05 September Chart Decoder Series: Average True Range – Volatility Tools to Help You Select Your Target and Get Profit

Welcome to Chart decoder seriesconvert professional trading tools into strategies you can use today.

So far, we’ve been working on:

Today we explore ATR (average true range). This is an indicator that solves one of the biggest puzzles in a transaction. What risk is there and where should the stops be placed?

What ATR really says to you

The ATR was developed by J. Welles Wilder Jr. in 1978 as part of a groundbreaking work on technical analysis. Unlike most metrics focusing on price direction, ATR measures only one thing. It’s volatility.

The ATR answers an important question: “How long does this market normally move?”

Calculation: The ATR examines the “true range” of each period. This is the largest.

1. Current high – Low current
2. |Current High – Previous Closed|
3. |Current Low – Previous Closed|

Next, move the average of these true range values ​​over the selected period (14 is the standard for Bitfinex, but you can adjust it to any time you like)

Absolute values ​​ensure that the ATR always shows a positive number, regardless of whether the gap is up or down.

Why is ATR important:

ATR is beyond context. It forms the way traders manage risk, size locations and set exits. Rather than relying solely on intestinal sensation, it provides an objective measure of market behavior that directly informs all transactional decisions.

1. Smarter stop loss

Placement of stops without an ATR is basically guesswork. The ATR indicates what is considered “normal” movement and cannot be thrown away in your daily swing.

• Scalping Stop (0.5 x ATR): Used by high frequency traders who want a quick ex with the first sign of trouble. Effective only during low volatility periods where market movements are predictable
• Standard stop (1 x ATR): Provides ample space for normal price fluctuations while maintaining reasonable risk management
• Stop position (2xATR): For traders who hold a position for several days that needs to survive the normal daily volatility cycle without a premature exit

2. Size your position appropriately

Professional risk management is the maintenance of consistent risk exposure regardless of market conditions. Instead of trading the same size in all conditions, adapt smaller positions when the volatility is high, and adapt larger positions when it’s mild.

3. Volatility breakout spots

Breakouts with expanded ATRs demonstrate institutional participation and true directional beliefs. If price breaks a critical level but the ATR remains flat, it often indicates weak follow-through and a high probability of inversion. The most powerful setup occurs when the price breaks a critical level with an ATR expansion, checking both direction and momentum.

4. Set profit targets

ATR multiple provides a reasonable framework for setting realistic profit targets and helps you move away from guessing towards consistency.

• Conservatives: 1.5 x ATR
• Standard: 2 x ATR
• Aggressive: 3xATR

Actual example: BTC/USD analysis

price: $110,500
ATR (14): 3,033

This tells us:

Bitcoin’s recent average daily exercise is about $3,033. This gives traders a clear context.

• The $3,000 move is no exception. Matches 1xATR
• Approx. 3,000 (1 x ATR) stops losses about normal breathing patio
• A profit target of $4,500-6,000 (1.5-2xATR) is realistic for swing trading
• ATR at this level shows a moderately volatile market that requires careful position sizing and risk management.

ATR + Other Indicators:

When combined with other tools, the ATR becomes even more powerful.

ATR + Bollinger Band: This move is more certain when you hit the extreme Bollinger band with a high-priced ATR. A low ATR in the band may suggest that extremes are not retained.

ATR + RSI: Excessive conditions for RSI with elevated ATR often mark important bases. High volatility shows true sales pressure, and it sells too much and makes the reading more meaningful.

ATR + MACD: MACD crossovers with an ATR expansion are more reliable than those contracted by ATR. Volatility confirms that there is a conviction for a change in momentum.

ATR + Volume + obv: Triple combination: obv points to the direction of smart marten, volume points to immediate conviction, and ATR shows how much to expect. If there is all alignment, there is a high paraability setup.

Bonus Read: ATR + RSI Behavior

price: $110,600
ATR (14): 3,033
RSI (14): 39.12 (nearly excessive)

This tells us:

• The RSI of 39 is below neutral (50), but has surpassed the 30 overselling threshold, still showing bearish momentum rather than extreme.
• ATR of 3,033 indicates an increase in daily volatility. This means that the swing is big.

For traders:

• Bearish rsi + high atr = Sales pressure is active and backed by volatility.
• If RSI approaches 30 while the ATR is high, the market is not just going down, but is being sold by force. Overselling conditions will carry more weight.
• If the RSI begins to climb while the ATR remains high, the bounce may have some strength behind it rather than simply a weak recovery.

ATR limitations to remember:

Delay indicator
The ATR is based on past price transfers. It tells us what volatility is, not necessarily what it is.

There is no direction bias
ATRs don’t tell you what direction the market will move. It’s just a typical amount of movement.

Smoothed data
Like all moving averages, ATRs can be slower to respond to sudden changes in volatility.

Market context is important
ATRs in trending markets behave differently than horizontal markets. Always consider the larger picture.

Pro tips for ATR:

1. Use multiple time frames

• Daily ATR: For swing trading and position sizing
• 4-hour ATR: For day trading setup
• 1 hour ATR: For accurate input timing

2. Economic calendar integration

ATRs often spike major news events. Plan position sizing and stop placement accordingly.

3. Weekend benefits

Crypto Markets is open 24/7, but volatility patterns often change over the weekend. Consider individual ATR calculations for weekday and weekends.

Try it with Bitfinex:

1. Log in to Bitfinex
2. Choose your main trading pair
3. Add an ATR indicator (starts with the standard 14 periods. The length can be adjusted within the ATR settings)
4. Observe how ATR changes in different market conditions
5. Practice using ATR for stop loss placement
6. Note the correlation between ATR and key price movements

Bitfinex. Original Bitcoin exchange.

]]> https://earlybirdsinvest.com/chart-decoder-series-average-true-range-volatility-tools-to-help-you-select-your-target-and-get-profit/feed/ 0 57289 https://earlybirdsinvest.com/sui-bulls-targets-3-50-after-a-breakout-from-this-key-chart-pattern/ https://earlybirdsinvest.com/sui-bulls-targets-3-50-after-a-breakout-from-this-key-chart-pattern/#respond Sat, 06 Sep 2025 01:59:04 +0000 https://earlybirdsinvest.com/sui-bulls-targets-3-50-after-a-breakout-from-this-key-chart-pattern/ My name is Godspower Owie and I was born and raised in Edo, Nigeria. I grew up with three brothers and have always been my idol and leader, helping me grow up and understand how to live.

XRP’s performance against Bitcoin is returning to a familiar pattern, and the charts are not looking good as August comes to a close. On the daily time frame, the pair is orbiting 0.000025 BTC after failing to hold its push above 0.000030 BTC. 

The candles are below the midline of the Bollinger setup, and the bands are tighter, which often happens before a bigger move. Since XRP is on the lower end of that range, it suggests that the bias is on the downside.

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On the weekly chart, the pattern looks even clearer. The rally that started at the end of last year lifted XRP from its lowest point in years, but it topped out quickly once it hit the 0.000030 zone. 

Since then, weekly closes have been dropping, and it looks like they have hit a ceiling, similar to what we saw before. The rejection from the upper band leaves the pair in a position to support itself, and the next pocket that is easy to spot is closer to 0.000023 BTC.

The monthly view tells the longest story. XRP used to have ratios that put it in the same ballpark as Bitcoin — trading above 0.000100 BTC in 2017 and even hitting 0.000200 BTC at its peak. Those days are long gone. 

What’s next?

Every time there has been an attempt to recover, it has been cut down before crossing the long-standing ceiling around 0.000055 BTC. That barrier has not been broken in over five years, and the market has seen every test as a chance to sell into strength.

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When you put it all together, it looks like XRP is entering another period where it is going to lag behind Bitcoin. With BTC dominance still close to 59% and capital flow favoring the leading coin, altcoin pairs like XRP/BTC continue to show weakness.

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The Engulfing Candle is one of the simplest and possibly most underrated chart patterns in trading.

In this tutorial, I’ll show you how to identify the pattern, what it tells us as traders and I’ll give you some trading strategies that use this pattern.

Many people over-complicate this pattern, but it’s very simple.

There are basically 2 types of Engulfing Candles.

Here’s how to identify them. 

Bullish Engulfing Candle

A Bullish Engulfing candlestick pattern signals a potential reversal from a downtrend to an uptrend.

Here’s what to look for:

• 2-candle formation
• First candle is smaller than the second candle and the close is lower than the open
• Second candle has the largest candle body that has been seen in awhile and the close is higher than the open
• The high of the second candle is higher than the high of the first candle
• The low of the second candle is lower than the low of the first candle
• The second candle closes near the high of its range
• This pattern has to print on a support or resistance level

Examples

Here is an example of a Bullish Engulfing pattern on a Bitcoin chart. The blue arrow shows the Engulfing Candle. 

Notice how this was a dramatic turning point on the chart.

This obviously won’t happen all the time, but it does happen frequently enough that you should pay attention.

Here’s a second example on the USDCHF Forex pair.

This one rallied hard after the pattern printed on a previous support level.

So those are just a couple of examples of when a Bullish Engulfing Candle can signal an upward move in a market.

Now let’s take a look at the opposite of this pattern.

Bearish Engulfing Candle

A Bearish Engulfing candlestick pattern signals a potential reversal from a downtrend to an uptrend.

Here’s what to look for:

• 2-candle formation
• First candle is smaller than the second candle and the close is higher than the open
• Second candle has the largest candle body that has been seen in awhile and the close is lower than the open
• The high of the second candle is higher than the high of the first candle
• The low of the second candle is lower than the low of the first candle
• The second candle closes near the low of its range
• This pattern has to print on a support or resistance level

Examples

This example on the AUDNZD chart shows how fast price can move after a Bearish Engulfing candle pattern.

Notice how it prints on a previous level of resistance.

Now here’s an example on the NZDCAD chart.

Again there was a sharp move after the engulfing candle prints on the resistance zone.

Take any chart and start looking for this pattern.

You’ll notice that it happens more often than you might expect.

But don’t stop there.

Be sure to test this pattern out before risking real money.

My Favorite Engulfing Candle Resources

Here are resources for Engulfing Candle trading strategies that I’ve found super useful.

You can use them to help you create, test and trade Engulfing Candle trading strategies.

How to Prove Engulfing Candles Actually Work

At this point, you’re probably wondering: Does this actually work?

That’s a perfectly natural question and the only one that matters, quite frankly.

So here’s the truth about trading Engulfing Candles…

Just like with any other trading method, the success of the chart pattern will be determined by the specific trading plan.

There are many ways to enter and exit trades with this pattern, so you need to define these parameters in order to have a real trading strategy.

I’ll provide specific trading strategy plans in the next section. 

But here’s where most traders get tripped up…

Remember, there are only 2 types of trading strategies, discretionary and fully automated.

Most Engulfing Candle strategies are discretionary.

Therefore, the results can vary greatly between traders.

So it is essential that you backtest it for yourself to find out how good you are at identifying the setups in your trading strategy plan.

Practice can also improve your skills, so don’t be afraid to keep running through simulations until you feel you’ve maxed out your potential.

Now it might be possible to automate an Engulfing Candle strategy. If so, then the results are usually reproducible between traders.

Even then, you still have to create an automated strategy and test it on every market/timeframe you trade.

Always verify, never take another person’s word for it.

Remember, profitable trading strategies usually start out as very unprofitable ideas.

So start experimenting and don’t be afraid to test your own ideas.

You just might discover something amazing.

Trading Strategies That Use Engulfing Candles

Here are some trading strategies that you can review and start testing for yourself.

I’ve also included my own backtesting results so you can compare notes and make improvements on these strategies.

Final Thoughts

This super simple candlestick pattern could be the basis for your next grail trading strategy.

It is easy to identify and can be programmed into most trading platforms.

But it’s up to you to test it out and find out if it will work.

Remember, the most profitable strategy in the world is the one that fits YOU best.

Now get to work. 

Meme cryptocurrency may soon be hot as their leader dogecoin

formed a golden cross, hinting at a huge price surge in the future.

A golden cross occurs with a simple moving average of 50 days (SMA) The price of the asset exceeds the 200-day SMA. The crossover shows that the short-term momentum is outweighing the long trajectory and could evolve into a major bull run.

Dogecoin averages bullished early today. Golden Cross is considered a positive indicator, but it has a complex record of predicting trends in most markets, including stocks, Bitcoin and Doge. This makes it less reliable as a standalone indicator.

That said, most of Doge’s previous big moves unfolded with the arrival of Golden Cross. For example, after the Golden Cross happened on November 6th, 2024, the price went from 130% to 46 cents in four weeks. Prices rose 25% in the four weeks since the average became bullish on November 22, 2023.

Similarly, a Golden Cross occurred in early November 2020, marking the start of a major four-month bull run, which saw prices rise above 1,000% in four months.

Let’s see if history repeats itself.

Read more: Sharp 7% Drop sends Doge to 22-cent support with a ton of selloffs

08 August Chart decoder series: Volume + obv – Smart Money Tracking System

Welcome to the Chart Decoder series. Here we categorize tools that separate casual traders from the strengths of veterans.

In the final episode, I explained it.

Today we dive into volume and obv (balance-on volume). Read together, these two indicators reveal where institutional money is flowing before the crowd catches up.

What is On-Balance Volume (OBV)?

Obv is a cumulative indicator created by Joe Granville in the 1960s. It is built on one simple premise. Volume precedes price. Smart money moves first, and prices continue later.

The calculation is simple:

• End of today > If the end of yesterday: The buyer won. Add today’s volume to obv
• If the end of today The seller won. Subtract today’s volume from obv
• If the end of today = the end of yesterday: It’s a draw. The obv remains the same

result? A tally of running purchases over time and pressure to sell.

Please note that OBVs only respond to closing prices. Daytime swings are irrelevant. You may see a deep red candle, but if prices rise more than the previous day, the OBV is still rising. In other words, the buyers had the final say.

How to read volume + obv:

volume It tells you how strong the movement today is.

obv Indicates whether purchasing or selling pressure is piling up over time.

Put them together, you get both short-term action and larger images.

1. Confirmed uptrends: OBV + large capacity + rising price

Everything is lined up: institutional accumulation (obv), strong participation (quantity), and upward movement (price). These are usually the most reliable trends. Momentum and smart money both support movement.

2. Accumulation zone: OBV + Low volume + Lateral price increase

Smart money accumulation stage. The institution is quietly building positions without dramatically moving prices. This often precedes a big breakout when retailers finally realize. Watch out for sudden volume spikes or price breakouts and check the movement.

3. Distribution phase: obv + large capacity drop + down price

Ongoing distribution. Smart Money is on sale (OBV) and currently has a panic sale (volume). These moves often need to go further as sales pressure is built up. If you have a long position, quickly reassess.

4. Divergent Pattern The most powerful signal occurs when the OBV and price disagree.

• Bullish divergence: Prices appear to be weak or delayed, but they obviously rise quietly. This is a sign that a major player is purchasing it. This could be a setup for a breakout.
• Bearish emancipation: Prices continue to climb, but OBV is slipping. This means that demand is fading downwards. Smart money may end early.

5. Breakout confirmation: OBV + Spying volume + Increased price destruction resistance

This is a dream setup. The institutions are already accumulating, retailers are jumping in, and there is real confidence in the breakout. Often this is a green light. Make sure you’re too late to chase.

Actual example: BTC/USDT analysis

• price: $119,100
• obv: Flat at 15,302k
• volume: It’s low and stable

The BTC has consolidated just under $120,000 after a strong rally, but the OBV is no longer climbing. The lines are flattened and there is no offensive sales, but neither suggests that strong accumulation is ongoing. This pause in OBV could mean that Smart Money is waiting and not selling, not actively purchasing. The volume remains light, so breakouts from here require new beliefs to stick.

There is no clear divergence at the moment, but the market is stagnant. Look carefully at the obv: if it starts to rise again on a green day, it may have returned the early signalble.

Volume + obv + other indicators:

This combo works even better when combined with tools you already know.

• Volume + obv + vwap: As OBV rises and prices approach VWAP in large numbers, they often show institutional support at fair value levels. There may be a bounce.
• Volume + obv + rsi: Rising in RSI in excess territory often marks a significant bottom. Smart money is buying while sentiment is poor. This can be a turning point.
• Volume + obv + magd: If obv rises and Macd is over bullish, it will strengthen the uptrend case. If the obv is falling and your Macd is bearished, the sales signal will increase the weight.
• Volume + obv + Bollinger Band: Bollinger bands show extreme prices. The obv can tell if these extremes are supported by actual pressure.
  If you hit a low price band but your OBV is rising, this can result in a quiet buildup during pullback. The possibility of rebounding could be brewing.
  If the price hits the upper band but the OBV fails, this may signal distribution during the hype. Possible fixes may continue.

Bonus Lead: obv + volume + vwap – Triple Confirm Setup

• price: $119,100
• VWAP: 118,737
• obv: Flat at 15,302k
• volume: It’s low and stable

Here’s what this chart tells us:

• The price is a little On vwapwhich suggests that BTC is slightly above fair value based on recent volumes. It’s neutral to mild bullish, but it’s not a strong signal in itself.
• I have an obv It’s flattened It shows that cumulative purchase pressure has stagnated after a solid uptrend. Smart money may be taking a break, they don’t sell, but they don’t actively buy it either.
• The volume remains Lighttherefore, there is no panic sales, but there is no surge in convictions from either side.

Conclusion: This is a neutral zone. Prices are stable just above VWAP, but OBV and Volume have not yet confirmed breakouts. If the obv starts to rise again with volume spikes, it could become your green light. Until then, stay patient.

Pro tips for volume + obv:

1. Use multiple time frames

• Daily OBV: Shows long-term institutional flows
• 4 hours obv: Suitable for swing trading setups
• 1 hour obv: Helps with accurate input timing

2. Watch not only the obv value but also the trend changes

Don’t see if the obv is positive or negative. Beware of trends changing. To rise after a long decline is more meaningful than to flatten a few weeks.

3. Volume quality issues

Not all volumes are equal. Activities during London/New York sessions often reflect institutional participation, but weekend or early Asian volumes can be noise.

4. Combined with major price levels

OBV works best when Price is nearby Support or resistance. If OBV is rising and prices are pushing towards resistance, there could be a breakout. If the obv is falling and the price is approaching support, it can drop.

5. Bear the divergence

Differences between price and obv can last for days or weeks. Just because OBV is rising while prices remain flat (or fall) doesn’t mean there will be breakouts today or tomorrow. In many cases, major players slowly and quietly build positions. It may take some time for prices to catch up.

6. I know the limitations

Choppy Market: obv gives a mixed signal during extended lateral actions as money flows back and forth without a clear direction.
News Events: Major developments can distort OBV readings due to price gaps.
Do not use alone: Always combine price actions with other metrics for confirmation.

Try it with Bitfinex:

1. Log in to Bitfinex
2. Select the main trading pair (BTC/USD, ETH/USD works well)
3. Add a volume histogram at the bottom
4. Add OBV from the indicator menu
5. Look for the patterns we discussed
6. Practice finding divergence between price and obv

Next chart decoder series: ATR (average true range): How to measure market volatility and position size, like Pro.

Bitfinex. Original Bitcoin exchange.

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Google is rolling out a new version of its Google Finance tool, with changes designed to help users find financial information more easily.

According to an August 8 announcement, the updated version includes an artificial intelligence (AI) feature that allows users to ask financial questions and receive detailed answers.

These responses also include links to related websites, so users can explore topics further without needing to search for each piece of information themselves.

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The changes aim to reduce the need to visit other platforms or use separate AI tools like ChatGPT. For example, instead of searching for several different stock tickers one by one, users can ask more questions, such as how a group of companies performed over a certain period.

Alongside the AI tool, Google has added new chart options. Users can view technical indicators like moving averages, switch to candlestick views, and adjust how the charts are displayed.

The platform is also expanding its data coverage. In addition to stocks and indexes, users will see more information on commodities and a selection of cryptocurrencies.

Another part of the redesign is a live news feed. As financial headlines are published, they appear in real time within Google Finance. This helps users stay updated without switching between tabs or opening other websites.

On August 6, Google pushed back against claims that its AI search features are harming website traffic. What did the company say? Read the full story.

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