In financial markets, prices often move step by step, continuously, in succession. However, at some point the market has made leaps and bounds for various reasons, creating price gaps on the chart. Westerners call this Gap, Japanese call this Window. Windows, gaps or price gaps are the basic and very important concept that every technical trader needs to grasp the characteristics, understand the meaning and know how to use.

What is a window?

Window is simply a Japanese term for a gap. There are two types of Window: Window Increase (Gap increase) and Window Decrease (Gap decrease). This is a continuation pattern with an extremely simple structure, made up of two candles and in the middle of them a gap.

Characteristics of the Window

For the Rising Window model, we have the following characteristics:

  • Appears in uptrend
  • The bottom of the second day candle must be higher than the first day's top candle, which means there must be a gap between the two candles.
  • Usually 2 candles will be green (bullish candles), but the color of the candle is not important in this model.

The Rising window acts as a support area in an uptrend. The support here is created between the top of the first candle and the bottom of the second day candle. After the market creates a gap (Window), prices will often fall to “fill the gap” before receiving support and continue the uptrend.

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It can be realized that, after the pattern is formed, if the next candle is a bearish candlestick but cannot fill the gap, we have Upside Gap model Tasuki, is also a continuation pattern increase.

In contrast, the Reduction Window model includes the following characteristics:

  • Appears in downtrend
  • The top of the second day candlestick must be lower than the first day's candlestick, there must be a gap between the two candles.
  • Usually 2 candles will be red (bearish candles), but the color of the candle is not important in this model.

The Fall window is acting as a resistance area in a downtrend. The resistance here is created between the bottom of the first candle and the top of the second candle. After the market creates a gap (Window), prices will often rise to “fill the gap” before encountering resistance and continuing the downtrend.

After the bearish window pattern is formed, if the next candle is bullish but can't fill the gap, we have Downside Gap model Tasuki, is also a continuation bearish pattern.

The meaning of the Window model

What does this Window model tell investors?

When a gap gap appears, it shows that the sell orders are too weak before the buy orders, the buyers are dominating the game. For this reason we expect the market to keep going up after the bullish window pattern is formed.

Similarly, when a gap gap appears, it shows that the buy orders are too weak before the sell orders, the seller is dominating the game. For this reason we expect the market to keep going down after the bearish window pattern is formed.

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Actual example of the Window model

Below chart ETF Gold with 4 occurrences Window. In the first three patterns, price gaps created by two bullish candles. Particularly in the 4th occurrence, the pattern is created from a rising candle and a falling candle afterwards. In this example, at each of the gaps, prices return to retest support and then continue the uptrend.

Instruction to trade with Window model

Gaps on the chart are very important when technical analysis. If the Window patterns appear, treat them as support / resistance levels. In an uptrend, a gap gap plays a supportive role while in a downtrend, they play a role of resistance.

One strategy of trading with Windows might be to consider waiting for prices to return to check gaps and consider orders.

As for the Rising Window, we wait for the price to return to the gap, if the market can't fill that gap, we enter a buy order. Stop loss should be placed at the nearest bottom, profit taking should be placed at the overhead resistance levels. You should also be alert if the price does not rebound after having gone into the gap but also plummeted down, filling the gap.

As for the Window Decrease, we wait for the price to return to the gap, if the market cannot fill that gap, we enter a sell order. Stop loss should be placed below the nearest peak, profit taking should be placed in the support areas below. You should also be alert if the price does not turn down after having entered the gap but also increased sharply, filling the gap.

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summary

Window is a continuation model. When you see the Window model appear on the chart, be sure to check for additional confirmation signals using indicators or price action analysis. Good luck!


You have just read the article: “Window candle pattern – Window”

Author: Tin Nguyen

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