How to Trade the Railway Tracks Candlestick Pattern on eToro

Trading can often seem intimidating, but with a solid foundation in basic candlestick patterns, even beginners can trade like pros. In this guide, we’ll explore the powerful Railway Tracks Candlestick Pattern, teach you how to recognize it on a chart, and apply it effectively on eToro.

Understanding the Railway Tracks Candlestick Pattern

🚂 What is the Railway Tracks Pattern?

The Railway Tracks Pattern is a reversal signal that can indicate an upcoming trend change, prompting traders to either buy or sell their positions. It resembles the Tweezer pattern and consists of two candles – one bearish and one bullish – that either stand on the same support level (lower trend line) or hang from the same resistance level (upper trend line).

One characteristic of the Railway Tracks Pattern is that the candle bodies should be more significant than the shadows or tails. The second candle should have body, overpowering the first one, demonstrating the strength of the trend in the same direction as the second candle. Occasionally, the second candle may be smaller than the first, typically occurring during short trend reversals.

This pattern gets its name from its visual resemblance to railway tracks. The main difference between the Railway Tracks Pattern and the Tweezer Pattern is that the candle sizes may vary. While the Tweezer Pattern features identical candles in terms of body and shadow, the Railway Tracks Pattern usually has a smaller first candle and a longer second candle or vice versa, with varying shadow lengths. Despite these differences, both patterns signal reversals, with the Railway Tracks Pattern often associated with longer price movements or ranges.

🔍 Identifying the Railway Tracks Pattern on a Chart

😉 The Key Criteria

To identify a Railway Tracks Pattern, look for the following criteria:

1. Both candles should have identical or nearly identical dimensions.
2. The pattern should appear at the end of a trend.
3. Both candles should touch a common trend line.
   

   

Applying the Railway Tracks Pattern in Real Trades

📈 Railway Tracks Pattern with Apple

Let’s examine a few examples of the Railway Tracks Pattern using popular assets like Apple and Nasdaq 100. In this Apple example, we’ll use a weekly range, accessible by clicking the range dropdown menu from the tab of tools located on the top right of the panel.

This Apple chart displays several Railway Tracks Pattern formations. Both candles in all formations share a common trend line, with bullish patterns standing on a support level and bearish patterns touching a resistance level.

📉 Railway Tracks Pattern with NASDAQ100

In the Nasdaq100 example, we see that not only the candle body but also the tail can touch the trend line. This chart demonstrates multiple instances where tails touched the trend line rather than the candle body.

What’s crucial in both examples is that both candles always touch a common trend line. Regardless of candle size or shadow/tail length, they must share a trend line to qualify as a Railway Tracks Pattern. Both examples show reversals following pattern formations.

📊 Railway Tracks Pattern for BTC

In thisnext example, a strong uptrend for BTC is followed by a steep downtrend after the Railway Tracks Pattern formation. The pattern’s candles are nearly identical, and both touch a common trend line or resistance level. As the pattern forms, a significant reversal occurs. This Bearish Railway Tracks Pattern signals a trend reversal towards a bearish market.

📈 Railway Tracks Pattern for FB

In this chart for FB, a series of Railway Tracks Pattern formations are visible at the ends of each trend. The identical dimensions of both candles in each pattern are evident, and each pattern falls on a similar trend line. For traders focused on swing trades, using the Railway Tracks Pattern to find reversal points can be highly beneficial.

💡 Tips and Tricks for Successful Railway Tracks Pattern Trading

1. Adjust the chart’s time or range settings to more easily locate the pattern on a day range.
2. Refer to the chart’s volume for additional confirmation of the reversal. Strong buying pressure indicates a bullish reversal, while strong selling pressure implies a bearish reversal.
3. Combine the Railway Tracks Pattern with other tools or indicators to solidify its assumptions and increase its effectiveness.

🚀 Take Your Trading Skills to New Heights with the Railway Tracks Pattern

Mastering the Railway Tracks Pattern can lead to more informed trading decisions and potentially higher profits. With practice and experience, you can harness the power of this easy-to-use pattern on platforms like eToro. By understanding the Railway Tracks Pattern and combining it with other indicators, you’ll be well on your way to trading success in 2023.

📚 Further Enhancing Your Trading Skills

Becoming proficient in the Railway Tracks Pattern is just one step in your trading journey. To further enhance your skills, consider the following:

1. Education: Continuously learn about different trading strategies, market indicators, and technical analysis techniques. Stay updated on market news and trends to make well-informed decisions.
2. Practice: Use a demo account or paper trading platform to practice your trading strategies without risking real money. Refine your skills and gain confidence in your trading abilities before investing real funds.
3. Diversification: Don’t rely solely on the Railway Tracks Pattern for your trading decisions. Explore and incorporate other patterns, strategies, and market analysis tools to build a more robust and adaptable trading system.
4. Risk management: Develop a solid risk management plan to protect your capital and minimize losses. This includes setting stop-loss orders, determining position sizes, and establishing a risk-reward ratio that suits your trading style and goals.
5. Emotional discipline: Train yourself to maintain emotional control and avoid impulsive decisions driven by fear, greed, or other emotions. Stick to your trading plan and strategies, and review your trades regularly to learn from both successes and failures.

What we think of the Railway Tracks Pattern

Although the Railway Tracks Pattern is easy to comprehend and is a good indicator for a reversal, they may be hard to find in the chart. Oftentimes, you will need to use varying date ranges by changing the duration or range settings as shown earlier. The best range setting to use would be where the price movement is clear and readable. A range setting that is too small (such as the minute range) can provide you with very small and thin candles which can be hard to interpret. On the other hand, a range setting that is too big (like weekly range) can take away trench formations where pattern formation is possible.

Also, this pattern can only be confirmed by drawing a trend line where both the candles should meet. The best exit points would be right after the second candle. However, to avoid risks of trend continuation instead of reversal, a candle confirmation after the pattern can also be considered. If the confirmation candle moves in the direction or trend of the second candle then it would be a good confirmation of the reversal.

One more way to confirm the outcome of the pattern is by checking the volume. Simply compare the volume of buyers with the sellers. If the second candle is bullish, the volume should show that buyers are overwhelming the sellers. On the other hand, if the second candle in the pattern is bearish, the volume should show that the sellers are overpowering the buyers.

The Railway Tracks Pattern is actually quite easy to implement in an actual trade and it involves lesser risks compared to other candlestick patterns. What’s important when dealing with this pattern as well as all other candlestick patterns is to always consider a candle confirmation right after the pattern formation, and take advantage of tools that will help you visualize possible entry and exit points.

With proper understanding and application, the Railway Tracks Pattern can enhance your trading strategy and minimize risk. By using a practice account on eToro, you can master this pattern and increase your profit potential. Join now!

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Author & Expert Trader - Financial Analyst :

My name is Bart Bregman and I am a full-time professional trader with nine years of experience. I specialize in shorter-term trading using technical analysis, and I have extensive experience with Stocks, CFDs, Options, and Crypto trading. I believe that there is no such thing as a bad trade. I'm currently traveling the world as a digital nomad trader. You can follow my journey on Instagram at https://www.instagram.com/bart_bregman/