Justin Bennett is a well-known foreign trade trader with more than ten years of trading experience. Trading began in 2007, and sustained and stable profit was achieved at 20 10. In addition, he is the founder and operator of Daily Price Action, a foreign exchange website, sharing price behavior strategies for traders.
Justin Bennett's common forms are: pin stick, engulfing stick and inner stick.
You can use the needle stick on the 4-hour chart and the daily chart, while the engulfing form and the inner envelope are more suitable for the daily chart and a longer time period.
Let's look at each form in detail.
1. Pin stick is my favorite candle form, which often represents the reversal of support level and resistance level. It is worth noting that if there is no critical support or resistance near the needle bar, it cannot indicate reversal.
The following is the bearish pin on the daily chart of AUD/USD:
Please note that after the currency pair closed below the key level, re-test the area and regard it as new resistance, forming a bearish pin. Shorting the 50% callback position will generate considerable profits in less than 48 hours.
2. Swallowing, as the name implies, means that a candle completely swallows the candle in front. It is a reverse form, which usually means a game between buyers and sellers.
The engulfing pattern is suitable for daily chart or longer time period, and the engulfing pattern in other short time periods is unreliable.
In addition, the engulfing pattern must appear at the fluctuation high point or low point. Otherwise, it cannot be an effective inversion signal.
The following is the swallowing pattern of AUD/USD on the daily chart:
3. Internal Envelope Internal Envelope means that the fluctuation range of a K-line is limited to the range of the previous one, that is, the high point of this K-line is lower than the previous one, but its low point is higher than the previous one.
For traders looking for good trend trading signals, the inner envelope is still the best in my opinion.
This form is suitable for daily charts, and any inner envelope that appears in a time period less than the daily chart has little effect.
The following are three bullish inner envelopes formed by USD/JPY on the daily chart:
The key factor of effective inner envelope is price trend. In addition, traders need to pay close attention to the position of support and resistance before deciding to execute the transaction.