What You Should Know When Trading Candlesticks With Large Trading Ranges

Yesterday, I sent out some forex trading signals/alerts for you to watch out for. To really understand this post, you need to click that link you just passed and then come back to read this one because this post is a continuation of that.

Well, guess what?

All of those levels were hit today and the price behavior around them was very unusual except for AUDUSD which I managed to get a buy trade in on the second attempt(after suffering a 30 pips loss on the first attempt) which is running profitably at 50 pips profit as I’m writing this. I will post a chart of the trade later down below the post.



Well, if you watched the the first hour candlestick of the forex market open, you will know what I am talking about here.

The trading range that price moved during the first hour of the forex market opening was crazy!  I’ve never seen such large  candlestick trading ranges in a 1hr timeframe like this before to be quite honest.

Here’s what I am talking about:

For USDCHF, the range was 235 pips ( 3-4 days price move achieved in just one hour!)


So what did I do USDCHF  trade setup?

  • When I looked at USDCHF, I knew this was not a good trade setup. The downward trendline was intersected but later price came down to it like being attracted to a magnet.
  • The fact is that you can see the shooting star (bearish signal) on the 1st hour candlestick is a good sign but with a 235 range??? No way I am taking that trade.

For EURUSD the range was 103 pips ( an average of 1 day’s price move achieved within 1hr!)


So what did I do with EURUSD Trade Setup?

  • The fact that there was a very bullish hammer/pin bar (candlestick) bouncing up from the major support line was a really good signal  to buy.
  • In fact, this a really good trade setup exactly as I anticipated. The price only went down 20pips below the major support line.
  • If I had placed a buy limit order and placed my stop loss like 30-40 pips below, I would never had got stopped out and would have made 100 pips profit within an hour (but I did not do that).
  • But because I was watching the close of the 1hr candlestick, the issue I had was with a 103 pips range. If I took a buy trade, my stop loss would have to be something like 110 pips(huge!) and personally I don’t like that. So I did not take this trade.

For GBPUSD the range was 135 pips. (an average of 1 day’s price move achieved within 1hr!)


So what did I do with GBPUSD Trade Setup?

  • I saw the bullish pin bar/hammer candlestick of the first hr candle.
  • As far as all things concerned, it was a slightly good trade setup. Why I said “slightly good” because price moved about 82 pips below the upward trend line before heading back up.
  • But If I was to take the trade, my stop loss would have to be around 140 pips, which I don’t like, I passed this one.



If the 1hr candled has already moved the day’s trading range, what is the likelihood of price moving out of this range during remainder of that day?

Not very likely! That’s right.

So that’s why I do not like to take such trades when I see large trading ranges like what I have described above.



There’s 2 things you can do, here they are

  1. do nothing…setup is not good, forget it and look for another trade setup.
  2. or wait and watch to see what happens. Sometimes, price does something funny: wait and see if price will get back down to test the level again (or test the trendline again) and then if you see the candlestick signal, then buy or sell. That’s what I did with AUDUSD currency pair which I am going to explain below so you understand.


  • When I first saw AUDUSD when the forex market opened, it was heading up, about 20 pips away from the major support level 0.8066 after touching that level.
  • I was anticipating to buy at that level but I guess I was late.
  • So I waited to see what price would do next? Will it get back down to that major support level again???
  • It only made about 29 pips trading range during that 1st hour…which is not bad compared to the 3 currency pairs given above (eurusd, gbpusd and usdchf).
  • In the 2nd hour price went back back down to test again the 0.8066 support level again so I bought at 0.8063 and placed my stop loss at 0.8040 (23 pips risk), this was my first trade.


  • But price went all the way down past the major support level and I got stopped out with a  loss.
  • But I was not ready to throw in the towel yet(give up) so I waited and watched after being stopped out to see what price was going to do?
  • Will I see some sign that price is weakening? (Slowing down of downward momentum). Price was now below the major support level/line.

On the 9th hour candlestick after opening, I saw an inside bar(candlestick).

  • Inside bars reflect indecision and lack of momentum.
  • The next candlestick, the 10th hr candlestick was an inverse hanging man candlestick ( a bullish signal). That was my signal to buy. I immediately bought at market price.

So far this trade is going good. I’ve moved Stop loss to breakeven which means a risk free trade. I will wait and see  tomorrow how this trade pans out tonight. If my stop loss it hit, I will walk away with nothing but the good thing is I wont lose twice.


If a support or resistance level is broken/intersected does not mean its over…

Wait and observe the price action just after that level is intersected. Look for signs of price weakness.

The support or resistance level being intersected may be due to stop loss hunting as explained in this  post. After that, price often heads back up in the opposite direction.

That’s why you should stick around a little bit and watch the price action even though you can see the the level has been intersected already!

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