Hello, one and all. Maybe you've noticed that there's a lack of content on financial literacy on the internet nowadays. If you're reading these lines, it's encouraging to see that you're getting closer to your financial freedom goal. I'm writing this article to contribute to your journey. However, it's important to remember that the information presented here is for educational purposes only. One of the paths to financial freedom is trading in financial markets. To engage in trading, it's necessary to be familiar with various technical tools, and one of these tools is candlestick analysis. In this article, I've delved into the "Low Price Gapping Play" candlestick pattern, which is part of candlestick analysis.
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| Low Price Gapping Play Pattern |
- Topic: Low Price Gapping Play
- Type: bearish
- Trend direction: continuation
- Opposite pattern: High Price Gapping Play
What is the "Low Price Gapping Play" Candlestick Pattern?
The Low Price Gapping Play is a continuation candlestick
pattern in a downtrend. This pattern is observed in a bear market. Sellers initially
push prices lower and then take a break after a while. This pause leads to a
hesitation in the price decline. Following the pause, a downward gap forms,
indicating that sellers are regaining strength. They then resume moving prices
lower. This sequence results in the formation of the Low Price Gapping Play
pattern.
Structure of the "Low Price Gapping Play" Candlestick Pattern
The Low Price Gapping Play candlestick pattern occurs when
the overall market trend is downward, and it predicts that this downward trend
will continue with the formation of this pattern. Low Price Gapping Play is one
of the Japanese candlestick analysis formations consisting of various
candlesticks. The structure of this pattern is as follows:
First Bearish Candle: The first candlestick has a long body
and appears as a downward red candle.
Several Small Candles: After the large red candle, several
small candles form. These small candles can be in different colors. This
situation leads to the formation of a consolidation zone.
Gap: After several small candles, a downward gap opens. This
gap is often caused by news or market impact.
Continuation Bearish Candle: Following the gap formation,
the downward movement continues, resulting in a long-bodied red bearish candle.
This movement indicates that the downtrend is continuing.
In conclusion, the formation of the "Low Price Gapping Play" indicates a downward pressure on prices, which may indicate that the current downtrend will persist. The formation of this pattern is generally considered an indication that the downward movement in prices will continue and that the current downtrend may strengthen.
Trading with the "Low Price Gapping Play" Candlestick Pattern
Now we know that the Low Price Gapping Play is one of the
patterns signaling the continuation of a downtrend. If we observe a strong
downward trend in the price chart, it may present an opportunity to open a
short position. However, while this pattern signals the continuation of a
downtrend, it's important not to rely on it alone. It is necessary to verify
with other technical analysis tools and consider fundamental factors. For a
safer approach, it may be preferable to wait for the price to reach a resistance
level or trend line and then sell.
Entry (Sell): The closing level of the continuation bearish
candle (last candle of the pattern) can be considered as the selling point. As
a more aggressive approach, the closing level of the first candle below the gap
can also be considered as the selling point.
Stop Loss: It is possible to place the stop loss order above
several small candles observed in the pattern structure.
Target: It is recommended to consider the risk/reward ratio
and set the target level accordingly.
Below is an example trade I'd like to share, showcasing the "Low
Price Gapping Play" candlestick pattern on the SSR Mining Inc. stock
chart. This pattern clearly reflects a bearish market condition, where the
stock price gaps down, confirming and reinforcing the ongoing downtrend. It
highlights the continued dominance of sellers, adding further weight to the
negative sentiment surrounding the stock. By analyzing this candlestick pattern
on SSR Mining Inc., we gain a clearer understanding of how price action aligns
with the broader market trend, further illustrating the strength of the downtrend.
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| Low Price Gapping Play on SSR Mining Inc. |
A fact to recall: Trading in the Forex market always involves risk. Like all candlestick patterns, the "Low Price Gapping Play" pattern can also produce misleading signals. Therefore, it should be used in conjunction with other technical tools and verified before opening a trade. Trade with a small portion of your capital and do not overlook these small trades. Wishing you trading success!