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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

Understanding Price Action Trading Video

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Understanding Price Action On Your Charts:

Price action takes patterns from your charts that are seemingly random, and uses easy methods to break them down. We break down what are key points in the market, and base trades off of these. Understanding price action is not complicated since it it simply analyzing previous information. You are using previous patterns to trade the current market. In this video, we focus on the highs and lows pattern. This pattern monitors the swings with higher highs and higher lows to determine market direction and potential entries and stops. Whenever we get swings in the market, we mark them down. This gives us a clear path of the trade as well as potential resistance and support levels. We monitor these swings in the market (highs and lows), and base future trade outcomes off of them.

Understanding price action with highs and lows

Our main way to decipher price action on a chart is identifying the highs and lows in the market. We mark off the highs, and the lows on every chart as per our rules for trading highs and lows. Additionally we rule out any false highs and lows by only selecting ones that are relevant. These Relevant highs and lows are ones that broke previous levels.

understanding price action with highs and lows
Price action outlined with highs and lows

Highs in the market:

Higher highs, and higher lows in the market outline an uptrend in the market. When we get successive higher highs combined with higher lows, we can determine key areas in understanding price action. Each time the market reverses from a high point, that is an incredibly important piece of information. At that point, every person trading was in agreement that that specific price was too high. This may be temporary. What we are looking for is if that high is easily broken by a new higher high.

Lows in the market:

Similarly, lows in the market define areas where the market is considered to be too good of a deal. These lows define where buyers and sellers are in agreement that the market is undervalued. When we get a low in the market, we want to look for if it is easily broken by a successive low.

Support and Resistance Outlined with Price Action:

Each area of support and resistance, minor and major, can signal trades/stops. Therefore we can look at higher time frames to determine key areas of resistance and support. Combined with these, we can trade the lower time frames to find entries for our trades. There are often conflicting bits of information between higher time frames and lower time frames using this same method. All we must do is remember the golden rule, “the higher time frame is always dominant“.

Dominant Time Frame:

Highs and lows price action can be applied to any time frame, but a level of R&S on a hourly chart is more dominant than a different level of R&S on a 5 minute chart. Both of these levels can, at the same time, be valid, but we must always respect the higher time frame’s value. This is due to the volume, and type of traders on the higher time frames. We go into detail about these traders in a different video here.

Bruce Banks Trader And Trainer