Hey traders,
There are multiple different ways to measure the strength of the market reversal from a key level:
✔️some traders apply volumes and look for its sudden spike as a confirmation,
✔️some traders rely on some indicators and look for a particular trigger there as the signal,
✔️some traders, like me, follow the candlesticks and make their judgments based on the candle's strength.
In this article, I prepared for you a candlestick strength meter that will help you to accurately spot the reversal clues.
❗️Remember about the important precondition:
that candlestick meter is reliable being applied ONLY on key levels.
Trading that outside key levels is not recommendable.
📈The initial touch of a key level is very telling:
after a sharp bullish / bearish rally to key resistance/support the reaction of the price on that can indicate you the strength of the identified level.
There are three main classifications of the reversal candle momentum:
*by reversal candle we mean the first bullish candle on key support or the first bearish candle on key resistance.
1️⃣The momentum will be considered to be low in case if the reversal candle will close within the range of the previous candle.
It indicates the weakness of bulls buying from support / bears selling from resistance.
You should patiently WAIT for some other signal before you open the trade.
2️⃣The momentum will be considered to be medium in case if the reversal candle will engulf the range of the previous candle.
It shows quite a strong initial reaction being sufficient to open the trade ONLY in a strict combination with some other signal.
3️⃣The momentum will be considered to be high in case if the reversal candle engulfs the range of the last two candles (two bearish or two bullish ).
By itself, it is considered to be a strong reversal signal.
The trading position can be opened just based on such a candle.
Among the dozens of different candlestick pattern formations, I believe that momentum candles are one of the most reliable in spotting the market reversal.
Learn to spot these candles and you will be surprised how accurate they are.
What candlestick pattern formations do you want to learn in the next post?🤓
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