Subject: Double Confirmation
This chart shows a classic “resistance-turned-support” pattern in price action and combines price action and candlestick patterns to illustrate how trade confirmation can occur.
Key concepts and steps:
1. Resistance becomes support:
• When price breaks through a key resistance level, that resistance often turns into support.
• This critical level is called the Key Zone .
2. Price Action:
• Prices pull back to retest key areas.
• If this area holds, the price will rebound from the support level.
3. Double confirmation signal:
• The chart shows two candlestick patterns to confirm the rebound:
1. Long Lower Wicks:
• It indicates that buying power from below has strengthened and the price cannot effectively fall below the support.
2. Morning Star:
• This is a common reversal candlestick pattern consisting of three candles:
• The first long black candlestick
• Second candle with small body (indicating market hesitation)
• The third long white candle confirms the reversal
• This further confirms that the support is valid.
Trading strategy summary:
1. Confirm the key area (resistance turned support):
• Find the resistance level that the price breaks and wait for a pullback to retest it.
2. Observe the reversal pattern:
• Look for double confirmation signals such as long lower shadows and reversal candlestick patterns (like the Morning Star).
3. Entry point:
• Consider going long after a bounce is confirmed.
4. Stop loss point:
• Place your stop loss below support to control risk.
5. Target profit:
• The target is the next resistance level or high ahead.
Summarize:
This chart shows the method of using price action (resistance turned support) and candlestick patterns (long lower shadow and morning star pattern) for double confirmation to increase the success rate of transactions. This method is suitable for finding pullback entry opportunities in trending markets and confirming reversals through support and patterns.
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