INSIDE candle….get ready
I love to look for inside candles on the charts. What is that? An inside candle is a candle that closes smaller than the previous candle. It means that price was consolidating, so a break above or below the inside candle can often be a larger move. Look at the EURUSD daily chart, there are inside candles all over the place during the past week. Last week my bias for this pair was up: the candle that closed Jan11 was an inside candle and the 5ema and the 20 ema were both pointing up. The next day candle, Monday, sure enough there was a 100 pip move up. Tuesday’s candle, another inside candle that closed down. Then, look out below! Wednesday’s candle was a huge down candle, 200 pips! Now, Thursday and Friday’s candles are both inside candles, consolidating after that big down move. So now what? The 5 and 20 emas are now pointing down or sideways. As long as price remains below the 20ema, my bias is now for further down. In fact, the lower bollinger band is near 1.4400, also the 100ema and near the 38% (1.4350) of the move up from last August. As an intraday trader, I will be watching for price rallies up, so that I can SELL and ride the wave down to the daily support area. Good trading!