Direct from the desk of Dane Williams.
Back again with another live trading update of my Master Candles strategy.
After focusing on Bitcoin a little earlier in the week, the price action really hasn’t been great for the strategy.
Bitcoin was actually the catalyst for yesterday’s how to filter Master Candles by size post.
Basically the market violently lurched down, printing what turned out to be a ridiculously HUGE Master Candle that could potentially take weeks for a trade to hit our take profit or stop loss level.
So let’s today turn our attention to Ethereum, a market where the same lurch down didn’t print a valid Master Candle, so we’re free.
I’ve already teased these setups on Threads:
But they deserve the further context that only a long-form piece of content can provide.
So yeah, let’s do this thing once again!
Trade 1: Master Candle with scouting wick (fade)
From my strategy:
If the breakout candle is the candle immediately following the lowest/highest wick or the breakout candle closes without triggering the breakout trade, then immediately fade.
Here you can see, the breakout candle closes outside of the top Master Candle line without triggering the breakout trade.
So it’s a fade.
I entered short just above the original scouting wick and targeted the opposite end of the Master Candle as my take profit.
Stop was 1:1.
The fact price was pushing into the $2000 psychological resistance level at the same time was a discretional element that could have also been applied here.
Trade 2: Clean Master Candle (fade)
From my strategy:
Fade clean Master Candles with no scouting party wicks, no matter what.
Next up you can see that the top of this Master Candle had no scouting wicks, making it clean.
This means that no matter what, it’s a fade.
As such, when price broke through the top of the Master Candle, I entered short, targeting the opposite end.
Stop again, 1:1.
This was a perfect example where price just had no momentum as it pushed through the short term resistance that the top of the Master Candle provides.
As such, price was subsequently rejected and my take profit was quickly hit.
Trade 3: Clean Master Candle (fade)
From my strategy:
Fade clean Master Candles with no scouting party wicks, no matter what.
Trade 3 was squeaky bum time as price flirted with my 1:1 stop loss.
But as the strategy says, momentum is normally not there when price breaks out of a clean Master Candle and the sellers were quickly halted in their tracks.
Price reversed and I got my 1:1.
Trade 4: Clean Master Candle (fade)
From my strategy:
Fade clean Master Candles with no scouting party wicks, no matter what.
Last up, this one is in a bit of a grey area.
So the Master Candle is actually the candle that meant we hit our take profit on the previous trade.
Whether you should ignore this one or take it is up to your discretion, but I included it in this review simply because it worked out.
It’s the same scenario where I faded a clean break out and targeted a return to the other end of the Master Candle.
In this case, my 1:1 stop loss was never in doubt and would have needed price to print a new lower low to be in danger.
The market just didn’t have the momentum required to do that and as such fading that breakout worked a charm.
Come and trade Master Candles live on Threads
Summing up, if you're in search of a simple and effective trading strategy that can be applied to various crypto markets, Master Candles could be the perfect fit for you.
Feel free to explore the #mastercandles tag on Threads and don’t hesitate to jump in on the discussion with your own setups.
Share your charts, engage with the community and don't be too shy to ask any questions regarding the live price action that’s playing out.
If you’re serious and have specific questions related to the strategy, I'm here to chat and help you out wherever I can.
For those of you itching to dive into trading but unsure of where to begin, Master Candles offer an excellent starting point.
Will you grab this opportunity with both hands?
Best of probabilities to you.