Yes, itis possible to analyze price charts without using any indicators. Here's the raw deal. by Solomon Chuama pen up & candlestick chart of any stock with no ~ indicatorsand analyze the price action on that chart fora certain period of time. This is known as price analysis using naked charts. You're using natural orraw” price movement of the market to analyze and make all your trading decisions. You can use this zaw price action analysis to trade any financial ‘market, whether itis forex, futures, or equities. The ‘market oscillation “footprints” that are left behind give you a clue to the market's direction. You're familiar with candlestick patterns. These patterns are a good way to analyze price action. A description of 44 osoier2017*Tochnicl Analy of STOCKS & COMMODITIES Which Bar Do You Like? Price Action Analysis Using Candlesticks some candlesticks ‘bar “Bullish & Bearish Candlesticks.” APPLYING PIN BARS Pin bars are referred to by other names in the candlestick world. For example, bearish pin bar is called a shooting star, gravestone doji,or inverted hammer. A bullish pin bar can be hammer or dragonfly doji. These patterns can be identified because they protrude significantly from the surrounding price bars. When they occur at the support & resistance levels, or at confluent levels, you can consider them to be relatively accurate setups. InFigure | youseeadaily chart of CADCHE Thereare three pin bars: a long tail pin bar buy signal, a pin bar buy signal, ‘anda pinbarsell signal. Inevery bullish pin bar reversal setup, the pin bar tail usually points down, which indicates rejection of lower prices or support level. This setup often leads to anupward move in price. The long tail pin bar buy signal ismore significantthanthe others. ‘Thisis because the longerthe ail, the more powerful the price rejec- tion. Ithelps to push prices in the ‘opposite direction. The next pin bar buy signal also pushed price upward, The pin bar sell signal is a bearish pin bar reversal setup, Where the pin bar's tail points up, indicating rejection of higher prices or level of resistance. This setup often leads to a fall in price. Notall long tail pin bars are going to work perfectly, which is why youneedto place your stop orders ‘when you act on one of them. FIGURE: How TO OPEN A PIN BAR TRADE AAs per the chart in Figure 1, you should be able to identify the bullish pin bars which require a buy order. You can buy CADCHF currency pairafterthe firsteandle- stick closes above the small wick (al) of the pin baras per the blue line. Similarly, in Figure 1,8 per the bearish pin bar, you can sell CADCHF after the pin bar closes as per the blue line, PLACING YOUR STOP. ON A PIN BAR In abullish pin bar, you place the stop-lossbelow the longercandle- wick of the pattern as per the red line. For the trade to work, do not use the exact high or low of the wick when placing the stop-loss but give additional room to avoid being caught up in the run, In a bearish pin bar, place your stop-loss above the longer candlewick of the pattern as per the red line. der od). SETTING PROFIT TARGETS IN PIN BAR TRADES. Setting a profit target is one way to exit a trade, Another way is through a stop-loss. One way to determine yous take-profit is to multiply the size of your pin bar by three. You can clos your trade if you spot another reversal candlestick while in a trending market. A third way is to close your trades at the next support or resistance level APPLYING An inside INSIDE BAR PRICE ACTION STRATEGY wr is a candlestick pattern that is made of atleast "TRADING FOREX LYING PIN BARS. Onis char of CADCHF, you nee ther are thee pn bars along al pin barbuy signal pin barby signa, rd n bar sl signal. Tho long tl pin bar buy signals more sigan han the thors, because the longer al tno mor powarulthe pc reectn. helps topush pices inthe oppestdecton. Tho pin taro signal is aboarih pin bar versa ot up, where tho pn bar's pons up inecatng rejection of higher pices Co lovel of eitance. Ti sl up ot leads foal pe FIGURE 2: THE INSIDE BAR I AN UPTREND. Inside bas roid visual evidence tho mart has contacts ard may be rex o reverse the cure end Here you can buy AUDNZD when the pice action breaks the uper level of he ise ba ange (Bue re). You sop-essShoud be lcsted below the lowest pnt fhe inde ba othe Buy two candlesticks. The first candlestick engulfs the range of the entire subsequent candlesticks. It is similar to a bearish orbullish harami candlestick pattern. The difference with an inside bar is that the highs and lows are considered while the real body is ignored. ‘The inside baris also different from the “engulfing pattern because the inside bar engulfs the entire range of the bar from high to low, whereas the engulfing pattern includes the ‘engulfment of the real body of the candle. Inside bars have the following features: + Itisa trend continuation signal. + They occur at major turning points and at support & resistance levels. They provide visual evidence the ‘ber 2017 * Teal Anal 9f STOCKS & COMMODITIES + ASESE PS eS 9 Bearish candlesticks include: ‘Shooting Str: Ihas an upper shadow and no lower ‘shadow but has a small body. Al the support level tis called an inverted hammer and atte resistance evel itis called shooting star. ts also called a pin br, Bearish Engufing Pattern: Thiscandestcconists ‘falar black realbody that enguls asmal wie rel ody inanuptend.Thesecondcandestckmustengut the prior candesck, and not necessarily shadow. ‘soe secondralbedy ftheergulingpatm shoud be the epposit colar af the first real body. Gravestone Doj: This consists ofan upper shadow, ‘pen, low, and close ator cose tothe session low. signals the reversal ofan uptrend Dark Cloud Cover Pattern: appears astwo cando- ‘sticks althe resistance level. Thelack candlestick will over SO and more of the white candtetick. nother words the blackcandlestickclose mustbsthe half way point ofthe white candlesticks rel body, otherwise a ‘bearish confirmation would be required. Hanging man: Hanging mans lke a hammer; thas litte or no upper shadow. The lower shadow is twice ‘the real body. It can be found atthe resistance evel ands also called a pin ber ‘Tweezers Tops and Hangingman: Twoozerstopsare ‘woormorecandletcklines with matchinghighs. Thay _are called tweezers because they are compared tthe ‘wo prongs of atweezers. Ina isingmarke,atweezer top is formed when te highs match, Bearish Harami Cross: A harami cross includes a ‘ong real body and a doj candlestick. A harami cross isa potent cross which wams that there would be a significant trend change. The harami ctoss is @ major reversal pattem unlike the regular harami pattern; this ‘is found in an uptrend, Bearish HaramPatter:tisfoundinanuptrendatha ‘osstnoolovel Thebodyotthfrstcandeisthasama ‘olcasthocurenttend. Thofrstbodycfthpatomis _alongbody the second boys sale. The open and ‘tose occurnsde the open and close ofthe previous ay Its presence inicates the rend is over. 46 + Osoher 2017+ Technical Anas of STOCKS & COMMODITIES Bullish candlesticks includ Hammer: This pattem has ite or no upper shadow. The loner shadow is twice the real body. It is also called a pin bar. Inverted Hammer:lthasen uppershadowandnolower shadowbuthasarealsmall body. Athe supporleveit iscaledaninvertedhammerbutattheresistancelevel its called Shooting Star. tis called a pin bar. Dragonfly Dol: thas alonglower shadow.The open, high, and oloso are near session's high. Whon a doj forms after a series of bulish candlesticks with long holow bodies, it signals that buyers are becoming exhausted Bullish Enguifing Candles: The candostcks are ‘ual nature. The white real body engulfs the black reel body wien the market i ina downtrend. The two candles must have opposite colors. Piercing Pattern: The candlesticks inthis pattem are ‘ualinnature. The white canclestckwilcoverS0%and ‘more ofthe black candlestick. The white candlestick ‘opens atthe lover ofthe black candlestick and closes above the midpoint othe blac real body. ‘Tweezers Bottom and Hammer: These are two mare candlesticks ina dounirend whore thoincivdual ower shadow ofthe candlesticks isthe same. They are not usually significant reversal candlesticks. Bullish Haram Cross: Haram cross includes along ‘eal body and a doji candlestick which wams of a signicant trend change. The Harami ross is amajor reversal atiom unlike the regular Harami pattem: his is found na downizend. Bullish Haram Pattern: Ths is found ina downtrend atthe support level. The body of theft candle is tho ‘same calor asthe curent trend, Tho first body of the Patter sa lng body, the second bodys smal. The ‘open and close occurinside the open andthe cose of ‘he previous day Is presence ncicates thatthe tend ‘could be over.market has contracted and may be ready to reverse the ‘current trend. + If the preceding period is a black candle, the inside bar must be white and vice *+ In an uptrend, each expan- sion candle will make a higher high than the previ- ous day. Then the inside ‘candlestick pattern shows the market has contracted. Similarly, in a downtrend, ‘each expansion candle will make a Tower low than the previous day. Then inside ‘candlesticks show the mar- Ket has contracted. HOW TO OPEN AN INSIDE BAR TRADE In the example provided in Figure 2, you can buy AUDNZD_ when the price action breaks the upper level ofthe inside bar range (blue line) Similarly, in Figure 3, you can sell GBPUSD_ when the price action breaks the lower level ofthe inside bar range (blue line). PLACING YOUR STOP-LOSS ON AN INSIDE BAR In Figure 2, your stop-loss should be located below the lowest point of the inside bar of the buy order (red Tine). In Figure 3, your stop-loss should be located above the highest point of the inside bar ofthe sell order (redline). Your profit target should be twice the size of your initial risk. PIN OR INSIDE? in bars work inal timeframes, especially in one-hour, four- hour, and daily charts, but for a price action trader, a daily ‘chart is preferable. However, when price action signals form (on the one- and four-hour charts that agree with your entry criteria, then you can trade them, Consistent profits can be ‘made by trading pin bar formations, especially at support & resistance levels. In other words, pin bar trading is more ac- ‘curate ifthe formation is clear, combined with solid support FIGURE 3: THE INSIDE BAR IA DOWNTREND. In 2 owrirens, ac" exransion cane wil mak alworlou than the previous day. Then inside carlosticks show the markt has cotaced. Youn ell GBPUSD when te price ac ton braks tho oer lvl of nie bar range ctuelin). Your stop-oss shouldbe lated above tn highest point of tered bof the al order (3 & resistance confirmation. The fluence added to a pin bar formation, the more accurate it becomes. (One good thing about inside bar setups is that they provide al evidence the market has contracted and may be ready to reverse the current trend. You can see an inside bar form uation signal or as a turning point signal. You can use both setups but the continuation signal is more reliable for new traders. have provided examples of charts for pin bars and inside bar candlesticks. The other bullish and bearish reversal candlesticks follow the same entry criteria, You can zoom in the chart for proper candlestick identification. Solomon Chuama has been working inthe fancial industry ‘for I6 years. Heisatraining seminar organizerand instructor ‘who tries to pass on to students his passion and knowle of forex trading. CChuama, Soloman [2016]. “Trade Using Pure Price Action,” Technical Analysis of STOCKS & COMMODITIES, Volume 34: July. 4IFX Trader (Metaquotes Software Corp) (ber 2017 * Teas Anas af STOCKS & COMMODITIES + 47