Skip to main content

Model absorption - price action setups

By

Model absorption - Price Action setups



Because of the contrast, MP for the trader relatively high probability of a good, profitable entry into the market. Required components of the bright signal - 2 candles that follow one after the other (or bullish and bearish or vice versa). In this case, the second candle surpasses the first value of his body, as if absorbing it.


Fig.1


Bullish and bearish absorption


For MP important are the following conditions:


1. Presence of a pronounced upward or downward trends can be short.
2. The body of the second candle should be more (absorb) the body first. Shadows can not be absorbed, then the signal is considered to be weaker.
3. The body of the second candle should be a contrast in color to the body first. Exception: a small body of the first candle (Dodge or close to it).


Figure 1 you can see both versions of the MP. Cover only the size of the body of the second candle, not its shadows.
Bear MF often represented by a small candle of any color (option dodge or top), which is absorbed by a long black (red) candle. Bear MP is of particular importance after the growing trend of sufficient mileage.

If the second candle is not fully absorbed the shadow of the first, this configuration is considered significant, but weaker.



Figure 2


Bull MP appears in a falling market. First formed small red (black) candle (Dodge), which is absorbed by the growing large candle. The model shows a good turn in the case of long-term downward trend.



Figure 3


As bullish and bearish engulfing need confirmation (gap, third white or red candle, etc..) There are such variations bullish engulfing pattern, which confirms the candle is represented as a component of candlestick patterns.


MP is a bullish signal for the extinction of the downward trend, the probability of rolling back from him, and even change the trend.
But the trader must take into account other factors that increase the efficiency of MP - quick entry of this signal does not provide a high probability of a profitable trade. Ie professional market is not interested in any absorption, but only the model with additional features, reinforcing it.


Other variations and additions to the model of the absorption


Let us examine some of the important additions to the MP:


1. Superpogloschenie - in this case, the smaller the body of the first candle, the MP is considered more reliable. Is a very strong signal, when the size of the second candle is so great that her body absorbs not only the first candle, and even somewhat earlier.
2. Trend (trend) is a high priority and the most important factor that increases the strength of a magnetic field. The trader is better to search model that will signal the end of the correction of the main motion.
3. Also, you may receive a signal which will interrupt the absorption of the previous. This is a very strong signal. The bottom line: the original (primary) absorption - false. True - follow. For example, a bullish engulfing can be represented as 2 white candles and one black, sandwiched between them. Bearish - 2 black and 1 white candle, sandwiched between them. It is therefore recommended to wait for confirmation MF signal.
4. Tail (lower shadow) in the first MP. In this case we are dealing with certain combinations of candles. When bearish engulfing "tail" of the first candle is very similar to the model "shooting star" - added MP bearish "shooting star" amplifies the signal to sell. When bovine MP "tail" of the first candle is similar to the model of "hammer" when the amplified signal to buy.

Any additional factor that affects the magnetic field, is a kind of filter for the trader. In this case, candlestick analysis forex exchange becomes better, he more fully as to cut unnecessary entries into the market. Trader gets the most accurate and profitable point of opening positions.


There is also an indicator that allows you to automatically detect the magnetic field (see. Article "Indicator Price Action").

For trading on Forex, choose only reliable and time-tested broker.


Use the correct model of the absorption - you definitely will smile luck!



Labels

Labels:

Comments

Post a Comment

Popular posts from this blog

Pin Bar Trading Strategy - Price Action Setups

By
Pin Bars - Price Action setups The tops of the bars on each side "nose" are the "eyes". Please note that Open and Close PB, ie nose should be in the redistribution of the left eye. Pin-bar can be traded as a single figure, and in combination with others. These include Fibonacci levels, important pivot levels (reversals), moving averages, peaks and main swing, fusion (the MA or Fib levels), rollbacks of current movements (not less than 23% Fib). For greatest reliability worth trade PB occurring at the maximum or minimum swing, or repelled from the merger. Figure 2 PinBar - a very reliable pattern Price Action. Trading on the pin-bars For beginners we recommend to put a stop order (or limit) directly under the base of the PB, about 10 points lower. Foot and input orders should be placed in 10 locations from the extrema, as the price may be a bit to go beyond the maximum or minimum. Figure 3 If current orders we receive profits, trail the...
Post a Comment
Read more

Forex Strategy - Vegas - Wave (gain 352 points)

By
Forex Strategy - Vegas-Wave (gain 352 points) Work as usual with a reliable dealing center . A bit of theory. For the EMA (144) with a well-defined trend characterized by the fact that it appears the level of support for the price. When the price crosses the EMA (144) is formed signal, whereby the trend is likely to change its direction. Signal for opening positions according to the strategy Forex on the moving average method "Vegas-Wave" acts penetration channel EMA. The resulting fractal will act as an additional filter - at his trial, and exhibited a pending order. To fix the profits can be used Elliott Wave Theory + levels and Fibonacci extension , which are measured from the first wave of Elliott the current trend. Algorithm trade strategy based on moving averages "Vegas-Wave" When the price above the price channel - a "buy zone" below - "area sales." When penetration top price channel formed EMA (144) and (169), after whic...
Post a Comment
Read more

Price action - trade without indicators

By
Price Action - trade without indicators Take a look at the picture. Regular schedule, is not it? As we know, the price moves in waves (zigzags). And if the start price movement, the trend in this direction is maintained. If a trader enters during a small correction (rollback prices against the main trend) - a cost-effective entry point. Connect the top and bottom. Now you will notice the trend movement, first down, then up. In the first half of the graph, you can search for points of entry for sale at rollback prices up, the second - to buy when the price moves down. 2. Price Action - look at the shadows of candles What is the shadow of a candle? This is the price levels of the Open and / or Close. If the shadows are long, it is possible to understand that the price met resistance, then turned around and headed in the opposite direction (in the direction of the candle body). This suggests the market moves too fast and strong players who have managed to deploy it. If we want to make m...
Post a Comment
Read more