n order to increase your chance of winning the trade, you need to remember that pairing candlesticks formations with support and resistance are always a good idea.
You must always consider all the factors that influence the market environment and this way you will increase your odds of predicting what will happen.
Keep in mind that trading in forex is not an exact science, if candlesticks point to a reversal or continuation that does NOT mean it will happen.
Using Candlesticks with Support and Resistance
The most common technique among traders is using the candlesticks with support and resistance levels.
Support and resistance levels determine areas, where bulls and bears are fighting to take over. If you look at how candlesticks react to them, it could help you to predict where the price will head next.
Let’s see an example:
In this chart, you will see that the resistance is around the 1.4900 level.
Normally you would like to place an entry order, but now you know about these candlesticks and you decide to wait instead because the candle that touched this level looks very bullish and the price could break the resistance.
Later you see a nice three inside down candlestick pattern, which is believed to be a potential bearish signal.
By now you have your sell signal confirmation, so you go ahead and short the pair.
Don’t forget to set a stop loss above the resistance.
You got your patience and put your initial wish to enter on hold, because of your knowledge of candlesticks patterns and now you have greatly increased the odds in your favour.
Boom! You are over the moon, because the pair almost immediately went in your favour, feeding you many pips.
After that winning this pips, you might actually have 0.1 % of Warren Buffet’s net worth.
Mr Buffet, watch your back! Your competition is coming.
If you did analyse only the signals that candlesticks gave you, we assure you that you would have lost your money. Without taking into consideration the support and resistance levels and how they are related to candlesticks, you will not be able to see the bigger picture in the following trends.
Analysis of candlestick formations paired WITH support and resistance levels makes your chance of winning bigger.