The High Close Doji Trigger
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The High Close Doji Trigger The High Close Doji Trigger www.personsplanet.com by John Person The High Close Doji Trigger here are many trading methods one can levels especially when Dojis appear. The key is watching employ to actively trade including various for confirmation for a transition to take place and to act mechanical trading systems and manual when there is a shift in momentum. We see a specific Ttrading tactics. The constant changing of conditional change take place in the markets behavior, market conditions can require system traders to adapt namely the market makes a higher high but establishes and update the parameters for the trading decisions. I a higher closing high above a Dojis high at the Pivot often prefer the hands on visual approach which is more Point support level. of a manual method while employing mechanical risk management techniques. The visual approach is aided In this article I want to share with you in detail this one by the use of candle charts. The draw back is one must specific trade setup and what it takes to confirm the buy have a basic understanding of this form of charting to signal or what’s known as a trigger to execute a trade. begin with. The upside is once you learn the basics, a new meaning of how markets act may open up to you. This is the pattern I call the High Close Doji or the HCD method. It has dimensions of specific criteria that need It amazes me that candle charting was one of the first to fall in place, therefore helping to eliminate and filter forms of tracking commodity prices some 400 years out false signals. It is a simple and basic approach that ago, today it has become more popular, however, is a high probability winning strategy. relatively few Futures traders implement it in their analysis. The myth surrounding this method is that This setup may help you improve your trading it is a highly complicated means of charting. The fact performance and allow you to develop a consistent is it is a relatively simple method and enhances the winning trading strategy. Consider this your own visual effects in charting. Candle Stick Charting is a personal trading system that is based off of proven basic building block method that immediately shows and powerful techniques. For a moment I want you a trader the important connection between the four to envision the concept of epoxy glue, it requires two most important aspects of price analysis. That is the compounds. Separately they are not very reliable or in relationship between the Open, High, Low and close fact a very strong bonding substance. However, when of a given session. It involves colors to differentiate the combined, a chemical reaction occurs and forms an relationship between the open and close referred to as amazingly strong and powerful bond. the real body, it acts as an immediate way to illustrate Using the methods of Candlesticks with Pivot Points and help identify the current markets environment can give you that same result if you know what to look and the current time frames acceptance or rejection for. The implementation of longer term analysis using of a specific support or resistance level in a clear visual Pivot Points will give a trader a fantastic means in which manner. If for example, on a given trading session prices to anticipate a point from where a trend change could move higher from the opening price, and close near the occur, thus helping one to not only prepare but to act highs, it shows strong buying interest. If after the open on a trade opportunity. the market trades up establishing the high and then fails, the distance formed from those points of interest The setup: is called the shadow, which clearly shows rejection from that high price level. One can implement this set-up using different time frames besides daily analysis. You can include weekly There is one more formation, called a Doji where there and even monthly Pivot Point calculations. Take for is no main real body formation as the market closes at instance the Weekly numbers. They are compiled from nearly the exact level from where it opened. That is the the previous weeks High, Low and Close. This method focus of this article of analysis after calculating the numbers will alert you In my Book “Technical Trading Tactics: How to Profit well in advance of a potential Support and or Resistance using Pivot Points, Candlesticks and other Indicators” level. If you have your calculations figured out on the I demonstrate many powerful ways to anticipate close of business on a Friday then you are prepared support and resistance levels. The most reliable and before the weekend starts and now have a general common method used to determine those levels is guide of what may be the next weeks potential High, the mathematical based calculations from Pivot Point Low or both. Analysis. Through the years I have noticed that Doji In the setup process you heighten your awareness to formations form more often than not at these pre- enter in a long or short position against predefined defined levels. That is the focus we want to concentrate levels and wait for the trigger or market signal at those on. The markets behavior at support and resistance levels. by John Person www.personsplanet.com The High Close Doji Trigger It can not only help you define or identify the target mouse to establish an entry in the market and establish area to enter but also what you wish to establish as a position. your risk objective. Another event that occurs with this setup process is you now can “set up” your orders to The chart below magnifies what you are looking for, buy on your trading platform with the selected contract notice once the market closes above the Doji’s high we amounts. In other words, prearrange the commands see an immediate reaction of positive momentum and on the electronic order ticket. Now all we need is a continuation of higher prices. confirmation so you can pull the trigger or click the That is what we are focusing on especially after a Cross, Bullish Piercing Pattern, A Bullish Engulfing decline in price and when the market approaches a Pattern or my favorite, but in most cases we want to predetermined support level based off of the Pivot act on a High Close Doji pattern. This pattern works for Point Calculations. most markets including Stocks, Forex and Futures. This is a high probability intraday trading pattern however it Trading Rules for the HCD setup: works very well for position trading. There is a higher frequency of patterns that develop for intraday trading. When the market approaches a key Pivot Point, buy on the close or on the next open once a new closing high is This pattern develops on various time periods, however made above the previous bullish reversal candle pattern I do not use less than a 5 minute time period. My especially a Doji formation. favorite day trading time frame is using both the 5 and the 15 minute period. This helps me to catch trend runs Place your initial risk management stop below the low as they occur in the market. of the lowest low point of the bullish candle pattern. This can be on a Manual Stop Close Only basis. The example below is the CBOT electronic Gold contract taken from September 28th 2005. The first dimension Exit the trade on the close or the first open of a candle we need is the Pivot Point calculations. So we take that makes a lower closing low after a prolonged the prior days High, Low and Close and applying the uptrend. formula we derive at 466.50 as the first Support level known as S-1. Notice the price action at the support One can use a “Filter” or back-up process to confirm the level. The Doji Forms at the S-1 and two times periods buy signal against a major Pivot Point number such as a later, an engulfing green candle forms, which signifies bullish convergence stochastic pattern. the market closed above the open. Notice that it also closes above the Doji’s high. A bullish Candle pattern can be a Harami, Harami Doji www.personsplanet.com by John Person The High Close Doji Trigger I want to illustrate the flow of the market price action, closing highs as defined by green candles, all the way up notice we never see, until the end of the trading session, just past the daily projected pivot Point R-1 of 472.50. prices make a lower closing low. The sequence of events This is a great example of a HCD trigger that results in a that transpire is higher highs, higher lows, and higher 6.00 dollar gain in Gold. In case you were wondering if this set-up can be applied to Forex markets the answer is yes. This next chart is a spot FX British Pound from September 30th. If you apply the Pivot calculations derived from the prior days data you will have a predetermined support of 1.7568. Notice how the market bounces around and then the Doji forms. The trigger to buy initiates once the Green candle closes above the Doji high and the same sequence of events takes place, higher highs, higher lows and a continuation of higher closing highs all the way up until we hit resistance at the R-1 of 1.7680.