In this important article, I will be discussing about the broadening pattern in the candlestick chart of forex market. After understanding this pattern you will be able to identify how big players hunt stops of retail traders? We will not be able to trade this forex market until we will not know how market works? How market makers hunt stops of retail traders? The only way is to learn their way instead of relying on a lot of useless mt4 indicators.
Before progressing further let me tell you that broadening pattern is not a trading strategy or profitable forex strategy (you will find this keyword on most of forums). And this is also not an ascending broadening wedge pattern or a descending broadening wedge pattern. I will call this pattern only broadening pattern. Broadening pattern will show us how market makers hunt stops. This will make it easy to anticipate price targets as well as to avoid stops. See the image below. Just an overview to make it easy to understand later.
Broadening Pattern Formation
Before Origin of broadening pattern there will be a big candle (Like marubozu candle). In reality big candle refers to supply in the price or demand in the price. After big candle broadening pattern will start. First of all, market will make one Low and one High in the price chart. Referring to chart, Then price will break Low of the price. Now a Lot of traders will put sell orders with stoploss above last high. After breaking low, instead of going short price will turn upward and break the high of price. Traders will get stoploss.
Instead of selling again more traders will buy thinking of a real reversal in the price with stoploss level below the last low of the price. But market makers will bring the price down. Price will break last low again and traders will get stoploss. After two consecutive stop losses, Psychological issues will overcome them and they will start shifting strategies again or trade without stoploss. These are biggest mistakes of newbies and 90% of traders left forex within first two years because of psychological issues. Instead of learning forex by practice, they rely on indicators or foolish charts full of indicators. Let me show you live chart examples.
By zooming out more
Pattern within a Pattern
Price will keep on breaking highs and lows (in short stop loss hunting). There will be many broadening patterns within a single broadening pattern. We should keep it simple instead of making it complex. We don’t have to look for every broadening pattern. Just look for one clear pattern and synchronize it with higher timeframe broadening pattern. By doing this you will be able to get target of price. I meant to say that you will know that what’s price next target? Where to go ahead? What’s in the mind of market makers? For which level or target they are looking for?
Anticipate these questions using broadening pattern then apply you strategy. That’s all.
Tip: Synchronize higher timeframe broadening pattern with lower timeframe pattern (Like H4, H1 higher timeframes whereas m15, m5 lower timeframes).
Trading is not easy. Don’t keep on switching strategies. Trade with discipline after backtesting a strategy yourself in a proper way instead of finding strategies from internet.
How to backtest forex strategy?
- Open Trading history using tradingview bar reply function
- Take at least 100 screenshots of your setup from the history (Only with clean environment)
- Go through all the screenshots one by one
- Make rules again with good risk reward ratio
- From 100 screenshots, Now again pick only those with clear environment & clear setups.
- Make ideal setup in your mind
- Now again pick 100 screenshots from history of another pair by following your ideal setup requirements.
- Strategy is ready. Trade it on demo with discipline (I said with discipline)
Do some analysis first and then apply your strategy. That’s all. Broadening pattern will make you anticipate the price and will help you to do Analysis of any pair in forex.
In Forex Success Comes Overnight But After Several Years of Hard Work.
Note: All the viewpoints here are according to the rules of technical analysis. we are not responsible for any type of loss in forex trading.