Welcome back to Alpha drop. My name is Ron and today it's a very exciting day. Crypto is alive, it has been pumping. We're going to be looking at the chart. So guys, this is a very good lesson to learn about order blocks. There are many different kinds of order blocks, and the one that is a very reliable continuation pattern for me is called something called a three bar pattern. So this is a bearish order block. What you're essentially seeing is a red igniting candle, then a green retest candle, then another impulsive candle which finishes the pattern.
The trick here is you need to validate the order block, and what you don't know is that there's an entire range playing out inside that order block. You're not just looking at one time frame, you're going to be looking at multiple time frames. But the trick is to know that the middle candle is never bigger than the first candle, alright? Because what's happening is, if you zoom in on the low time frame, here there's an entire pattern playing out inside this order block. So, usually, if I look at the one-day time frame, I like to zoom in to the one-hour time frame. So, there are multiple ways to do this. If you're looking at the weekly, if you spot an order block on the weekly, for example, for BTC, there's an order block here, green-red-green. So, the bullish three-bar pattern order block is green-red-green, because there's an entire range being played here.
There are usually two options that I go for. The first option is I would buy on the retest, but this is very risky because the pattern is not being played out. You don't see the third candle playing out. Unless you can see the future, you're not going to know that this is actually a three-bar pattern. So if I go for that first option to enter on the retest, I would usually DCA and put my stop loss just below the range, or in this case, because this is a short, just above the range high. But if it's a long, I would put it just below the range low.
Looking on the weekly, you can see this is a very bullish order block for Bitcoin that happened in February. You have the igniting candle, you have the retest, then you have the igniting candle. The trick here is just by using this strategy, can we identify if there's any new order block coming in on the weekly? So far, not really. But this is actually very interesting because this is another three candle that involves the middle candle being the Doge. You can see this is a very long wick that absorbed a lot of sell pressure. This can also be an interesting continuation looking for the upside, so you need confluence to confirm that this is indeed a bullish pattern. But this is not one that I'm good at identifying and confirming that it is indeed a pattern being played out. But this three-bar pattern is one that I have used for the past year and made a lot of money on Futures, and it's just really that simple.
To play the right, bear in mind that this is not a guarantee that price will go where it's supposed to go. This is just a relevant structure for you to identify, and if you've identified that structure, there are definitely tons of opportunities for you how you want to play it out depending on your trading style. If you're a swing trader, if you're a scalp trader, you need to know what your risk management is going to be. Okay? Alright. So the exercise for you guys is to just look at charts. If you have time, if you really like trading, identify these order blocks, study them, and study why there are certain factors that add confluence to that order block. For me, that strategy of the retest is just very plain and simple for me because it's just structure-wise. I don't really need volume profile to add confluence to it, I just trade off of structure, keeping it very simple. How I mitigate my risk is obviously risk management, how much I'm willing to lose on that trade. You need to be a good loser in order to be a good winner. I've learned that the very hard way. Oh yeah, that's important, very important.
You need to be a good loser if you want to be a good winner. Smash that like button, subscribe to the channel. And if you don't have a buyit account, you can sign up with our referral link down below. There's a $30,000 deposit bonus as well as a $20 USDT sign up bonus so you can start trading immediately. Alright, guys! Smash up the like button, subscribe to the channel. One more time for good luck.
Q: What is a bearish three-bar pattern in order blocks?
A: A bearish three-bar pattern in order blocks is a reliable continuation pattern characterized by a red igniting candle, followed by a green retest candle, and then another impulsive candle to complete the pattern.
Q: Why is it important to validate order blocks with an internal range on various time frames?
A: Validating order blocks with an internal range on multiple time frames helps confirm the pattern and provides a deeper understanding of the price action within the order block. It is essential to ensure that the middle candle is never larger than the first candle to maintain pattern integrity.
Q: What are the trading strategies that can be implemented within order blocks?
A: Two common trading strategies within order blocks are buying on the retest and placing stop losses strategically. Buying on the retest can be risky if the pattern is not fully confirmed. It is advisable to Dollar Cost Average (DCA) and place stop losses above or below the range depending on the trade direction.
Q: How can one identify and trade continuation patterns for future gains?
A: Identifying and trading continuation patterns for future gains involves utilizing strategies like analyzing weekly charts for bullish or bearish order blocks. Confirmation of patterns through confluence and understanding the significance of key candles like the Doge candle can help in predicting potential price movements.
Q: How can understanding order blocks and practicing risk management enhance trading skills?
A: Understanding order blocks and practicing risk management can enhance trading skills by providing a structured approach to identifying trade opportunities. By focusing on risk management and studying order blocks, traders can make informed decisions and improve their trading performance.
Q: How does the Alpha Drop community encourage learning and engagement in trading?
A: The Alpha Drop community encourages learning and engagement in trading through educational content, referral bonuses, and a supportive online environment. By emphasizing the importance of risk management, continuous learning, and community engagement, Alpha Drop aims to help traders improve their skills and achieve success in the market.
