For this example I will show a current AUDUSD short trade from today. It is one of my favorite techniques with a very high rate of success.


I begin by watching for candle formations on the daily time frame. Any time frame can be used depending on how long you wish to hold the position and the amount of gains vs stop loss you are willing to risk for the position. Obviously if you were to use this system on a weekly or monthly chart – your stop loss would have to be wider and your profit targets more substantial.

The charts shown are stripped down with no fibs, moving averages or trendlines and will concentrate purely on candle formations.


The first chart below shows the AUDUSD daily. After a very impressive rip higher the price action formed a Dragonfly doji followed by a bearish lower (black) candle. Dragonfly dojis often appear near the top or bottoms of trends and can be an indication of a change in sentiment, or a weakening in momentum. — I used the doji and the bear candle to draw my tradable range (magenta lines) at the top and bottom of the recent price action. – Please click charts to enlarge –




Once we are happy with our set up and our trade range has been drawn, we can switch the time frame. For this example I have gone straight to the hourly chart,.

Now we have identified a tradable candle structure on the daily we can watch the hourly candles for further bearish  clues – This came in a bearish engulfing candle. You can enter a short position at the end of the hour once the candle is confirmed, or wait for the following hourly candle to retrace upwards a little in order to try and gain a better price.

A technique I often use is to wait for a small retrace halfway up the bullish’bearish engulfing candle known as selling/buying the belly. In this example the price did rise to the belly (red line) and this was my short entry.

Here we have a choice….. We can either set our stop loss at the top of the trend (higher magenta line) or alternatively chose a very tight stop at the top of the last hourly swing high (green line).




As you can see by the updated (live) screenshot below this is working out to be a fine trade (free trade now) that offered excellent risk reward from the outset .


AUDUSD-H1 live chart


Horatio Dubsly

Pin It on Pinterest