How TBH and TBL patterns work in forex?

How TBH and TBL patterns work in forex?

Feb 17 • Forex Trading Articles • 522 Views • Comments Off on How TBH and TBL patterns work in forex?

If you are trading with the Price Action strategy, you are a few steps closer to real success. When trading this strategy, we would like to highlight the TBL (Two Bar low) and TBH (Two Bar High) patterns. Visually, they look like tweezers but they are not. Such patterns allow you to trade on any timeframe and any instrument.

All trading with such patterns is identical to trading with the Inside Bar. The reason for this is that the last bar is the inside bar for the previous bar. Almost all patterns of the Price Action strategy are two-sided, which allows both buying and selling.

TBH is a pattern with more than one bars, and their highs are the same. The TBH setup is two-sided. If you notice the high of the signal bar’s breakout, then this is a sign that the trend continues. On the other hand, if you observe the breakout of the low of the signal bar, then this is a clear sign that the trend will reverse. Adjacent bars should differ from each other by no more than 3 points.

TBL is also a pattern of more than one bars, and their lows are the same. The setup, like TBH, is two-way. A continuation signal is a breakout of the low of a signal bar, and a reversal signal is a breakout of the high. So, pay close attention to which direction this candlestick combination breaks through. As in TBH, the lows should differ by no more than 3 points.

How to trade TBL and TBH?

Let’s briefly discuss how the TBL and TBH patterns can be traded.

TBH Trade Setup

If a reversal is expected on the chart, you need to place a buy order slightly below the last bar’s low. Set your stop loss beyond the high of the TBH. If a continuation is expected, then you need to set a buy order slightly above the high of the last bar, and stop-loss, respectively, for the low of TBH.

TBL Trade Setup

If we disassemble TBL, then the situation is mirrored to TBH. You need to set a buy stop above the high of the last bar and a stop loss around the low of TBL in a reversal. If it continues, then the sell stop should be set slightly below the low of the last bar, and stop-loss should be set beyond the high of the TBL.

Subject to these conditions, you may have high probability to win the trade. However, not every trade ends in profit. That’s why we have stop-loss to limit the losses. You can add other indicators like simple moving average or oscillators like MACD and RSI to confirm your trade entry. This adds more to the probability of success. No matter how successful a strategy is, you should not take too much risk in a single position rather it is advised to risk no more than 1.5% for every trade. 

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