Today we will continue to get acquainted with useful tools for qualitative market analysis. It’s about the Double Bar candle pattern. It’s simple enough. And if it is timely identified on the chart, you can open a successful trade.
This model is formed of 2 candlesticks with almost identical highs or lows. A discrepancy of 2-3 points is possible. Let’s consider two variants of this pattern.
Two candlesticks formed on an uptrend have the same lows. This indicates that the price is not yet able to overcome this level, and therefore the probability of continuing upward movement is high. You can buy it.
And the second option. Two candles formed on a downward movement have almost the same maximums. This indicates the formation of a level of resistance. You can consider sales.
How to trade using the Double Bar
pattern
Trade order opening conditions are very simple. In order to trade more efficiently, it is necessary to put additional important support/resistance levels on the chart or use an appropriate indicator for this purpose. They will help us determine where we need to lock in profits and set a stop-loss.We will consider an example of opening a trade:
The downward trend has a pattern Double Bar. Maximum two candlesticks are the same. Just below the level formed by this set-up, we place a pending sell order. Stop-loss and Take Profit are at the nearest important levels. The SL should not be large in size. For the euro/dollar pair – no more than 30 points. And the TP should be 2-3 times the stop.
For an uptrend, the conditions for opening an order are similar. Only in this case we will be interested in the pattern of two candlesticks with the same minimums.
Recommendations for using the Double Bar
For successful trading, you need to consider the following:
- сигнал is well practiced on higher timeframes (4 hours, day);
- открывать trade orders should be in the direction of the main movement only;
- допускается the use of a pattern of three candlesticks, with the same extrema being in the 1st and 3rd candlestick;
- торговать only pending orders;
- строго maintain the ratio between stop-loss and take-profit;
- если the price has passed in the necessary direction the distance equal to two SL, we translate the order into a lossless one;
Before you start using Double Bar in real trading, you need to gain experience with it on a demo account.Fyodorov’s Inga17.09.2018