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Hello and welcome back to Cryptocurrency Trading Masterclass by wealthy education and this video, we're
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going to take a look at price action, trading with inverted hammer and shooting star candlesticks.
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So this is like the last video in the sense that it is really only one shape.
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It just depends on where it shows up.
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And this is the exact opposite of candlesticks you learned.
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And the last video it has the same rules can be either color in the body really doesn't matter.
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Can also be unchanged.
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That's even better.
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For the astute of you, you will recognize this as a.
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Gravestone dodgy.
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Slight difference, there is no peak through, that's what makes the difference between one of these
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and a gravestone does you.
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So really, at the end of the day, it tells you the same thing.
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It tells you the same thing about the psychology.
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And that's really what you're paying attention to.
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So what's the difference between the two?
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Well, shooting star is at the top of an uptrend.
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It's a it's a falling star out of the sky, it's a sign of negativity and like the.
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Hammer and hanging man, you take the trade on the break of the candlestick, in this case to the downside.
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You put a stop loss on the other side.
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Now.
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An inverted whammer.
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It's just simply this it is a hammer.
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Look ahead, put a little body here, but it is a hammer at the bottom of a downtrend on a break above
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the top of this.
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You would recognize this as a bullish sign.
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Now, why?
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Well, both of these show that the buyers are trying to come in and push the market higher.
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They fail and therefore.
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You sell off in the case of a shooting star.
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And the case of an inverted hammer, you're falling, you're falling, and then you go here, you try
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to rally in, the traders fail.
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And at this point in time.
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It looks very bearish, but what happens if the next day or whatever, they break the top of it?
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Well, anybody who's short in this area is in trouble.
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So it becomes a bicycle.
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On the other hand, if you continue lower, that actually is a continuation signal.
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So it kind of serves two purposes.
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In that case, you'd be looking at a downtrend, an attempt to rally and then a continuation.
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So it's like a continuation hammer in the last video.
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So let's take a look at a couple of examples and I'll walk you through.
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Our charter, bitcoin.
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You can see right here, it's a nice little shooting star.
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What does this tell us?
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Well, this tells us that we had been rallying for a while.
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We reached the previous resistance area and you will see these most of the time as support resistance
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areas.
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We failed to get above it and then we pulled back.
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So once you're underneath the bottom of this candlestick, it's a cell signal.
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You got your stop loss up here and then you aim for whatever.
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Now, in this case, you might have aimed for a support level.
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You know how you choose to trade it.
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Now, with hammers and shooting stars, a lot of times you want to see the Bollinger Band, see what
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they're doing.
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Yes, you did get overextended, so it makes quite a bit of sense.
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Your first target, B, the bottom of the Bollinger Band.
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So at the very least, you're probably looking at about a almost two to one risk to reward ratio, which
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is exactly what you want to see.
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This is an inverted hammer.
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Now, this is an interesting setup.
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And I picked this one because we had dual hammers.
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You may recognize this from the last video, but notice.
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An inverted hammer, the exact opposite.
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So this.
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Becomes.
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A three candle signal in the sense that this inverted hammer in and of itself is bullish if you break
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to the upside, but you also have the support underneath here.
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So, again, you kind of have to look at the what the story is that the market's trying to tell you.
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Here's an inverted hammer.
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And so is this one that just shows that the buyers in this case failed.
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But then the next scandal, they push it higher, found a little bit and then eventually broke above
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that.
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That shows real wherewithal and tenacity.
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That's probably the best way to look at when you get a broken inverted hammer to the upside or.
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Perhaps.
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A hanging man and shows in the last video shows tenacity by the Sellards, they are fighting and fighting
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and finding it shows that they are ready to put up a serious fight.
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The volunteer band, you can see that the hammers did break down below the inverted hammer, which became
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its own signal.
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You can see breaking above the top of the volunteer band in this little bit of a squeeze in the second
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inverted hammer shows that we are overdone.
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But look at that force.
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You're looking for momentum in this case.
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And then finally here in.
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Steller Lewins, you can see that the.
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Shooting star form here and here, showing signs of exhaustion.
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Now, why is that not a surprise?
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Well, it shouldn't be a surprise because we had seen so much in the way of selling pressure just above.
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So there's a couple of things going on here that you need to be aware of.
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Take a look at this nice rally here, pretty significant pullback.
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Nice shot here, but it's a lower high, so that adds more confirmation to a potential selling opportunity.
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The.
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Indicator's.
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You could put this this is your cross here, so we dipped.
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Down to here, and then we crossed again to go higher, but notice right here, we have crossed yet
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again to the downside that confirms it.
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Again, the resistance is probably the most important thing, quite frankly.
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But you can look at other indicators.
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Obviously, you can see that we tagged the top here.
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We almost tagged the top here.
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So we were getting stretched anyways.
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So it was already kind of leaning a bit lower while in Japan itself, not providing a signal, but does
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provide a sign that things are getting a bit stretched, certainly worth paying attention to when you
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look at it through that.
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Kind of prism, if you will.
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And then finally, you can just throw a moving average.
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So we'll put an Emma up.
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And this is a four hour chart, so you can do nine.
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You can also do 20.
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You can see that not only did we find support here, but as we started to drift lower, that suggests
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that we are possibly overdone.
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So going back to the nine.
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You can see how the shooting star formed the hammer form, so in a sense, you've got a shooting star.
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A neutral candle, a hammer, another shooting star, and then finally the breakdown.
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So regardless, you can see that there is a lot going there right at a resistance barrier.
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And I would not get too hung up on the exact pip.
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You're looking for the attitude in the market.
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You want to give it a little bit of room to breathe.
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You don't necessarily put your stop loss, for example, one tick or one pip just above the top of the
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candlestick.
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You want to give it a little bit of room?
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You know, you weren't really threatened there.
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But in this case, as you are pressing what should be resistance, you could even put your stop loss
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as high as that.
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Well, then you have to look for a target with your target.
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Well, maybe down here where we continue to see reaction in the market, that is still like a two to
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one risk to reward ratio again.
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There's a fine line between.
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Hanging on to every technical and a little bit of artistry, there's a little bit of both going on in
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trading and you have to be aware of that.
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That's why I don't want to I want to give you a framework, but I don't want to give you.
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Cut and dry, you know, if it grows three ticks above the top of this candlestick, you have to get
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out because that's not the case here, as you can see.
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So you can see that these candlesticks are very reliable, like the ones that I showed you with the
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Hammer and the Hanumant, they're just the exact opposite.
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So that would be expected.
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In the next video, we're going to talk about a triple candlestick pattern called three white soldiers
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and three black crows.
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