1. Alternating Colors

The market is creating alternating bullish and bearish candles (green-red-green-red -...), they are the same size, one after another. Below you see an example of a EURUSD Daily chart where there was a period of lack of clarity.

Such alternating colors are signs of strong hesitation. At this point, anything can happen.

The market can go in any direction with little or no warning.


2. Railroad Tracks

Railroad Tracks is a set of 2 candles next to each other. They are longer than average and come in different colors. The market rallied (fell) sharply and then returned immediately. This is often fundamental or news. We made mistakes by market participants. From here, things can get trickier, more difficult.

Railroad Tracks can also mess and jam your technical indicators, your support and resistance levels, your trade style, and where you place your stop loss. Many times Railroad Tracks will cause you to place a large stop loss with uncertain entry points.


3. Wicks - the Centipede:

There is a scenario where you will face an obscure market with long long tails forming on both ends of the candle. The market rises and falls very quickly. This goes on all the time, and at this point any method is crazy.

These candlesticks will resemble the legs of a centipede. During this period, the market can go up, down, or sideways. In any direction, the market remains indecisive. The bear and the cow were still fighting and they were equally strong. It is not known which one will win, as either can lose.

The tail of the candle forms short highs and lows and is sometimes indistinguishable.


4. Saw Tooth:

The saw tooth is a market condition where the price is moving in a very narrow range, not forming a clear high - low, but still moving.

A serrated area is a collection of candles that have no effect at all. You will have everything from small doji to long engulfing candles, spinning tops, ... Quite coincidentally, nothing cool either.

Very difficult to trade and will likely make you hit your stop loss before taking a profit.


5 / Sideways:

You will discover sideways markets before and after announcements, news, and depending on the timeframe you are trading. It lasts throughout the day or throughout the session.

A market where sideways moves sideways and makes the candle very small, cannot identify any specific pattern. When the price is in this narrow zone, the indicators will give false signals, so there will be many false divergences but absolutely nothing.

In the example below, you see the USDCHF is completely sideways. At this point, the market will have no war between the bulls and the bears, they are already on picnics and campfires are over. You can try provoking them by placing a buy or a sell order, but they just ignore you.

In the end, the party will be over, one of you will say something unpleasant and the fight will take place, but when this happens it's difficult to determine which one is on top. Can only wait.


6. Shark Tooth:

This state is quite easy to see when you see it on the chart. The market creates low peaks that are both fast and pointed. The price went up and down very erratically and the highs and lows were quite close together.

"Long and pointed" are keywords to describe the Shark Tooth market.


7 / Long Entry Candles:

The set up is perfect, the divergences are clear and the trendline is great, you did a good job of finding a setup and waiting for it to take shape. Eventually, the price moved up the trendline, but the Long Entry Candles, twice or more than the length of the average nearby candles!

Do we trade?

Not for me. When you see a bigger candle than usual, your stop loss will be very far away, and the tree should probably have gone to its full potential.


8 / Lack of Wedge formation

Wedge formation, it's as Trendline divergence. It is a beautiful picture. When the price is bullish, it cannot move through the trend line, indicating a lack of momentum. If this wedge does not form, I believe there is still strength in the trend and will wait for another wedge formation. Below is an example of the classic wedge formation.


A wedge pattern is depicted when the upper and lower trend lines are not parallel. If you line these two lines, they will intersect at one point. Conversely, if they do not intersect but parallel or apart, it is no longer a wedge-shaped pattern. The example below shows a split of trend lines rather than crossovers. A no wedge. Without a wedge, the upper and lower trend lines paralleled and did not form formation.


This seems like a lot of other situations where you shouldn't trade.

Fortunately for us, these don't always happen. The market moves in a way that has far more opportunities than the impossible to trade examples in this guide.

It's important to know when the market is bad. When things go wrong, it's wise to just sit back until everything is normal again. And don't forget one important thing - Money Management.

There is nothing wrong with not trading in turbulent markets. Don't confuse trading when the market is bad with uncertainty or fear, that's not the case at all. Sitting out bad markets is the best position you can take as a trader.