So we got a nice looking signal on the daily chart - now what??? As it turns out after the signal we spotted price did move down (this does not always happen, which is why we use stoplosses!) - so what are some possible entry points if you had wanted to take a short(sell) position?
In the above chart you can see the daily chart on the right with the previously mentioned signal bar marked with a triangle. The chart on the left is a 1 hour chart and I have marked some potential entry points which occured the day after that could have been used and depending on your trade management all three could have booked profits. With practice you will learn to see these entry points. . . and again I think having a look at japanese candle stick reading would be helpful. The idea would be to place a sell stop order just below the low of the hourly signal candles. Many people will place their stoploss just above the same signal candle. It's really up to you though just be sure to use proper risk control, as I said earlier not all signal candles will play out as nicely as this daily candle did.
Did I take a trade based on the daily signal candle we saw? You bet I did! I entered on a break below that original daily candle. Check out the next post to see my play on the signal. . .
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