- TradeTalk Channel
- Support and Resistance
- Risk to reward
- Volume Profile
- How to Identify Traps
- Supply and Demand
- Fibonacci Levels
- Lesson on Entries
- MASTERCLASS FOR YEARLY TREND IDENTIFICATION
Trading. The Only Three Candlesticks You Need
If you are finding it difficult to navigate a plethora of technical analysis tools, hundreds of youtubers and twitter influencers, begin by simplifying your approach. Start here. Heath “will teach you how to analyze price for the most consistent and higher probable entries so you can become a better trader”
TradeTalk Channel
In summary, Heath explains the basics of candlesticks, a method of technical analysis used in trading. He discusses the importance of understanding the three types of candles: outside, inside and trending. He also explains the relevance of the candle wicks and taking out the highs and lows of the previous candles as it can provide valuable information about market sentiment and potential trend reversals.
Heath goes on to discuss that candlesticks are the method of technical analysis used in trading that display the high, low, open, and close prices of a security or asset over a specific period of time. They are made up of four key parts: the high, the close, the open, and the low.
A bullish candle is one where the opening price is lower than the closing price, while a bearish candle is one where the closing price is lower than the opening price. These parts are represented by the body of the candle, which is the area between the open and close prices, and the wicks, which are the lines above and below the body that show the high and low prices for the period.
Instead of studying the many different candlestick patterns and formations that exist, a simpler approach is to understand that there are only three types of candles: outside candles, inside candles, and trending candles.
An outside candle, also known as an engulfing or outside range candle, is one where the range takes out the entire range of the previous candle. An inside candle is one where the high, low, open, and close is inside of the previous candle’s range. A trending candle is one that maintains the same direction as the previous candle.
One important aspect of candlesticks is the relevance of the candle wicks. The wicks represent the highest and lowest prices of the period and can provide valuable information about market sentiment. For example, a long upper wick on a bullish candle can indicate that the buyers pushed the price up, but the sellers then pushed it back down, which shows a lack of buying power and a potential trend reversal. Similarly, a long lower wick on a bearish candle can indicate that the sellers pushed the price down, but the buyers then pushed it back up, which shows a lack of selling power and a potential trend reversal.
Another important aspect of candlesticks is the taking out the highs and lows of the previous candles. This can provide clues about the strength of the current trend and potential trend reversals. Candlesticks can be studied using different time frames, such as 15 minutes, 30 minutes, or hours, but it will only be in reference to the price range given in that specific time. Overall candlesticks provide a lot of information about market sentiment and trend and can be used to make trading decisions
Support and Resistance
The Best Way to Find Support & Resistance
In summary, Heath is discussing the concept of support and resistance in trading.
Heath explains that there are several different ways to draw support and resistance levels on a chart, but the traditional method is to find an area on the chart where there have been multiple interactions. He then goes on to explain his own method for drawing support and resistance levels, which is to use the last up closing candles for resistance and the last bearish candles for support.
He mentions that when drawing support and resistance levels it is best to use a weekly or daily time frame because these levels will hold the most weight on those time frames and then goes on to show examples of how to use his method on a chart, and explains that old resistance levels can sometimes become new support levels.
He also notes that when markets are choppy, it can be difficult to find clear support and resistance levels on a daily time frame and suggests that if we get a nice daily push lower and a close below we can look for this to hold as possible resistance on another test of it and points out that when the markets are choppy, it can be difficult to get a clear understanding of the support and resistance levels.
Risk to reward
How to Identify Good Risk to Reward Set Ups
In this video, Heath is discussing the concept of risk to reward in trading and using the example of Bitcoin to demonstrate how to identify good risk to reward set ups on a chart. He begins by explaining the importance of understanding support and resistance levels, as these are key areas to look for potential trades. He also mentions that the best time frames for identifying these levels are the daily and weekly charts and then goes on to explain that when looking for a trade, it is important to consider the direction of the trade and the potential reward versus the risk.
He uses the example of a current situation where Bitcoin is testing weekly support and advises that it is not a good idea to take short positions in this area as it is a support level. In order to identify a good risk to reward setup, one should look for areas of resistance and target the daily high or low depending on the direction of the trade. The speaker concludes by emphasizing the importance of understanding how to identify high probable regions to take trades and how to base the potential stop loss or risk against the potential profit or target.
In the second half of the video, Heath continues to discuss the concept of risk to reward in trading and provides an example of a trade setup that did not work out. He explains that he was looking for a trend to continue to the bullish side, as resistance was taken out with a close on a certain day.
He then uses the bar replay tool to show the intraday chart and explain how they were looking for a potential setup to get long, and goes on to show the price action on the intraday chart and explains how he was looking for daily support and resistance levels.
However, he says that the trade did not look like a buying opportunity as it was too close to resistance and also explains that the risk to reward was not valid and if they had taken the trade, they would have been risking 1% to potentially make 0.65%.
Heath concludes by mentioning that they are only human of course and make mistakes, but it is important to learn from these mistakes in order to become a better trader.
Volume Profile
Volume Profile Do’s and Don’ts
Heath, is discussing how to use the Volume Profile indicator in technical analysis to identify consistent and profitable trading entries. He explains that there are different variations of the Volume Profile indicator, but his preferred one is the “Session Volume Profile” as it shows the most volume traded within the daily range. He also mentions that the “Visible Range Profile” is not useful in his opinion as it changes based on the number of daily candles on the screen, making it difficult to be consistent in analyzing price. He goes on to explain that the Volume Profile indicator is customizable and can be adjusted to fit the trader’s preferences.
The indicator shows the point of control, which is the area where the most volume in the daily range is traded, marked by a red line. It also shows the opening, high, low, and closing prices of the daily range, and the blue area represents buyers and the yellow area represents sellers.
Volume Profile is a technical analysis tool that helps traders identify the price levels at which the most trading activity has occurred. It is based on the idea that the more trading activity that occurs at a particular price level, the more significant that level is in terms of support or resistance. This is because the greater the volume at a particular price, the more buying or selling pressure is present at that level.
The Volume Profile indicator typically displays volume information in a histogram format, with the x-axis representing price and the y-axis representing volume. The most significant price level is typically represented by the highest point of the histogram, also known as the Point of Control (POC). This is the price level where the most trading activity has occurred and can be used to identify key levels of support and resistance.
Traders also use the volume profile to identify areas of high and low volume. High volume areas are considered to be more significant than low volume areas, as they indicate stronger buying or selling pressure. Low volume areas, on the other hand, can indicate weaker buying or selling pressure and may be less significant in terms of support or resistance.
In addition to identifying key levels of support and resistance, volume profile can also be used to identify trends, patterns, and market conditions. For example, an increase in volume can indicate a trend reversal or a change in market sentiment.
It’s worth mentioning that volume profile is not suitable for all markets, and it should be used in conjunction with other technical indicators and analysis. Traders should also be aware that volume data can be manipulated and therefore it’s important to use multiple sources of volume data to ensure the accuracy of the indicator.
How to Identify Traps
How to Identify Bull and Bear TRAPS in these Financial Markets
In summary, a bear trap is when a support level is breached but then the price reverses and goes back in the opposite direction, usually in a bullish trend. This is often used to draw traders into a bearish position, but the reversal shows that it is actually a trap. A bull trap, on the other hand, is when a resistance level is breached, but then the price reverses and goes back in the opposite direction, usually in a bearish trend.
Heath Discusses the concepts of bear traps and bull traps, as well as support and resistance levels in the financial markets. A bear trap is when a support level is breached, but then the price reverses and goes back in the opposite direction, usually in a bullish trend. This occurs when traders believe that the price will continue to fall below a certain support level, but instead it reverses and goes back up. The reversal is often used to draw traders into a bearish position, but the reversal shows that it is actually a trap. Traders who enter into a short position based on the belief that the price will continue to fall may experience losses as a result of the reversal.
He suggests using the close of a bullish candle on a daily time frame as resistance and the close of a bearish candle as support for a more objective approach to finding support and resistance levels. They argue that this method is more objective because it uses the exact price point of the candle’s close, rather than a subjective level, as a basis for support and resistance. He also recommends waiting for a close above resistance or below support before taking a trade, as this confirms that the price has breached the level and is likely to continue in that direction and advises watching old resistance levels for potential rejections, as the price may come back and test those levels before continuing in the direction of the trend.
A bull trap, on the other hand, is when a resistance level is breached, but then the price reverses and goes back in the opposite direction, usually in a bearish trend. This occurs when traders believe that the price will continue to rise above a certain resistance level, but instead it reverses and goes back down. The reversal is also used to draw traders into a bullish position, but the reversal shows that it is actually a trap. Traders who enter into a long position based on the belief that the price will continue to rise may experience losses as a result of the reversal.
Heath emphasizes the importance of being objective when identifying support and resistance levels, as well as waiting for confirmation of a breach of a level before taking a trade, and watching old resistance levels for potential rejections and recommends using the close of a candle as a basis for these levels, and using daily time frames to make sure that the trend is clear.
Supply and Demand
HOW TO IDENTIFY SUPPLY AND DEMAND
In this video Heath is discussing a method of technical analysis called supply and demand zones. He explains that supply and demand is a phenomenon that occurs in charts at turning points in price. He also mentions that this method is known as “Heath levels”.
The method involves identifying places on the chart where the last candle before a price reversal occurred, as this indicates that there was a change in the balance of buyers and sellers. He then goes on to explain how this information can be used in a trading strategy, specifically by following trends and looking for places on the chart where the supply of an asset briefly met with enough demand to cause a pause in the price. This is typically indicated by one or more green candles on the chart. He then gives an example of how this method can be applied to the daily chart of Bitcoin.
Fibonacci Levels
How can Fibonacci Levels Help in Trading?
Heath is talking about the use of Fibonacci tools in trading, specifically the Fib retracement and Fib extension tools. The Fibonacci sequence is a set of numbers that starts with 0 and 1 and each subsequent number is the sum of the two preceding numbers. The Fibonacci tools are used to find support and resistance levels, as well as targets for new all-time highs or lows. The Fib retracement tool is used to find specific retracements within a price range, and can be used to find possible correction lows in an uptrend or correction highs in a downtrend. The Fib extension tool is used to find targets for new all-time highs or lows.
He mentions four popular Fib numbers that the retracement tool focuses on, these are the 0.236, 0.382, 0.618, and 0.786. He also states that he does not use these tools often in his own trading and prefers to rely on his own understanding of support and resistance levels.
Lesson on Entries
Heath is discussing a trade opportunity that he identified in the Bitcoin market using technical analysis. He is specifically referencing two areas where he took entries (bought positions) on the Bitcoin market using the daily time frame. He is pointing out that there were multiple opportunities to take an entry and that this particular opportunity was good because it came after a trap was set (when the market dropped below a certain level). He mentions that he is using the 21 exponential moving average as a key indicator for when to take an entry and that in a downtrending market, it’s important to pay attention to whether the 21 exponential moving average is above price, as this can indicate whether the market is likely to continue to go down or rebound. He references the relative strength index (RSI), which is another technical indicator that he is using to determine when to take an entry and that he will be doing a deep dive in a video to explain these concepts in more detail.
He continues his discussion by talking about the importance of closing above or below certain levels on the chart, and how he used this information to make decisions about when to take an entry.
He says that he is using a two to one risk to reward ratio for his trades, which means that he is willing to risk losing 1% of his investment in order to make 2% (or 2% to make 4%). He talks about the importance of having a stop loss in place to protect your position, and how he moved his stop loss up to break even as the trade progressed.
He mentions that it’s better to close the week out without taking a trade as neutral than it is to close out the week in the red, and that traders should look for the highest probable scenario to play out. Overall, he is emphasizing the importance of paying attention to the chart levels and time frame and the use of risk management strategies to make successful trades
MASTERCLASS FOR YEARLY TREND IDENTIFICATION
MASTERCLASS FOR YEARLY TREND IDENTIFICATION
In summary, Heath is discussing various financial markets, including the stock market and Bitcoin, that the VIX (a measure of stock market volatility) may not signal the end of the bear market, and that the market may continue to be sideways for a couple of years. He also notes that there may be opportunity for trading within these ranges. He talks about the possibility of the stock market going lower until the first or second quarter, and that interest rate hikes may not be necessary for capital to rotate back into risk markets. They suggest that investors should watch the inflation rate and non-farm payrolls as indicators of the Fed’s future actions.
Heath is discussing his analysis and predictions for the performance of the cryptocurrency market. He mentions that he had previously warned his followers about a potential bearish reversal in the market for Bitcoin, specifically around the 55,000 to 50,000 area, due to changes in the Federal Reserve’s monetary policy. He had called for a short trade in March 2022, which turned out to be correct, and emphasizes the importance of identifying trends at the beginning stages of periods, such as the beginning of the month, quarter, or year. He notes that these are the times when potential ranges are set early, and the chart of Bitcoin’s performance in 2022 was very ugly.
He refers to Solana as his “dark horse” for 2023, indicating that he believes it has the potential for significant growth. He advises traders to stack between 4 and 12 dollars and mentions that as long as Solana stays above its yearly opening range, it can remain bullish, but if it falls below the yearly opening range, there could be problems. He also mentions that the weekly supply is holding for now, and that it will be important to mark the opening range and watch for the direction of the trend.
He says that he is still sitting in his USD JPY short and that there is no reason for him to close the position as it has not shown a change in trend yet and that he has already made money on the trade and that he will manage the position so that he cannot lose money. He also observes strange behavior in the market, such as a tiny candle with record volume and an increase in volume without a corresponding increase in trend growth, and suggests that this could potentially mark a turning point in the market.
He emphasizes the importance of analyzing the opening range and watching for the direction of the trend and mentions that he is keeping an eye on the level of 13,8 as a potential support or resistance level, but also points out that the level of 13,8 is a monthly, quarterly and yearly resistance, and it is a very important level to keep an eye on. He advises traders to keep all the things that he tells in a little folder or binder and watch the videos over and over again to better understand the market.
He advises traders to mark their opening ranges, be aware of potential liquidation zones.
