The master candle is one of the strong technical analysis patterns that helps traders identify moments of market consolidation and prepare for potential breakout opportunities.
What is the master candle?
It is a large candle (whether bullish or bearish) followed by at least four consecutive candles that trade completely within the price range of that candle (i.e., the high and low of these candles do not exceed the highest and lowest price of the master candle).
How to trade using it:
1. Formation: Wait until the formation pattern is complete with 4 candles inside the range of the mother candle.
2. Breakout: Watch the price movement afterward:
· Breakout of the high: Buy signal.
· Breakout of the low: Sell signal.
Golden tips for application:
· Timeframe: Avoid short timeframes (under 30 minutes). Hourly and daily timeframes are more reliable.
· Confirmation: Do not rely solely on the pattern. Use it with support and resistance levels or other technical indicators.
· Risk management: Set stop-loss and take-profit points strictly.
Summary:
The master candle is an effective tool for capturing new trends after periods of consolidation, but its success depends on patience and using it within a comprehensive trading strategy.
