Effective day trading method #7 : Head and shoulders pattern combined with NR7 candlestick pattern

  • Price Pattern: If a Head and Shoulders formation is detected, we will wait and wait for the formation of a candlestick pattern called NR7 (this is the name of the pattern where the body of the candle has the lowest amplitude). in the last 7 sessions) appeared at the neckline.
  • Entry: We place a sell stop order slightly below the low of the NR7 candlestick. If after a few hours the pending order does not match, we will cancel the pending order.
  • Profit Target: This is a strategy based on a classic chart pattern, so we can use the pattern's price target estimation formula. We will calculate the height of the pattern and add (or subtract it from the break point).
  • Stop Loss: Stop loss is set so that the risk/reward ratio is 3:1 or higher.

Strategy example with USD/CAD currency pair:

After a clear Head and Shoulders pattern has formed, we wait for the NR7 candlestick pattern to appear. The NR7 candlestick pattern has formed with the bottom of the pattern located at 1.3800, so we place a Sell stop order at 1.3795, with a profit target of 1.3200 and a stop loss at 1.4000, we have a profit/risk ratio. is 3: 1.

Effective Day Trading Method #8: Triple Top / Triple Bottom Pattern with Inside bar candlestick
  • Price Pattern: If a Triple Top or Triple Bottom formation is detected, we will wait for an Inside Bar to appear near the bottom of the pattern (or neck-line).
  • Entry: In case the pattern appears as a Triple Top, a sell stop order is placed slightly below the bottom of the small candle in the Inside Bar pattern. If a Triple Bottom occurs, we place a buy stop order slightly above the top of the small candle in the Inside Bar pattern. If after a few hours the pending order does not match, we will cancel the pending order.
  • Profit Target: The take profit or profit target will be at the next support or resistance. We can also use the classic histogram pattern estimation formula - calculate the height of the pattern and add (or subtract it from the break point).
  • Stop Loss: We can set a stop loss such that the risk/reward ratio is 2:1 or higher.
Example of an inside strategy for the NZD/CAD currency pair

After the Triple Top pattern was formed in the area between 0.9400 and 0.9500, the Inside bar candle was formed. When satisfied, we place a sell stop order below the intraday low of 0.9056, with a stop loss placed slightly above the intraday high slightly above 0.9180. The profit target is 0.8600, giving us a 3:1 reward:risk ratio.

Effective Day Trading Method #9: Break support/resistance and create reversal candlesticks
  • Price pattern: First, we look for a significant break from support or resistance levels and wait for a pullback to occur. The price retracement should be stopped at the breakout point. Next, we look for a reversal candlestick pattern.
  • Entry: In the event of a breakout of resistance, we will wait for the corresponding bearish pullback and once the reversal candle is confirmed, we will place a buy stop order above its high. Conversely, in case of a break of a support, after correction and confirmation of the reversal candle, we will place a sell stop order below the low of the candlestick pattern.
  • Profit Target: Exit or take profit at the next support or resistance levels.
  • Stop Loss: We can set a stop loss such that the risk/reward ratio is 2:1 or higher.
Example of a strategy in the EUR/USD currency pair

After a strong break through the 1.1050 resistance, the price drop and consolidation above the resistance has now turned into support. After the price forms a reversal candlestick pattern (red arrow), we place a buy stop order on top of the reversal bar at 1.1141, with the target to take profit as the next resistance – located at 1.1400. The stop loss we place is a little below the bottom of the reversal bar located at 1.1040. The gain/risk ratio achieved is 2.6:1.

Effective Day trading method #10: Cup & Handle pattern with Inside Bar candlestick pattern
  • Price Pattern: If a Cup and Handle formation is detected, we will look for the formation of an Inside Bar candlestick pattern on the handle.
  • Entry: The buy stop order is placed slightly above the high of the Mother candle (big candle) in the Inside Bar pattern. If the order is not matched after a few hours, we will cancel the pending order.
  • Profit Target: Exit or take profit at the next support or resistance.
  • Stop Loss: We can set a stop loss such that the risk/reward ratio is 2:1 or higher.
Example of this strategy for Gold price (XAU/USD):

As we can see in this example, not one but two Inside Bar candlestick patterns formed inside the handle, which is a warning that the upcoming price movement will be significant, and it will happen soon. Referenced as the high of the highest candle of the two patterns, a buy stop order is placed at 1096, with a profit target placed around the next resistance at 1118 and a stop loss at 1087. gives us an estimated return/risk ratio of 2.4.

Effective Day Trading Method #11: Rectangle pattern combined with double top and reversal candlestick pattern
  • Price Pattern: This is a rather complex pattern consisting of two parts. In the first part, a rectangular pattern is formed. After that, the price breaks down, corrects up and creates a double top, we need to wait for a reversal candle to appear.
  • Entry: A sell stop order is placed below the bottom of the reversal bar. If after a few hours the pending order does not match, we will cancel the pending order.
  • Profit Target: Exit or take profit at the next support or resistance. This type of pattern usually generates huge profits, so we must try to catch a strong price movement and try to hold it for as long as possible.
  • Stop Loss: We can set a stop loss such that the profit/risk ratio achieved is 2:1 or higher.
Example for AUD/NZD currency pair


After the rectangle pattern formed, the price broke down. Then a double top is formed with a lower high and finally, we have a reversal bar. At that point, we place a sell stop order below the bottom of the reversal bar at 1.0955 with a profit target of 1.0500 and a stop loss at 1.1050. The reward/risk ratio this time is 4:1.