The One-Stop Go Pattern

Arvind — Mon, 13 Jan 2020 00:30:00 GMT

In this we'll be looking at a particular price pattern that is repeated several times, so much that it is treated as price action. The One Stop Continuation pattern.

This wonderful pattern is simple to represent, and easy to identify, and take a trade, though they are a bit rare in occurence. To the keen observer, it is easy.

The one stop pattern requires a primary trend, and a candle opposite to the trend, that shall preferebly be a hammer(or a pinbar candle as it's also called). A trade is entered into, in the side of the primary trend, when the trend continues, past the closing price of the hammer. Note that the working of these varies, and the target price is based on a demand or a supply zone of the broader chart. (Either a primary or a second level target. TSL is recommended for extended time periods)

The Primary trend here is a short trend, and there is a green spinning top that gets negated in the very next candle. We wait for the next candle to close lower than the green candle, and enter at the open of the next candle, going until we spot a reversal sign, in this case, a P.A.R.T signal at B. A is the entry point, and the SL can be a few pips above the green's high, in this case, the close of the previous candle.

A long entry initiated at A, with a SL and trade closed at B at the start of the green candle as per P.A.R.T.

The sheer brilliance of using this to trade is the simplicity, and the minimal risk involved.

Typical cases of failure:

This is an example of failure of the pattern materialising despite giving a good entry signal and the SL being hit in the first candle. note the Small Risk, and huge reward. Lose less, target more.

Here, the red pin bar gives a signal, the succeeding green candle confirms it, and yet the SL is trigerred by the next candle which although is green and hits the target eventually. This is an avoidable trade. The large green candle with the long tail that trigerrs the SL is the first candle of the next day. Taking posositional trades with candles of very small durations is the reason.

Though these work on all virtually all timeframes, when it comes to consistency and ease of identification, the smaller timeframes of 1/3/5/15 min take the lead.

This leads to these rules that can be framed albeit loosely:

Smaller Timeframes
Entry near the start/ at mid-point of the primary trend, not near the close/target.
Entry only after the close has been breached on a closing basis by the suceeding candle.
Appropriate holding periods, consistent with the timeframes.

Price Action Reversal Theory

Arvind — Sun, 12 Jan 2020 11:57:48 GMT

In this, we'd learn what PART is, and how to trade with PART.

Remeber Price Action ? Yes, the same old candle shapes. Let's see how and why sometimes they just work opposite to how they're supposed to work.

We are going to see Hammers, Dojis, and candles that are a mix of these both in this post. So, let's jump right in.

Spinning Tops - These are Candles whose wicks resemble a doji, and body of a hammer. (These are dojis with small bodies) A typical spinning top looks like this:

A hammer, a spinning top and a doji (L to R)

So what about these ? Well, these are candles which show traders are mildly certian of the price moves, but largely confused. These also have bullish/bearish types, and just like all single price patterns, color is irrelevant, and shape matters.

Now, for the PART...

A bullish single candle price action pattern causes a fall in an uptrend, and a bearish single candle price aciton pattern causes a rise in a downtrend.

WHY? The reasoning is pretty straightforward. Look at the chart below.

The bullsih hammer here signals the end of the bull trend.

The reason lies in the definition of a hammer. A hammer is when a low is made, and is recovered from right? So, take the case of the buyers during the up run prior to the hammer. Some'd get afraid when the candle makes a low lower than the mid point of the previous candle (see the image above), and exit, causing a market fall.

Now, this fall would be definitely until the low of the hammer. That is a certianity. That typically happens in a matter of 1-3 candles. Further move is decided by the support/resistance levels.

Here is an example of a PART in a downtrend. Notice the target getting hit in the second candle.

PART notably works quickly in timeframes lesser than 1 Day, and works, but, slowly in the Daily tf, making the Risk-Reward unfavourable on Daily tf.

School of Markets

The One-Stop Go Pattern

Price Action Reversal Theory