Trend Trading is a powerful technique but they appear only about 10% of time. So if you are a pure trend trader, then be ready to spend hours doing nothing. Even when you do catch a trend, you may still lose out as Trends can whipsaw. BUILDERFX uses trend tools in a market enviorment which is classified as trend markets. That is key. Once a market is classified as trending, we deploy trend tools which are described below.
We use candlestick patterns to identify trends and trade them profitably.
The hammer is a candlestick pattern that occurs after a correction in an up-trend. In the case of the DBS chart, hammers should appear at Buying Opportunity 1, 2 or 3. The lower shadow of the hammer must be approximately 2 times that of the body. The longer the shadow, the stronger the signal. It should have little or no upper shadow.
Remember, in the last few days of trading, the sellers have been stronger and pushed the price down. Fear is getting into the market and more sellers will be pressured to sell their positions.
A confirmation occurs if the next candle trades above the highest price of the hammer as shown in the image below. This will also be your entry price.
The inverted hammer works almost exactly like the hammer, just that it is inverted. It also occurs after a correction in the uptrend. The image below shows it,
As with hammer, inverted hammer requires a confirmation which is also your entry price.
Inside Day Breakout
This is a powerful trading pattern. In a trending market, when you have a day where buyers and sellers are nearly balanced and we paint a candle which is confined inside the previous days high and lows, its called as a inside day. If the next day price goes above the high of the previous days high, then its considered to be a BREAKOUT. BUILDERFX uses the pattern to monitor trends.
Outside Day Reversal
Even better than the Inside day pattern, is the outside day pattern seen more rarely than other patterns. When they do occur , they provide tremendous bullish or bearish trend pressures. This pattern is often seen at the beginning of a reversal and start of a new Trend. This pattern has one of the highest win rate in modern day trading and we rank it as the most profitable among all trading patterns. BUILDERFX uses it very efficiently.