Candlesticks with Support and Resistance

In this lesson, we will examine the fundamental Japanese candlestick patterns taught in prior lectures in order to make informed trading judgments.

Remember that candlesticks are meaningless unless you examine the market situation and what the price is showing you.

But, before we begin, a word of warning...

As with every benchmark index or tool, just because candlesticks indicate a reversal or continuance does not mean it will occur.

Nothing at all is set in stone in the FX market!

Using Candlesticks with Support and Resistance

The most basic application of candlesticks is with bullish levels.

As bullish levels define where sellers and buyers have built up their defences, to see how candlesticks react to them might help you predict where the price will go next.

Here's a real-world example from the currency market:

In this instance, you can observe that resistance is located near the 1.4900 level.

You desperately want to enter, but you decide to hold off because the candle that reached this level appears to be quite bullish.

After two candles, you notice a lovely 3 inside down candlestick formation, which is considered a strong bearish indicator.

You short the pair after confirming your sell signal with the formation.

Since you're a savvy merchant, you likewise set a stop misfortune over the obstruction.

Because of your immense knowledge of candlestick formations, you have considerably boosted your chances of success.

How about we see what occurred after you shorted…

Almost quickly, the pair moves in your favour, netting you hundreds of pips.

You go to your local car dealership and purchase a fancy sports car.

There's also a jet. With complementary colors.

“Why do I have to pair bullish levels with candlesticks？” you may wonder. I could get a lot more indicators and make a lot more money if I only used candlesticks!

Take a closer look at the same chart of your potential trade to find out...

We've highlighted a few potential trading signals based only on candlestick shapes.

Take a look!

If you had only traded those candlestick formations, you might have lost every time!

You have boosted your chances of winning by simply combining candlestick formations with bullish levels.