Windows

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I know you are all familiar with the concept of gaps in trading, as they are extremely common when trading currency markets and not only. Well, under the candlestick charting techniques they are being called windows, and strange enough, they are falling into the category of continuation patterns. While on the Western technical analysis approach it is the believe that a gap is always filled, and this is the only way to look at them, under the Japanese approach the window is a continuation patter, not having anything to do with the filling of the empty space left behind.

There are two kinds of windows, one bullish called rising window and one bearish called falling window.

On the appearance of a rising window, one should look into buying dips, and on the opposite side, on the appearance of a falling window, one should look into selling spikes. According the the Japanese technical analysis approach, windows can become support and resistance areas. Therefore, a rising window should be a zone of support on pullbacks, and, consequently, a falling window should be a zone of resistance on spikes. And I am talking about the entire zone/area of the window, not a specific value. In other words, the higher the window, the higher the support/resistance areas.

So if there is something to add to the Western approach when dealing with gaps is to look at the area of a gap as being support/resistance for future price action as price is definitely attracted by it.

A tip about the time frames to look for when looking for windows would be to start from the four hour chart and going higher as for lower time frames they are, let’s say, not that important.

The recording that goes with these chapter will show you examples of both rising and falling windows and how they become important resistance/support areas.

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