The more complex is one trading strategy or setup the more hard is to follow it. The more hard to follow it, more difficult is to make a profit. So I want to show you a really simple setup, which can improve your trading.
The key to this setup are the candlesticks and one specific pattern- DOJI! Doji is a candle stick pattern, which tells us that for a particular time frame, there was uncertainties in the market. At one point the bears were in charge and at the other - the bulls. Many people consider the Doji pattern as a reversal pattern, but that is not necessary in all depends on the context. What if not look at the Doji as a reversal and as a continuation with a moment of uncertainties. For example we have a strong upwards trend and we are starting to see at some point weakening of the trend and Doji, Most of the traders will think this is the end, its time for a reversal but they will be wrong most of the times.
So instead of the reversal and open a reverse position as soon as we see a doji, lets wait a little bit. Lets consider the doji as a signal for continuation of the trend and wait for a confirmation. The confirmation is one of the next candles. If we consider the highest/lowest point of the doji as a support/resistance.
So if we are having a bullish trend and we see a doji lets mark the highest point of the doji, that will be our entry point and if we have a bearish trend our entry point will be if one of the next candles closes below the lowest point of the doji - this is the confirmation.
One more thing we should think off before entering the trade is the trend and how to identify if it is a bullish or a bearish. I prefer to use the 200 MA or the ichimoku cloud, but if you prefer another indicator, it should work with it as well.
You can find below some examples of the setup. At the daily chart of DAR we are seeing the price is over the Ichimoku cloud, so the trend is bullish. There is a few time Doji for the last month and after most of them there is a bullish candle braking the resistance and after that a continuation of the trend.