WEBVTT 0 00:09.450 --> 00:15.090 Here we have Australian dollar against the United States dollar on a 4-hour chart. 1 00:15.270 --> 00:21.810 I have identified this downtrend line that connects thee lower highs. Of course in the space within 2 00:21.810 --> 00:28.590 the first two highs, I can not be sure that there's a downtrend, but after the price forms a lower high 3 00:28.800 --> 00:34.040 and then goes down again, I'm sure that the market is in a downtrend. 4 00:34.080 --> 00:36.220 How beautiful is this chart? 5 00:36.390 --> 00:42.720 This is a great example of how understanding candlesticks can give you a clear picture of the market. 6 00:43.410 --> 00:45.120 Here right on the trend line, 7 00:45.120 --> 00:49.640 we have a shooting star that inaugurates a new down move. 8 00:49.860 --> 00:55.460 I wouldn't have taken this one because I could not be sure that the price was in the downtrend. 9 00:55.620 --> 00:59.160 But look at this, again on the trend line. 10 00:59.160 --> 01:02.400 We have a first bearish engulfing pattern here, 11 01:02.450 --> 01:08.970 with a long upper shadow that is telling me that buyers failed the attempts to push the price over 12 01:08.970 --> 01:10.520 the trendline. 13 01:10.590 --> 01:16.710 Then a second bearish engulfing pattern here, again on the downtrend line. 14 01:16.890 --> 01:18.890 This is beautiful. 15 01:19.230 --> 01:26.130 I look like a kid recording this video, it is just because Forex trading has usually the tag to be 16 01:26.130 --> 01:30.590 a difficult topic, especially when we talk about technical analysis. 17 01:30.630 --> 01:36.620 So I'm happy to share with you this kind of approach to the market and I'm happy if this can help you 18 01:36.630 --> 01:40.740 to make your life easier when you analyze the charts. 19 01:40.800 --> 01:48.840 So coming back to our analysis, I actually opened a short position on this pair, right after this candle. 20 01:48.840 --> 01:53.900 If this candle doesn't look so clear to you, this pattern leaves no doubt 21 01:53.970 --> 01:59.670 and you could have opened a position at least after this bearish engulfing pattern. 22 01:59.790 --> 02:03.340 Let's analyze the position I have taken on the market. 23 02:03.510 --> 02:05.690 The entry level is quite easy. 24 02:05.810 --> 02:14.370 I want my trade right after this candle, so I took 0.7530. As you know I like to get my trade with 25 02:14.370 --> 02:17.370 a price that ends with zero or five, 26 02:17.460 --> 02:21.470 so I can calculate my stop loss and take profit faster. 27 02:21.900 --> 02:25.360 Now I have to decide where to place my stop loss. 28 02:25.380 --> 02:28.580 I want my stop loss over this trend line. 29 02:28.710 --> 02:37.530 So I decided that 0.7570 is a good level because if the price reaches my stop loss, my downtrend line 30 02:37.530 --> 02:39.830 is clearly not working anymore. 31 02:40.260 --> 02:47.760 So I have a risk of 40 pips and I'm going to draw my take profit line 80 pips below my entry level 32 02:48.000 --> 02:51.970 in order to have a risk to reward of one to two. 33 02:52.020 --> 02:55.830 Is this price too far from my entry point? 34 02:55.830 --> 02:57.350 It is not too far. 35 02:57.390 --> 03:03.840 The price has already tested this level in the past and we are also in a downtrend so I expect that 36 03:03.840 --> 03:10.730 the price can go even lower than this. Is the take profit too close to my entry level? 37 03:11.130 --> 03:18.650 Maybe yes, I can increase my take profit because as I said I expect the price to go lower than this level 38 03:18.840 --> 03:24.150 because we are in a downtrend and I expect the price to form a new low. 39 03:24.150 --> 03:27.170 I move my take profit by other 40 pips. 40 03:27.270 --> 03:32.100 So I have a risk to reward of one to three and this level seems fair. 41 03:32.100 --> 03:36.900 I think that the price can reach this line if the downtrend continues. 42 03:36.930 --> 03:38.830 So this was my position. 43 03:39.000 --> 03:41.670 Let's see what happened. 44 03:41.670 --> 03:44.030 Well, this is just amazing, 45 03:44.040 --> 03:47.430 I wish I could have trades like this every day. 46 03:47.490 --> 03:53.070 The price went immediately down and reached my take profit in about half day.