What Is The Master Candle Pattern & How To Trade With It

The Master Candle pattern is a breakout pattern that compromises of highs and lows of the next four candles. These four candles are present right after the formation of the Master Candle. Also, the Master is bigger than the following four candles. The name of the pattern familiarizes with the Master controlling its assistants.

What is the Master Candle pattern?

The Master Candle allows breakouts without considering the main trend. This means a trader can look for the breakout points inside the trend when the Master Candle emerges on the chart.

The four candles that come after the Master describes the pattern. These four candles are called the setup candles. Breakouts are considered valid only if the setup candles break the Master Candle highs and lows. These highs and lows define support and resistance levels.

This is how the pattern forms on the chart:

Master Candle pattern on a chart
Master Candle pattern on a chart

The Master Candle or MC is traded on the H1 timeframe and works best for intraday and day-trading breakouts.

In forex trading, it has a pip range depending on the pair. For example, pairs like GBP/USD or GBP/JPY has a range of 40 to 105 pips. The MC has a pip range between 30 to 150.

There is a confusion among traders about the identification of the Master Candle. For the development of the MC, the next four candles should be inside the pattern. In other words, the four candles should be aligned with the Master Candle.

Master Candle Pattern identification
Master Candle Pattern identification

How to use the Master Candle pattern?

To implement the Master Candle, there are a few guidelines if a trader wants to follow them. These are:

  1. A trader shouldn’t trade near the support and resistance levels.
  2. Trading positions shouldn’t be closer to the Master’s height.
  3. Go long or short only if the Master breaks the high or low.
  4. Traders shouldn’t trade outside the above-mentioned pip range.

After following these rules, traders may wish take long positions above the high of Master Candle. Conversely, they can take short positions below the low of MC. The stop-losses should be set at the Master Candle’s highs or lows.

To exit the Master Candle, a trader needs to target its size. For example, if the MC has a size of 50 pips, a trader could leave at the 50 pip mark.

A keynote to add here is that the Master Candle can produce false breakouts. The candles may reverse after the breaking points. This is especially true when trading volatile currency pairs.

However, there is a way to try and help solve this issue. Traders could wait for the formation of the four candles following MC, and then take positions after it if they wanted to.

Master Candle pattern trading strategy

The concept of the Master Candle is very popular in forex trading. There are different ways of looking at this trading strategy, but in its simplest form, a Master Candle is a candle which contains the highs and lows of at least the next four candles after it.

The formation of a true Master Candle can be seen on a chart if the next four candles are consolidating inside of the tall Master Candle.

The Master Candle trading strategy is famous for the fact that it provides clear patterns and also helps in the identification of breakout points, making it especially useful for traders in the long run.

It is always useful to follow a certain set of guidelines or rules when using any trading strategy and the same is true for the Master Candle trading strategy.

The Master Candle is a simple and effective chart pattern. Traders may look for the Master Candlestick pattern on any timeframe according to their own individual trading needs.

Master Candle pattern buy strategy

A signal appears when there is a candlestick on the chart with 4 more candlesticks being formed inside it. As soon as this condition is met, two dashes appear – the first one is black, above these candlesticks, the second dash is green, a bit higher, 3-candlestick long. Above this green dash, a pending buy order is placed with a 3-hour spread value. If a signal appeared and three candlesticks were formed after that but a pending order wasn’t triggered, this order should be removed.

  • Locate the pattern on shorter timeframes.
  • Wait for the price bar to go bullish before entering.
  • Enter the trade after the formation of setup candles.
  • Set a stop-loss at the MC’s low.
  • Exit the trade according to the size of Master Candle.

Master Candle pattern sell strategy

A signal to sell appears under the same conditions as a signal to buy. It’s just that in the case of a signal to sell, one should place both buy and sell pending orders at once. A sell order should be placed at the level where a red dash appears after the signal. The dash is also 3-candlestick long, and if an order wasn’t triggered, it should be removed. The order also should be removed if a buy order was triggered first. And vice versa – if a sell order was triggered first, one should be removed a buy order.

  • Look for the pattern on shorter timeframes.
  • Wait for the price bar to go bearish before entering.
  • Enter the trade after the formation of setup candles.
  • Set a stop-loss at the MC’s high.
  • Exit the trade according to the size of the Master candle.

Master Candle pattern conclusion

The Master Candle Pattern is a simple pattern that can give exact breaking points and can be used on your trading platform charts to help filter potential trading signals as part of an overall trading strategy.

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