Original subtitles

0 Hello and welcome, guys, to the next lecture in Section 4. 1

I will introduce the last two candlestick patterns, which also make an important part of the support 2

and resistance training strategy. 3

Firstly, we will study the long-legged doji 4

When you look at a trading chart, you will notice various doji's, which is a candle with no real body. 5

A doji represents indecision among buyers and sellers. 6

As price moves nowhere during this session, both buyers and sellers have control of the price at some 7

point during the session before price closes at its opening price, hence making market directionless. 8

However, for this strategy, we are only looking to analyze and trade the long-legged doji, or sometimes 9

I call it as a magic doji. 10

As the name suggests, this single candle formation consists of both large lower and upper tail, or 11

wicks with almost no or very small real body. 12

Also, you will take trading positions using a long-legged doji both in bull and bear market. 13

When analyzing a long-legged doji, you will always keep the following guidelines in mind: 1. Whether this 14

long-legged doji appeared after a prolonged move in price and time, this means when a long-legged doji 15

appears after an uptrend or downtrend, it reflects the confusion among buyers and sellers, hence 16

pointing to a possible reversal whether this long-legged doji is also associated to 17

key support or resistance levels. 18

A long-legged doji seen at a key level offers 19

even higher probability of a trend reversal in sight. 20

Let us study long-legged doji using some examples now. 21

Guys, I'm using USDCHF to study a long-legged doji. From a major level which acted as 22

resistance on this pair, price decline in a clear downtrend before a long-legged doji appeared on a key 23

level. 24

Notice the extended tails of this doji with very small real body indicating weakness in the market. 25

And then market rallied sharply in an uptrend following the appearance of long-legged doji. 26

This time, a long-legged doji appeared after an uptrend. 27

And then market went into a small consolidation phase on daily charts before the larger downtrend began 28

on this pair. 29

Guys, there is another long-legged doji on this price chart, as I show you here, which also bought a pause 30

to the uptrend. 31

The fact that it came at a major level made this doji 32

worthwhile as it presented a sell opportunity on this this pair. 33

The next example is of GBPCHF and a long-legged doji terminated the existing downtrend 34

at a key support zone. 35

Notice the large lower tail of this candle signaling sellers were unable to maintain their control 36

over the market, therefore, price advanced in a bullish trend. 37

The last example is USDJPY forex pair. 38

The guidelines stay the same, after a clear upward trend in price, long-legged doji appears at a key level, 39

hence providing a high profitable opportunity. 40

Please keep in mind that the color of the long legged dog is not important while analyzing market tops 41

or market bottoms. 42

This also concludes the examples of long-legged doji as we continue studying the last candlestick pattern 43

in this strategy. 44

Guys, the last candlestick formation you need to know is called isolated pivots. 45

This is a three-candle formation, which is seen after both an uptrend and a downtrend, just like 46

the doji. 47

To understand how isolated pivots look in an uptrend, imagine a market progressing in an uptrend and 48

then a candle with a small, real body reveals possible weakness in the market. 49

This second candle is also bullish in color, but has a very small, real body and small lower or upper tail. 50

And then during the third and final candles, very strong, bearish scandal with a large body appears 51

signaling a change in trend. 52

Please note that the second or middle candle must have a higher-low compared to the previous candle 53

and the next candle. Guys, exactly the opposite applies during a downtrend for isolated pivots. 54

Isolated periods are mostly used during sideways price activity, hence they present perfect opportunities 55

when market is in a consolidation phase after a sharp trend. To understand isolated pivots, 56

let's look at a few examples. 57

Here we are looking at CHFJPY daily chart. 58

I will quickly apply the support and resistance zones based on the sideways price activity before 59

we proceed. 60

Notice the three candles here, guys, the first candle was very bullish, signaling the continuation 61

of the uptrend. 62

Second Candle was also bullish in color, but had a very small real body. 63

And finally, third Candle was heavily bearish, indicating the new selling strength in the market. 64

The second candle must have a higher closing price compared to the other two candles of the isolated 65

pivots to validate the pattern. 66

Let's study another example of the USDJPY here. 67

The isolated pivots presented trading opportunities at both price support and price resistance zones. 68

It is very important that we stick to the guidelines to gain confidence in our analysis. 69

Now that we have finished studying all the key patterns that you need to know, I am confident that 70

you will use your analysis wisely to achieve your target returns. 71

More often than not, you will notice one of these key candlestick patterns on any trading instrument of your 72

choice, hence offering potential trading opportunities. 73

So traders, this also concludes this lecture and the Section 4 of this course. 74

Please go to these lectures thoroughly to understand these patterns carefully, as I promise these are 75

all the patterns you need to know to become a successful trader. 76

And I will see you in the next lecture.