Friday's Update 04032020
Today's candle was a small candle with a lower shadow about the same length as the real body of the candle. This candle is considered a very weak bullish candle. It is bullish because the lower shadow indicated buyers were able to move price above the low of the session and to move it back to approximately mid-range. It is also bullish because the size of the body is small indicating a lack of selling interest. It is a weak bullish candle because it is not convincing enough to guarantee the price will start to move higher from current price levels, as a result, there is still a possibility price will continue to move downward towards support on Monday. Having said this we also have to remember this is a Friday candle. Friday's are known to be a low momentum trading day so it is not out of the ordinary for a Friday candle to be small in size.
So how do we make trade decisions based upon this candle?
Since price has not made it down to or very close to the support price level it is still possible price will continue lower on Monday and/or Tuesday, but what if it doesn't? What if price turns higher starting on Monday, how do we handle this? Here is what I would do: I would take have taken half profit just before the close on Friday or would take profit first thing Monday morning and then I would move my Stop Loss to breakeven. Having done this I have guaranteed a profit on the trade. This leaves one half my position open so if the price moves down to support I can lock in additional profit. However, if the price starts to move back upward and stops me out at breakeven, at least I have an overall profit on the trade. Now there is one other small problem! Usually, when the markets open at the beginning of the new week the spread is still quite large until trading picks up and momentum starts to kick in. So what I would do, if you have the luxury, would be to watch what happens with the market right after the opening on a lower time frame. If the price looks like it wants to move lower then let your profits continue to run. However, if price makes a higher low on a lower time frame then I would take half profit. Note: It is best to take profits or half profits just before the Friday close if we are going to take a profit to avoid the higher spread cost associate with waiting until after the open of the new week before taking a profit.
Click on the above image to review part 1 of this tutorial
PLEASE LIKE ME, but only if you like this trading tutorial. Also please leave a comment on how I can improve the tutorial.
Today's candle was a small candle with a lower shadow about the same length as the real body of the candle. This candle is considered a very weak bullish candle. It is bullish because the lower shadow indicated buyers were able to move price above the low of the session and to move it back to approximately mid-range. It is also bullish because the size of the body is small indicating a lack of selling interest. It is a weak bullish candle because it is not convincing enough to guarantee the price will start to move higher from current price levels, as a result, there is still a possibility price will continue to move downward towards support on Monday. Having said this we also have to remember this is a Friday candle. Friday's are known to be a low momentum trading day so it is not out of the ordinary for a Friday candle to be small in size.
So how do we make trade decisions based upon this candle?
Since price has not made it down to or very close to the support price level it is still possible price will continue lower on Monday and/or Tuesday, but what if it doesn't? What if price turns higher starting on Monday, how do we handle this? Here is what I would do: I would take have taken half profit just before the close on Friday or would take profit first thing Monday morning and then I would move my Stop Loss to breakeven. Having done this I have guaranteed a profit on the trade. This leaves one half my position open so if the price moves down to support I can lock in additional profit. However, if the price starts to move back upward and stops me out at breakeven, at least I have an overall profit on the trade. Now there is one other small problem! Usually, when the markets open at the beginning of the new week the spread is still quite large until trading picks up and momentum starts to kick in. So what I would do, if you have the luxury, would be to watch what happens with the market right after the opening on a lower time frame. If the price looks like it wants to move lower then let your profits continue to run. However, if price makes a higher low on a lower time frame then I would take half profit. Note: It is best to take profits or half profits just before the Friday close if we are going to take a profit to avoid the higher spread cost associate with waiting until after the open of the new week before taking a profit.
PLEASE LIKE ME, but only if you like this trading tutorial. Also please leave a comment on how I can improve the tutorial.
