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Bullish Candlestick Pattern High Volume Trading Video

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Candlestick Patterns: High Volume Spikes

A common bullish candlestick pattern happens when you get a volume trade spike on the market bottoming. When you see this setup, be sure you don’t confuse it with high volume strength push downward in the market.

We are going over a common bull signal that you will see that indicates market support with high volume. These high volume trade spikes, in combination with a bottoming of the market, can give you areas of greater support or resistance in the market for your trades. You can consider these bull signals as physical proof that there are other buyers in the market. The buyers are willing to take long trades side by side. That means that they will also be placing stops outside of these levels (as talked about in a previous video) that you can trade.

We go into how a market can show these signals along with how they can easily be confused with non-bull market signals that do not have a corresponding bar that pushes the market up with high volume so you don’t make that common trading mistake. With this bullish candlestick pattern, we wait for proper confirmation of the reversal.

Bullish Candlestick Pattern: Clear Signal

When the market has high volume trade spikes, you have to put yourself in the mind of traders that are against the current move in the market. The high volume trade spikes are caused by both buyers and sellers pushing the market up and down, but we must keep in mind that the winner of each struggle in trading will not only be more bold from that point on, but will more than likely be profitable in their trade, so they will gain control of the current price in the market, and push it further in their direction.

bullish candlestick pattern finding a volume bottom
bullish candlestick pattern volume bottom

Applying This Bullish Candlestick Pattern:

Check out the video here for a different view of when the market breaks these key levels.

Breakout Trades Video

Breakout Trades and High Volume Trade Spikes Video

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Breakout Trades and High Volume Trade Spikes

As individual traders, one of the key strategies we use is breakout trades. These are a key edge we can use because they allow small share traders to get in at the key pivot points in the market. We can use price action alalysis to find key levels of S&R in the market, and enter as they are broken.

On top of this, we watch the level 2 on a trade to see price ceilings/floors eaten up by orders before we choose to trade. This is a key advantage of taking a smaller size in the market. When we see a seller with 50k shares on the ask, we can time our entries as they are getting eaten up.

 

Why these levels?

When we are searching for breakout trades, we must identify key price action levels. These levels are agreements between buyers and sellers in the market. With each agreement of highs and lows, there are key levels outlined in the market. At each point in time the market turns, a level is formed. When these levels are re tested, they gain strength. This is assuming the re test was followed by a move away from the price point.

breakout trades trading
breakout trades from the daily chart

What about minor re tests of price action levels?

We need to clarify the difference between a re test, and a weakening of a key price action level. When a market comes down to re test a level in the market, two things can happen. One is where the market bounces off that level, re enforcing it. The other is when a trade tests that level multiple times on a lower time frame, weakening that level. With the latter, the price keeps re testing, each time weakening the level.

How can we use the difference between these two type of level testing?

When we see a key price action level being tested, we know it is prime for a breakout trade. These levels have been proven over time, and when broken will have an accumulation of traders willing to sell/buy.

The breakout trade moment:

When a key price action level is broken. Technical traders jump at the opportunity to make money. They see these levels in the sand drawn around areas where traders not only want to buy/sell, but want to exit their existing positions. This doubling effect is the key in breakout trades. You have an accumulation of both traders who are profitable, and traders who want to be profitable watching the same level. When that level is crossed. A volume spike appears. This is created by both stop orders, and new traders coming into the trade.

Price Action Trading Video

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Price Action Trading, and why can’t institutional traders use breakout trades.

At the end of this article you will understand the advantage that you have in the market with price action trading. This is aimed at individual traders, not ones who work at trading firms or hedge funds. This is one of the many edges that you have against traders with big size in the market.

Your position size doesn’t effect the market:

[Read more…] about Price Action Trading Video

Candlestick Patterns: Simplify Your Charts Video

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Candlestick Patterns: Simplify Your Charts

We’ve gone into detail on Technical Analysis strategies. One difficulty traders have is identifying key Candlestick patterns in the market. The highs and lows pattern is easy, but it rarely appears so cleanly on our charts. We are faced with candlesticks that form patterns with ticks outside of key areas.

One key addition to our analysis we can do is use the theory of Encompassing Candlesticks. These are formed when their highs and lows are greater than surrounding candlesticks. This is true for candlesticks before or after encompassing candlesticks. When a market is wide ranging, the specific highs and lows within this range become less important. These price levels are broken, and therefore are less significant. This is true for large swings in the market and down to each individual candlestick.

 

Why Use These Candlestick Patterns?

Candlestick patterns
Candlestick patterns with encompassing candlesticks

When we are able to remove 2 or even 5 candlesticks, it simplifies the price action on the chart. While we are removing information, the inside candlesticks are less important to our analysis. We can choose to ignore them, or take them into account. If we choose to ignore these candlesticks, patterns may start to appear. If we choose to keep these candlesticks in our analysis, we can weight them differently.

We can use these modified charts to clarify our technical analysis on the charts like in the next video here:

Trading Support and Resistance

Bruce Banks Trader And Trainer