Following on from Chart Types Part 1.
Time Stamps
3:20 – WTC/BTC
- Mike likes this altcoin from a longer time perspective
17:32 – TREND REVERSAL
- A really nice chart type
- Can be found on Exo Charts
- Trend reversal candle consists of a mixture of the Range chart and the Tick chart
- There are two types of bars in one chart
- Tick trend/trending bar
- Tick reversal/reversal bar
- If you select for instance a trend rev 78-48, the first number refers to trending candles. There will be a new trending candle created every 78 ticks (39 dollars). The second candle is a reversal candle. A new candle gets printed every 48 ticks in the opposite direction of the previous candle. So basically, large candles are trending candles and small candles – possibly with the wick – are called reversal candles.
- Wicks in this type of chart are different and it is important to understand them correctly so that you can read the chart correctly.
- In these charts wicks are called shadows
- In a trend rev chart, wicks are always directed against the candle direction. So, there can never be a red candle with the wick to the downside and there can never be a green candle with the wick to the upside. This is useful because you can see where the price is attempting to go but failed to stay.
- The good side of this type of chart is that it removes noise.
- These candles are good to see clearly if the price is consolidating or trending and also, it is easier to read horizontal support/resistance levels.
- When you know how to read you can combine them with reading volume, delta, it is easy to spot S/R levels etc.
32:26 – AN EXAMPLE
- A very nice example of how reading this chart helps you spot reversal easier.
- Upon approaching a key level there was a reversal bar – price tried to push up but the reversal candle indicates reversal (with trapped traders)
36:58 – BTC TA
44:57 – Q&A
- When the reversal candle is forming it can have a reversal wick on both sides but when it finally forms, the wick can only be on one side.
- Keep in mind reversal candles can also be printed in ranges or at the key levels
- Big wicks indicate large orders
- The higher number you use, the higher the TF that you are looking at
- You have to use other tools/indicators for confluence
- If price is pushing up and forming a red candle it indicates a reversal candle but if there is a positive delta in that candle it is contradicting so you have to be careful. In this case, there will either be a reversal or the price will be ranging more.
- When there is big volatility Mike uses higher trend rev charts but in general, he uses whatever looks best for him in the given moment
- When the candle is forming it is difficult to see where the POC of a candle is. It is best to wait until it is formed completely or use the lower trend rev chart.