Did you know many people lose money by chasing high? Following the rising wave is a good strategy, but you should learn about the microstructure.
What is microstructure?
It is the smallest structure that consists of multiple candles and is formed on the K-line. It appears in both directions, upward and downward. This structure is useful to identify the future direction of the trend.
- If the K line breaks through the high point of the structure and then touches the low point, it means the trend is continued.
- If the K line breaks through the low first and then touches the high, it means the trend will reverse in the future.
How to create a microstructure?
- First, determine what type of scenario it is: rising or falling.
- If it is rising, look at the upper shadow lines; if you have found multiple, try to draw a structure around the upper shadow lines until you have met with retracement.
- If it is declining, look at the bottom shadow line.
- You can use the same structure for both types of markings.
How to use
In trading, you never depend on a single trading indicator and pattern, but you should combine them with multiple indicators and patterns. Microstructure is also used in conjunction with other patterns and indicators.
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