Introduction
In the strat trading, we will use the three proven methods that work in the market, and we will surely know what happens during the formation of these patterns. And we call them the three universal truths in the strat.
When you open the chart of any currency pair, you will see many patterns and candlesticks on the chart. But you do not know that
what will happen next…
you are not sure about the activity of traders in the real market…
You don’t know about the future market direction…
But with the help of 3 universal truths, we can predict the market accurately because when these patterns form, then we come to know the future market direction. It also gives confidence to traders.
On the price chart, if you analyze like a pro trader then you will come to know that the market can move only in three ways. There’s no other pattern except these three. And these are three truths of the market. Because they will always form and the market will continue making these three patterns.
- Inward consolidation
- Up/down price trend
- Broadening formation
Besides these three above patterns, you will not see any other market pattern. So strat trading has simplified the trading by using these three market patterns by turning them into candlestick patterns.
Professional Trading has become much easier with the use of strat patterns.
Let me explain each market pattern one by one.
Inward consolidation
Before making big decisions, prices always move in the inward direction. This means that each successive price wave will be shorter than the previous wave.
On the candlestick chart, inward consolidation can be seen as an inside bar candlestick pattern.
After the breakout of inward consolidation, the market makes big trends.
The inward consolidation represents that the market is in the indecision phase. They are deciding the future direction of the market. That’s why an inward consolidation pattern forms on the chart.
The breakout of inward consolidation confirms the future direction. So we should also stay away during this consolidation and then after the breakout we should forecast the market.
This pattern is also an alert for trend reversal or trend continuation.
Up/Down price trend
It’s a known fact that trend is your friend. A trader should also trade during the clean price trending conditions to avoid stop losses.
An up/down price trend is a condition during which price will make higher highs or lower lows.
This is the condition during which we will open trades. After inward consolidation, the market mostly makes big bullish or bearish trends. When a bullish trend forms then we will have to open buy trades. On the other hand, when a bearish trend forms, then we will have to open sell trades.
This market pattern simply shows the dominance of buyers or sellers in the market. If the buyers are strong then the price will move higher and we will have to open buy trades only. If sellers are strong then the price will move in the bearish direction and we will have to open only sell trades.
I hope you will also come to know the importance of the second universal truth in the strat trading.
03 Broadening pattern
When the price expands, breaking the previous highs and lows, then a broadening pattern forms. I name it as a stop-loss hunting pattern.
In reality, when this pattern forms, the market makers are eliminating the retail traders and creating liquidity to start a big new trend. It can also be seen in the form of an engulfing candlestick pattern.
A broadening pattern is mainly a trend reversal pattern; however, it also helps to exit a profitable trade. I will explain it in detail in the next articles.
It is the 3rd universal truth of the strat trading.
The bottom line
The above are three truths of the market. Actionable signals, timeframe continuity, and broadening formation of each price pattern have a function, and it is always happening on the price chart. When we combine these three patterns, then high probability trade setups form, and those are the strat patterns.
This was an introduction to the universal truths of the market. However, I will explain each in detail so you can also master the strat patterns to become a better trader.
If you have any queries, please remember to ask me in the comments below.