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Learn Forex Trading: Candlestick Entry Techniques
hey traders welcome back to Forex inside review this is Danny G and before we get started I just wanted to give a big big thank you to all the loyal subscribers we have hit a thousand and I know that to many of you that might not seem like a lot but it is a huge deal for me that we started from literally zero subscribers nothing just started posting content out here so I really do appreciate it thank you guys from the bottom of my heart and for those that haven't subscribed do me a quick little favor before we get started just hit that subscribe button hit that like and comment below and let me know what you guys thought if it was good thoughts today we're going to be going over candlestick formations which really move the needle for me entry techniques things like that so all that and more right after the intro [Music] you [Music] hey traders so I want to go over something that really moved the needle for me right which was candlestick formations right entry techniques so I had the strategy I knew basically where I wanted to get in I understood that I got my bias from the daily timeframe right and I came down to the hourly timeframe and I looked for levels that I can get in short or long right based on the daily timeframe the problem was though that once I identified that zone once I identified that area that I wanted to get in what did I need to do to actually click buy or sell right what was that trigger that was like okay now you can enter short or now you can enter Mom and for me that was candlestick formations right so I needed something I needed price to give me a sign to tell me something right and be like hey this is what we're going to get in short so there's a whole bunch of different candlestick formations right anywhere from double tops to Morningstar came from confirmation to three little soldiers or three white crows or hammer shooting stars everything there's a whole bunch of them and I'm gonna go over a few that I look at and I trade right and I'm going to kind of give you the the reasoning behind why I trade these candlestick formations and hopefully you guys can pick a few or just see the logic behind that and maybe look for another candlestick formation that fits your trading style your appetite whatever it is fill in the blank so I made a small little presentation for you guys on illustrator I know that usually it kind of goes on on the on the Microsoft what is the PowerPoint but it's easier for me to do it on illustrator because I can kind of modify a few things so let's go ahead and take a look so right here what I did is that I know this is going to be very very basic for some of you right but guys you won't believe it this traders from all different levels that are watching these videos experienced traders very very new traders intermediate traders so I'm just going to kind of give you guys the basic right now of what a candlestick formation is and then we're going to go over to the I'm sorry I'm going to give you guys the basics of what a candlestick is and then we're going to go over to candlestick formations right let me see if I can remove this there we go right so like that we see a bigger screen and then I'll just bring it back so this is the high of the candle this is the open of a bearish candle so this is where price opened up and this is where price closed and this is the low of that candle right and the same for a bullish candle so this is where we open and this is where we close so by the time it opened it pushed up all the way higher this is the high of the candle and this is the low of the candle and this is what's called a doji candle right now imagine a tug-of-war right so you guys are pulling pulling pulling pulling to the downside pulling pulling pulling pulling to the upside right and at the end of the hour or whatever timeframe it ends up at a draw right no one was able to really push it down over here so this candle is called the indecision candle right we don't have a decision here right it was a tie so there and this is going to come into another candlestick formation right so that's why I wanted to explain it to you guys but this is a tie now from here I want to go over some of the candlestick formations that I actually use now I'm going to start out with my favorite one a double top right or a double bottom right and this is the this would be the double bottom right but the double top is when price comes up to a level of resistance right and you see price halt right and then you see it put a bearish candle and then we go down and then we go back up and then we go back down and then we come back up over here right now there's a lot of different ways to trade the double top and to trade the double bottom right the way that I learned and the way that I trade it right is that the this candlestick right this week has to at least touch the close right which is this close right over here right this wick can also go like this right it can it can go higher than the highest high right over here right so it can go up all the way over here the only thing that it can't do right or the only or one of the things that it can do is that it can't close above this high is high all right if it closes above like in this case right then it's no longer a valid double top for me right it can all it can do this it can close above the close as well right it just can't close above this high as high so what are the rules right well the high must touch the clothes and cannot close above the highest high right so if we have these two then it's a valid double top right now there's some other things that I use for my double top I use RSI divergence right and the RSI is a tool called the relative strength index right now this is a it's a mo it's an oscillator right so it just goes up and down it doesn't continue going up or continue going down and this oscillator gives me the relative strength of this candle compared to the other previous candles and if we have something called divergence right and I'll show you guys right here what their vergence is actually I'll show you guys later because right now we're going over the candlestick formations and we'll go to the real charts but if we have divergence right then this is a valid trading opportunity I would enter right at this candle right over here after this bearish candle has formed so I'd enter right at this open right same for the double bottom it's the same exact thing same rules apply this is just reversed so you guys can see them then we have something called a Morningstar confirmation now Morningstar confirmation uses this doji candle that we were talking about and what it means is that price is coming down right we get an indecision candle we don't know what's going on here and then we break a move higher right so we make a move higher a bullish candle this is bullish confirmation we would enter next bar market which would be this candlestick right over here in the same for a bearish Morningstar confirmation right now I think this has a different name I think this is like a Morningstar and this is like an evening star I don't know you know all I know is that excuse me that's the formation these are more aggressive entries than a double top or a double bottom right but you can still use them still valid and then this right here over here is what we have three little soldiers three white crows three white soldiers whatever you want to call it and there's an eye and there's two different ones here right because I want to illustrate the difference so there's people that trade right these three have to be within the body of this candle right so for the further the trading strategy to be or the entry technique to be valid these candles need to be within the body of this candle right now me personally right I think that these three soldiers have a lot more confirmation than these three then you can tell the difference and take a second and tell me what the difference is obviously besides that it's not in the within the body of the candle but tell me what else do you notice in these candlesticks that these don't have right give you one second you guys can pause it – all right I'm live you guys aren't all right cool so if you haven't noticed right notice that there's no wicks all right see how there's no wicks over here right that's a lot of selling pressure right so we so we have pressure we probably got a little bit to the upside but then we close really we have a lot of momentum to the downside these are called Mar buzu Mar BOSU Mar Bisou I don't know the name I know that it's something like that right Mar bozo candles which is basically showing that there's no wicks to the downside right giving that there's no buying pressure at the end of the hour time frame or the daily time frame or whatever time frame that you're looking at right so whenever you have these three come from these three little soldiers right then it's a it's a confirmation that price wants to continue going down lower now this is a more conservative approach right because you have to wait for three bearish candles after we've hit our level of resistance or support right so it's you're going to have a lot you're going to need a little bit more patience and these aren't as often right as other candlestick formations so you know definitely got to have a little patience for that one then we have more aggressive entries now these can be all flipped backwards upside down I didn't do it on these either but I'll show you guys that and they have different names if you're flipped upside down so like for example this is called this is called I think it was a hammer right and then this one's like an inverted hammer and then if you flip it it's a I don't remember the names guys anything that I say right now is just going to come off wrong so I'm sorry but these are these are the candlestick formations and you flip them they're the same I think one two inverted hammer the other ones a morning not morning star shooting star the other one's a just a hammer and then I forgot what the last one is called right but these I was talking about these two this one is an engulfing candle lower low lower close however you want to call it and it's basically when we come up to a level of resistance right let me see if I can draw out let's say that this is a level of resistance right let me increase the thickness so you guys can so let's say that this is a level of resistance right if we come back and we come up here right so we're looking for the shorting opportunity so we're waiting for price to give us a lower lower lower closed under this wig right so we can do this as well right it can do sorry it can do this right where the wick is lower right this wouldn't be a lower lower lower close this would be once we do this right once we close over so we can have the wig right we just need to close lower than this low right over here now that's an engulfing candle we've engulfed this complete candle right and that would be a bearish indication right an aggressive bearish indication this right here is another aggressive bearish indication because we're looking to take the trade after this candor this candlestick so next bar market same with these these are entering next bar market so these are aggressive entries but these are candlestick formations that we can look to execute on now this is something that's very very very very important guys I don't trade any of these right any of these candlestick formations any of these over here if we are not at a level of major support and resistance right we have to be at a level of major support and resistance on the daily timeframe for me to even consider trading these candlestick formations now this is crucial right because a lot of traders will go out here and be like oh Danny G trades double tops Danny G trays double bottoms let me trade a double bottom or a double top because I'm pound/dollar there's a double top right now right and this is we're recording a tour December 5th right at 8:00 in the morning you know pound dollar has a double top right now right so let me trade that one right but you gotta be you gotta be sure right or not that you got to be sure but you got to make you got to pay attention at where you are and respect it to the higher time frames right and just even in the lower time for in respecting to where you are you're gonna trade a double top or double bottom in no-man's land and what that meant and what that means no-man's land is it not at a level of support and resistance no right at least I wouldn't I don't trade these unless we're at any significant level of support and resistance so what I'm gonna do right now is and I'm going to bring up the charts and I'm going to show you guys what these are what are some of the candlestick formations and I've highlighted them and ok so dollar yen we have one right over here so we have this double top right let me go ahead and delete all this stuff all right so we haven't don't mind this this is just because there's a site for completion over here I'll show you guys right now there's a site for completion over here so it's showing me the target profit and the and the stop-loss but all right so we have this double top right over here right and this is a valid double top right and the only reason I wasn't able to actually take advantage of this was because I think it completed not in my trading hours but we have this double top here now the only reason that I'm looking at this double top is because we are at a level of resistance on the daily timeframe I'll show you guys what I mean by that right now so look at this right over here so we had a level of resistance resistance support support support and now we have a level of resistance resistance resistance right so we come back up to this level of resistance now I'm looking for a double top right I'm not looking for a double top right over here right what is this this is no-man's land right this is no-man's land right right over here this right here is consolidation right looking for trade there I'm looking for a trade right here at these levels that these levels were price actually did reverse right and this is very important guys whatever you're looking for Morningstar confirmations hammers inverted hammers blah blah blah blah blah you know you got to be looking for these at levels where price has reversed before this is very very important this is doesn't matter what strategy you're trading because price does respect these levels of support and resistance not always and we can have different decisions some traders I know that some trade is for example on pound dollar they traded the breakout right of this to the upside right instead of looking for a counter trend opportunity to be looking short they traded to the upside that's fine it was a decision level but they made that decision there right they didn't make it over here Midway they made it at these levels of support and resistance so you got to make sure that you you at least consider the levels of support and resistance in your trading because they're going to play a crucial part whether you like it or not I think on Aussie dollar we had another oh no this is on the daily I'll show you guys on Aussie dollar we had another double top was it let me see Aussie dollar Aussie dollar right this one one was one that we did take advantage of so we're coming back up right and you're asking okay well why did you take this double top well we can see what happened on the daily right what happened over here we were consolidating we broke this level of structure we came back up where were we yet we were at a level of support and outturn resistance is that a morning sir you can consider it's a doji candle right this would be a Morningstar a Morningstar it's not it's a doji candle but work later see I get sidetracked so easily so we broke this level of structure right we come back down we came back up now I'm looking for the shorting opportunity right and then we go down to our lower timeframe right and we got this double top and then we got the divergence what's the diversions that I was telling you about this you see this RSI right over here right so we got the divergence right price came up we came back up to retest the RSI was making lower lows right and then we got the reversal we got the little spike up higher but then we got the reverse and then we got the break of structure we came back up to retest many of them call it a 2618 there's different names for it we came back up to Rita's and then BOOM right the drop down lower back to previous support down over here right and and then now we're just kind of consolidating coming back up but anyways this was a double top trade that we took right and this is what I mean on pound dollar right pound dollar we're putting a double top we came back up over here we came down we're coming back up to retest why am I not looking at this candlestick formation well because we're no-man's land we're not in anywhere that I'd want to trade on the daily timeframe so I'm not going to be looking at this even though we have the divergence right look at this we have the divergence we're coming back over up over here we have a lot of divergence but I can't take this trade because we're not at a level of support of resistance that I'm looking at the trade euro dollar right over here we had and this is both this is why I highlighted this one we got the double top right we had the slight divergence all right why were we looking at this trade let's take a look at the daily see where we are right where were we on daily we're at a level of support right so that's why I looked for this trade I wasn't looking for this trade over here I wasn't looking for this trade over here right I wasn't looking for it over here I was looking for it down here because this is where price had reversed right so if I'm looking for a trading opportunity it's going to be centered around these levels of support and resistance right and these candlestick formations they're not a strategy by themselves I don't just trade every double top right I only trade them when we're coming back up to these major levels so we got this double top and then we got what those three little soldiers right now in this case they're not exactly like how we identified and guys they're not always going to be that way right what's important though is that if you want to include that into your strategy make sure that you have a way of objectifying it whether it's going to be okay I can't have any wicks to the upside okay has to be within the same body of that candle okay it just has to be three consecutive candles right whatever it is that you want to do it can't be longer than the first candle they all have to be similarly the same the same length right you can use something like that to objectify it but anyways these this was a similar formation we got the small pullback to retest and then we got the move up higher so there's definitely these candlestick formations do happen and then on I think finally it was on pound New Zealand that I wanted to show you guys that we had a few so this is the Morningstar confirmation but I think I want to go back because there was a few different ones so this is this is an engulfing candle right lower low lower closed so we got the candlestick up over here then we got the lower low lower closed and then price reversed down over here that I have something else up here yes I did so we have again the hammer or the inverted hammer the shooting star I don't remember right but we had a long wick with the small body right and what the price do what we got two candles and then boom reversed right big big reversal I think that was it right I think that was it I didn't have anything else yes I didn't have anything else again another engulfing candle right so these are these are candlestick formations that we can just start finding a whole bunch of them right we can start finding a whole bunch of them but these are candlestick formations that happen and you want to be using these now in this case I probably I wouldn't have traded this one right let me see if we were at a level of support and resistance we probably weren't yeah right so in this case where we came you could have been aggressive right because we did have this consolidation over here right and if we did get the pullback you could be aggressive and internal at this level of consolidation putting stops above these highs right but it wasn't it wouldn't have been the trade that I would have taken personally but you could you could make it work and I can see how you can make it work right and then we had the Morningstar confirmation here which was a failed one right but still nonetheless a Morningstar confirmation we had the the bearish candle then we had the doji candle and then we had the bullish candle and then we also were in the descending triangle which we could have had a fake a fake out to the upside before making a move down lower show you guys with what that looks like yeah descending triangle so you know guys there's there's a lot of ways to trade and that's why sometimes you know I I was criticized one time for for not giving you guys specifically you know like showing you guys that there's many different ways but not showing you guys specifically how to enter or how to exit but the truth is that there's so many different ways so many different ways to trade that I can't possibly test all of them and I can't possibly tell you which one's going to be the most profitable which one's not going to be the most profitable what I can tell you is that I Center my trading right around levels of support and resistance right and I look for candlestick formation entry techniques right at these levels right they're going to maximize my wrists reward and give me the highest probability of success right now keep in mind probability right key word probability right I said it kind of kind of text in there you know but we got to make sure that we understand that not every trades gonna be a winner don't go out here and be like oh man Danny G drop some knowledge I'm gonna be trading engulfing candles lower the lower closes I'm be trading all the soldiers not just three of them you know and and you start losing money we'll just make sure that you guys know exactly what you're doing and I would recommend knowing what you're doing before you start trading with real money trade this on the demo account take a few months guys a few months is not going to kill you and if it does if you can't take a few months right to practice on your trading then that means that right now you need money more than you need a skill or I'm sorry let me let me rephrase that right right now there an urgency for you to make money and I don't think that if you if you don't know what you're doing you shouldn't invest your time in trading at this moment I think that if you need money fast I think there's other ways that you can make money fast right for you to dedicate time that you need to become a profitable trader and then apply capital right to your trading in order for you to grow your accounts they're two different things right so I hope that you guys understand the difference I know that I was one of those that I rushed myself and I tried to make money really fast and that's why I lost thousands of dollars trading so I hope you guys don't make the same mistake as I did right so guys I hope this helps I hope this helped you guys with with your entries I hope that you guys now have something that you guys can use guys if you have any questions send me an email at Danny G at the alcove FX I'll be more than happy to help you guys please do me a favor if you haven't followed like to subscribe please do me that favor guys we're growing really fast and we're going because of you guys we're going because you guys are sharing these videos because you're talking to friends about it so if you guys can continue to do that that would be so awesome and I'd be so appreciative and the more that you guys do that the more motivates me to give you guys awesome content like this and and also guys if you have any questions about anything specific you know about trading a wedge pattern whatever anything that it might be send me an email Danny G at the alcove FX and I'll and I'll make sure to include that in the next video so with that being said I'll let you guys go I'll see you next week good luck the trading guys I'm adding each other different names we would dig a rocket ship numbers live far away this dream of outer space now the mountain either face saying wake up you need to make money