’s go!
Now that you have read that previous article, let’s talk about what to do if we aren’t already in a trade on the currency pair in question. In the following AUDUSD pair of charts, let’s say you find yourself looking at the pair around the time frame marked 1. Obviously, the pair has already had a large move to the down side, so you aren’t still looking for shorts way down here are you? You especially shouldn’t be with the big round number of .7500 hanging out down here (a psychological level of support/resistance.) Instead, when the first green bodied candle in this new uptrend decisively breaks past the previous week’s high price, you decide to look for long trades. That previous week’s high was formed on 12/05, and didn’t break until 12/14.
After the major players have given you the hint that they are no longer shorting, but going long, we can now look for long trades on our smaller timeframes. In the corresponding one-hour chart, you had an opportunity to buy on 12/19 near the 0.7650 mark. While it took a couple of days for you to make a lot of pips, the signal was clear.
OK, let’s say you missed that one, end of year holidays and all. How about one after the start of the year?
In this next picture, you noticed a weekly high of about 0.7874 that happened on Jan 5. (This weekly candle is marked 2). Once you had permission to look for long trades, as the previous weekly candles high had been broken, you could have gotten long around the 0.7847 mark. By using this technique, you won’t be early or first to these trades by any means; however, your probability of being correct in this direction will go up substantially. Now, seeing where this chart is currently trading (at the time of this writing), I wouldn’t still be going long using these time frames. If you are long, please continue to manage your winning trades appropriately!
Now, how about an example for the short side? The weekly low on the EURGBP was on Sept 1, and was broken the following week on Sept 5. (Weekly candle marked as 3). Once you had your short bias, or your permission to look for short trades, we must wait for a rally into supply to take any short opportunities. On both Sept 7 and 8 we had chances to get into this short trade.
Now, I must make a couple of things super duper clear. This technique to get a long trade or short trade bias works very well during up or down trending markets. When you find a chart that is going sideways, our third trend direction, this bias technique will not help much at all! In fact, it may hurt more than it helps! The second point I want to make is, you must also take into consideration what the trend HAS BEEN. If your trend has been going UP for several weeks, taking you into a long term supply level, I would definitely NOT be looking to continue trying to find trades on the long side. On the other side, if your trend has been going DOWN for several weeks, taking you into long term demand, I wouldn’t be looking for any more short trades.
This content is intended to provide educational information only. This information should not be construed as individual or customized legal, tax, financial or investment services. As each individual's situation is unique, a qualified professional should be consulted before making legal, tax, financial and investment decisions. The educational information provided in this article does not comprise any course or a part of any course that may be used as an educational credit for any certification purpose and will not prepare any User to be accredited for any licenses in any industry and will not prepare any User to get a job. Reproduced by permission from OTAcademy.com click here for Terms of Use: https://www.otacademy.com/about/terms
Editors’ Picks
AUD/USD oscillates at around 0.6680s after FOMC’s decision, ahead of US jobless claims

The AUD/USD finished Wednesday’s session in the green, gaining 0.26%, though well below the day’s highs at 0.6758. As the Asian Pacific session begins, the AUD/USD trades at 0.6683, slightly below its opening price by 0.01%.
EUR/USD retreats toward 1.0850 as US Dollar recovers ground Premium

EUR/USD reached levels above 1.0900 for the first time since early February after rising more than a hundred pips following the Federal Reserve meeting. It then retreated to 1.0855, as the greenback recovered ground across the board, boosted by a deterioration in market sentiment.
Gold soars to $1,978 after Fed raises rates as expected Premium

Spot gold jumped to $1,978 during Fed Chair Powell’s press conference and then pulled back. A decline in US yields and broad-based Dollar weakness is offering support to the yellow metal, which is up more than 1% on the day.
TRON price crashes 12% as SEC charged founder Justin Sun for violating securities laws

TRON price plummeted on March 22 after the cryptocurrency became the new target of the ongoing regulatory crackdown in the United States. The Security and Exchange Commission (SEC) is now looking into Tron founder Justin Sun’s company and related entities of the altcoin’s ecosystem.
BoE Interest Rate Decision Preview: Preparing ground for a rate hike pause in May Premium

The Bank of England (BoE) is seen keeping up its interest rate increases, although at a slower pace in March, as the world battles financial sector risks.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
Discover how to make money in forex is easy if you know how the bankers trade!
5 Forex News Events You Need To Know
In the fast moving world of currency markets, it is extremely important for new traders to know the list of important forex news...
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and...
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.