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Saturday, September 22, 2018

[FOREX TIP] Double Bar High Lower Close (DBHLC) and Double Bar Low Higher Close (DBLHC)

The Sky Is Not the Limit

The Sky Is Not the Limit

The Double Bar High Lower Close and its opposite, the Double Bar Low Higher Close are two candlestick patterns. These patterns, although a bit rare to occur can signal potential change of direction in the market. The double bar high lower close (DBHLC) and the double bar low higher close (DBLHC) can be used to trade the markets in the short term. Because these are price action patterns, they are valid across any time frame. However, remember that you need to book profits quickly in order to truly take advantage of these price action patterns.

Market Psychology behind the DBHLC and DBLHC

The two patterns are not just technical patterns but come on the back of market psychology. It is after all traders moving prices around. Think about it for a moment. When you have two candlesticks (let’s call them sessions) failing to rise above or fall below a certain level it indicates a short term resistance or support levels.

Buyers or sellers attempt to push price higher or lower respectively and fail. This leads to the markets quickly turning around and thus establishing the support or resistance levels. We know that support is where demand is overwhelming and resistance is where supply is overwhelming. When there are two consecutive sessions that fail to break the support or resistance level, it results in the DBHLC or the DBLHC patterns.

Reversal Trading Rules using the DBHLC and DBLHC with support and resistance

It should be fairly evident by now that you can use the DBHLC and the DBLHC to identify when a support or a resistance level holds. This will give you the early edge to anticipate a turnaround in price. So the first step is to identify the support and levels. Once the price levels are drawn out on chart, you simply wait for the DBHLC or the DBLHC to be formed.

Combining the support and resistance levels and trends, you can also use the DBHLC and DBLHC to trade within the direction of the trend. Let’s take a look at the below examples.

The Double Bar High Lower Close (DBHLC)

The double high lower close is a two candle pattern. As the name suggests, there should be double highs. The highs need to be close to each other. The second candlestick should close lower than the first candlestick.

Double Bar High Lower Close Candlestick Formation

Double Bar High Lower Close Candlestick Formation

In the above example you can see the double high lower close method in action. Here, price action posts a high. The second high is not that evident but it is close. Following this high, price closes lower. A short position is taken at the open of the next candlestick session with a target of two times the risk. Price action evidently slips as expected to hit the target.

The Double Bar Low Higher Close (DBLHC)

The double low higher close is a two candle pattern. There are two (double) lows formed close to each other. The second candlestick should close higher. After the second candlestick closes, you can then go long on the open of the next (third) candlestick. Stops are placed at the low and you can target with a 1:2 risk/reward ratio as shown in the chart below.

Double Bar Low Higher Close Candlestick Formation

Double Bar Low Higher Close Candlestick Formation

The above chart illustrates the DLHC method. You can see the first low being formed and the candlestick also closes bearish. Following this, the next candlestick also makes a low, close to the previous candlestick. But this time, price action closes higher. Once the DLHC is confirmed, you can then take a long position. In the above example, we have the target placed to 1:2 with the stops at the low of the second candlestick.

The Double Bar High Lower Close and Double Bar Low Higher Close Trading Approach – Conclusion

The DHLC and DLHC methods are quite unique to price action traders. While this is not a strategy on its own, the beauty of DHLC and DLHC is that you can combine this with other technical indicators. You can trade off support and resistance levels or even using moving averages and trade in the direction of the trend.

Remember that the DHLC and DLHC can get a bit subjective. Sometimes you will find that the highs or lows are not quite close but you can see a follow through. The best way to get familiar with this price action pattern is to practice and understand the larger context of the market.

 

 

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[FOREX TIP] GBPUSD Weekly Forex Forecast – 24th to 28th Sept 2018

GBPUSD Weekly Forex Forecast - 24th to 28th Sept 2018

GBPUSD Weekly Forex Forecast – 24th to 28th Sept 2018

The GBPUSD has closed the previous week slightly unchanged. The weekly close above the big psychological number 1.3000 only gives the bulls the upper hand in the short-term. The long-term trend remains to the downside so a close below 1.3000 can be the signal that the bearish trend is resuming. The first level of support comes at 1.3044 followed by 1.2955 where the bears can find some troubles. The stochastic indicator is in neutral territory, so there are no extreme readings to show overbought or oversold conditions in the market. On the upside the first level of resistance comes at 1.3170.

Only a break and close above 1.3170 can open the door for Cable to try to challenge again last week high near the resistance level 1.3280. There is no major risk events scheduled on the UK economic calendar for the upcoming week. However, from the other side of the monetary policy spectrum, we have the Fed interest rate decision. The market is pricing in a 90% probability of a rate hike from 2% to 2.25%. Other than that on Friday we have the revised UK GDP figures for the second quarter.

 

Previous GBPUSD Weekly Forex Forecast

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[FOREX TIP] USDCAD Weekly Forex Forecast – 24th to 28th Sept 2018

USDCAD Weekly Forex Forecast - 24th to 28th Sept 2018

USDCAD Weekly Forex Forecast – 24th to 28th Sept 2018

The USDCAD managed to break and close below the big psychological number 1.3000, which signals a shift in the market sentiment. We should now expect more downside, but we still see the bulls not giving up the fight so easily. A retest of the big round number 1.3000 can still be in the cards, before more downside to be seen. Only a break and a close back above 1.3000 will suggest that the bulls are back in control. The Stochastic indicator has slightly entered in overbought territory but there is no extreme reading yet. On the downside previous week low 1.2890 is a good support level.

We need a daily close below 1.2890 if we want the bearish momentum to accelerate. Below that we can note 1.2730 as the next major support level. The ongoing NAFTA negotiation between the US and Canada remains a risk theme that can disrupt the market volatility. So, traders should keep an eye on the news headlines for any new developments on NAFTA talks. Other than that we can mention the BOC Governor Poloz speech scheduled on Friday.

Previous USDCAD Weekly Forex Forecast

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[FOREX TIP] AUDUSD Weekly Forex Forecast – 24th to 28th Sept 2018

AUDUSD Weekly Forex Forecast - 24th to 28th Sept 2018

AUDUSD Weekly Forex Forecast – 24th to 28th Sept 2018

The AUDUSD broke and closes above the key resistance level 0.7200 and above the 200 moving average. Now, as long as we trade above these two technical levels the bulls should remain in control. The next resistance level comes at 0.7346 followed by 0.7443 the top of the previous trading range. There are no extreme reading on the stochastic indicator to suggest a reversal, but the two resistance level mentioned earlier should give us decent sell-offs.

On the downside the support level 0.7200 is the first area of interest, but we first need a break and a close below the 200 moving average. There are no major risk events scheduled on the Australian economic calendar that can impact the market volatility. We should expect a more technically driven market in this sense.

Previous AUDUSD Weekly Forex Forecast

 

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[FOREX TIP] USDCHF Weekly Forex Forecast – 24th to 28th Sept 2018

USDCHF Weekly Forex Forecast - 24th to 28th Sept 2018

USDCHF Weekly Forex Forecast – 24th to 28th Sept 2018

Fundamentals Outlook
The week ahead is expected to be relatively quiet for the most part. Data from the Eurozone will cover second tier data. German Ifo business climate will shed light on the business conditions for the Eurozone’s largest economy. In the U.S. the Federal Reserve’s monetary policy meeting will be the main event to watch for. The FOMC meeting is due for Wednesday. The markets have fully priced in a rate hike at this week’s meeting. Forward guidance will be crucial for the markets looking ahead.

The recent flat print in inflation is starting to stoke concerns on whether the Fed will be able to raise rates for the fourth time this year. The Fed Chairman, Powell will be holding a press conference later in the day. The ECB will be releasing its monetary policy meeting minutes later on Thursday. Given that there were no major policy decisions taken at the recent meeting, the minutes are unlikely to impact the markets much. From Japan, the BoJ’s core inflation data and housing starts will dominate the headlines. Data from Switzerland is quiet for the week ahead.

Chart set up:
The USDCHF currency pair closed bearish last week after the previous two weeks showed an indecision pattern in the chart. The strong bearish price action is expected to be maintained for the week ahead as well, albeit for a modest bounce to the upside.

Key support/resistance levels:
Support: 0.9649; Resistance: 0.9461

Commentary:
After USDCHF lost the handle near 0.9649, price action extended declines lower. By Friday’s close price action was seen posting a strong doji pattern. This potentially indicates a near term upside. We expect the resistance level at 0.9649 will now be retested while the bias remains to the downside. The lower support at 0.9461 will be the most likely downside target that will be tested over the week. For the week ahead, USDCHF is expected to be bearish.

Previous USDCHF Weekly Forex Forecast

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[FOREX TIP] USDJPY Weekly Forex Forecast – 24th to 28th Sept 2018

USDJPY Weekly Forex Forecast - 24th to 28th Sept 2018

USDJPY Weekly Forex Forecast – 24th to 28th Sept 2018

Fundamentals Outlook
The week ahead is expected to be relatively quiet for the most part. Data from the Eurozone will cover second tier data. German Ifo business climate will shed light on the business conditions for the Eurozone’s largest economy. In the U.S. the Federal Reserve’s monetary policy meeting will be the main event to watch for. The FOMC meeting is due for Wednesday. The markets have fully priced in a rate hike at this week’s meeting. Forward guidance will be crucial for the markets looking ahead.

The recent flat print in inflation is starting to stoke concerns on whether the Fed will be able to raise rates for the fourth time this year. The Fed Chairman, Powell will be holding a press conference later in the day. The ECB will be releasing its monetary policy meeting minutes later on Thursday. Given that there were no major policy decisions taken at the recent meeting, the minutes are unlikely to impact the markets much. From Japan, the BoJ’s core inflation data and housing starts will dominate the headlines. Data from Switzerland is quiet for the week ahead.

Chart set up:
The USDJPY currency pair extended gains for the past two weeks. However, the gains from last week showed that prices were losing momentum. By Friday’s close, the USDJPY was seen struggling to hold near 112.74. As a result price action fell to close slightly lower on the day.

Key support/resistance levels:
Support: 111.63; Resistance: 112.74

Commentary:
From a weekly perspective, given the failure to breakout above 112.74 is an indication that the USDJPY could be posting a correction in the short term. This means that the currency pair could be looking to correct to the lower support at 111.63.
This price level previously served as resistance and therefore is pending a retest. While we expect the declines to stall at 111.63 level, a breakdown below this level could potentially signal further declines. In the near term, price action is expected to trade within the said levels before more clarity emerges from the trend. For the week ahead, the USDJPY currency pair is expected to be slightly bearish.

Previous USDJPY Weekly Forex Forecast

The post USDJPY Weekly Forex Forecast – 24th to 28th Sept 2018 appeared first on Advanced Forex Strategies.



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[FOREX TIP] EURUSD Weekly Forex Forecast – 24th to 28th Sept 2018

EURUSD Weekly Forex Forecast - 24th to 28th Sept 2018

EURUSD Weekly Forex Forecast – 24th to 28th Sept 2018

Fundamentals Outlook
The week ahead is expected to be relatively quiet for the most part. Data from the Eurozone will cover second tier data. German Ifo business climate will shed light on the business conditions for the Eurozone’s largest economy. In the U.S. the Federal Reserve’s monetary policy meeting will be the main event to watch for. The FOMC meeting is due for Wednesday. The markets have fully priced in a rate hike at this week’s meeting. Forward guidance will be crucial for the markets looking ahead.

The recent flat print in inflation is starting to stoke concerns on whether the Fed will be able to raise rates for the fourth time this year. The Fed Chairman, Powell will be holding a press conference later in the day. The ECB will be releasing its monetary policy meeting minutes later on Thursday. Given that there were no major policy decisions taken at the recent meeting, the minutes are unlikely to impact the markets much. From Japan, the BoJ’s core inflation data and housing starts will dominate the headlines. Data from Switzerland is quiet for the week ahead.

Chart set up:
The EURUSD extended gains last week with the euro currency seen closing near the resistance level of 1.1797 – 1.1715 region. As price actions remains in a long term technical resistance level, we could expect to see strong gains emerging as a result on a successful breakout to the upside.

Key support/resistance levels:
Support: 1.1715; Resistance: 1.1797

Commentary:
In the short term intra-week outlook, the EURUSD is seen settling within the range of 1.1715 support and 1.1797 resistance. We expect some sideways price action for consolidation in the near term. However, the bias has clearly switched to the upside. Given the fact that the current price band has been a key level in the past, it will be interesting to see how price action behaves at the current levels. The expectation is for the EURUSD to breakout to the upside. This could potentially confirm the uptrend in price and could push EURUSD to form a bullish trend. In the event that the support at 1.1715 fails to hold, then we can expect a move lower. For the week ahead, the EURUSD is expected to be bullish.

Previous EURUSD Weekly Forex Forecast

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