Prophet Market
This video provides a simple technique that has a 70%+ accuracy rate in determining the bias of price action using stocks, options, or cryptocurrency. The technique involves looking at a daily chart, and if a green candle closes above the open of a red candle, it’s a bullish bias, and vice versa for a bearish bias. The video goes on to explain how to apply this technique to predict the next candle’s bias.
How to Determine the Bias of Price Action: A Simple Technique
Introduction
Understanding the importance of predicting the bias of price action can give traders a significant advantage in the markets. In this video, we will cover a straightforward technique that has a 70 plus percent accuracy rate in determining the bias of the price action of any given day using stocks, options, or cryptocurrency. We will be using only one chart, the daily chart, so that you can apply this technique to any market that you trade.
Defining Bullish and Bearish Bias
To understand the technique, we must first define what we mean by a bullish and bearish bias. Looking at a single time frame, a bullish bias is generated when a green candle closes above the open of a recent red candle. This means that the price has increased, and we would expect the next candle to have a bullish bias as well. A bearish bias is generated when a green candle closes below the open of a recent red candle. This means that the price has decreased, and we would expect the next candle to have a bearish bias.
Analyzing Candlestick Patterns
Analyzing candlestick patterns is the basis of this technique. By looking at the previous candle and predicting the bias of the next candle, we can accurately predict the market’s direction most of the time. If the next candle’s bias is the same as the previous candle’s bias, it is considered accurate. However, if the bias changes, it is incorrect.
Using the Technique to Predict Bias
This technique is not an exact science, and it’s important to consider other factors that may influence the price action in the market. Still, this simple technique provides traders with a reliable way to predict the direction of the market, giving them an advantageous position to make informed trading decisions.
Applying the Technique in Real-World Trading
Using the broad market tickers, we conducted a trailing 12-month analysis to determine the effectiveness of this technique. Starting in October of 2020, our analysis showed a strong success rate with a 70 plus percent accuracy rate, creating a valuable tool for traders.
Conclusion
Knowing how to predict the bias of price action accurately provides a significant advantage in trading the markets. Whether you are trading stocks, options, or cryptocurrency, understanding this simple technique on the daily chart level will give you a valuable edge over other traders. Remember, incorporating additional factors can reduce trading risk, but using this technique as a basis for analysis can help you make informed decisions for long-term profitability and success.
