Trading NAS100 with candlestick charts requires a clear, repeatable process. The index is volatile and tech-heavy, so candlesticks give immediate price-action clues. Below is a practical 5-step workflow that takes you from pattern recognition to trade execution, followed by common mistakes and a concise checklist to use before pulling the trigger.
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Identify key candlestick patterns
Scan your chosen timeframe for reliable price-action signals: bullish/bearish engulfing, pin bars (long wick rejection), doji (indecision), and morning/evening stars. On NAS100, look for patterns at meaningful levels—reversal signals near previous highs or lows carry more weight than the same pattern in the middle of a range. Mark each signal on your chart and note the context: trend, proximity to support/resistance, and candle size relative to recent candles.
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Determine trend direction
Decide the dominant trend on multiple timeframes. For intraday trades use 15‑minute to 1‑hour charts to define the near-term trend and a 4‑hour or daily chart to confirm the broader direction. Simple rules: higher highs and higher lows = uptrend; lower lows and lower highs = downtrend. Use a smoothing tool like a 50-period EMA to visually confirm slope and dynamic support/resistance. Align trade ideas with the higher-timeframe trend to improve probabilities.
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Confirm with volume
Volume validates moves. On NAS100, breakouts accompanied by above-average volume (relative to recent bars) are more likely to sustain. Look for volume spikes at pattern completion—e.g., a bullish engulfing with rising volume suggests institutional participation. Divergence between price and volume (price rising on falling volume) is a warning sign that the move may lack conviction.
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Look for key support and resistance levels
Identify horizontal levels from recent swing highs/lows, round numbers, and consolidation zones. Mark these on your chart and watch how candlesticks behave around them: rejection wicks, clustered small bodies, or clean breakouts. Combine these zones with trendlines and moving averages for confluence. For entries, prefer pullbacks to support in an uptrend or rallies to resistance in a downtrend.
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Execute trades based on these insights
Define entry, stop, and target before entering. Example setups: enter on a pullback candlestick signal at a confluence zone with volume confirmation; place the stop beyond the invalidation wick or the next structure level. Use position sizing to limit risk (e.g., 1–2% of capital). Manage the trade: move stops to breakeven after a favorable move and scale out partial profits at pre-defined targets aligned with the next structure level.
Common mistakes
- Ignoring broader market context
- Misinterpreting candlestick formations
- Relying solely on one time frame
Pre-trade checklist
- Identify key candlestick patterns
- Analyze support and resistance levels
- Confirm trend direction
- Check volume for signals
- Review trading plan before executing
Final notes: on NAS100, speed and momentum can amplify both winners and losers. Favor trades where multiple elements align—pattern, trend, volume, and level—rather than single-signal ideas. Keep a trade journal: record the candlestick setup, volume behavior, timeframe alignment, and outcome to refine pattern interpretation over time.
