Instead of coming back to the Order Block, the price comes from a place that makes no sense. This place might be a Hidden Base. This strategy is when the price goes back to where two same-colored candles meet. This makes a zone. It’s like finding a hidden spot in the Forex market. Two same-colored candles touch, and you have a HB. Here’s the golden nugget – it equips you with an edge that not everyone has. If you’re new to Forex you’re in the right place. This guide will teach you the secrets of this strategy and how it can skyrocket your earnings.
Key Point
Summary
What is a Hidden Base?
A period of consolidation within a trend where price action forms a rectangular trading range.
How to Identify Hidden Bases
Look for a tight sideways price pattern after an impulsive move up or down.
Key Characteristics
Narrow range, low volatility trading. Well-defined support and resistance levels.
How to Trade Hidden Bases
Buy breakouts from bullish bases. Sell breakdowns from bearish bases. Place protective stops.
Using Hidden Bases
Indicate consolidation before potential continuations. Provide defined trade entry and stop loss levels.
Limitations
Not all breakouts from bases succeed. Can take time to form. Require confirmation.
This table encapsulates the key information about Hidden Bases.
What is the Hidden Base Trade Strategy?
The Hidden Base (HB) strategy is a lesser-known but highly effective trading approach that primarily focuses on identifying and exploiting market patterns and trends. The core concept is to identify price levels where the market is temporarily consolidating, forming what we call a “hidden base.”
These bases can be found within various timeframes, making this strategy versatile for both day traders and swing traders.
Imagine this: you spot a market breakdown and set up a trade for yourself. You choose Order Block as your entry point. But then, the price bounces back from a ridiculous point before it even reaches the Order Block.
You miss the trade. It could have been a sweet deal, with a juicy profit margin. Sure, there will be other opportunities, but how can you predict such crazy reversals? The answer lies in a concept that is self-explanatory: Hidden Base.
It is the zone formed by the wicks of two candles of the same color that intersect each other. This area is crucial for us. If you zoom in to the lower time frames, you will see why. There is either an FTR structure or an Engulfing Pattern happening there.
You will also find Rally Base Rally or Drop Base Drop structures there. In short, the crossing wicks in the higher time frame are actually pause points in the lower time frame.
Do you recall Yin-Yang candles? We use them in this strategy as well. It is very similar to Yin-Yang candles. In fact, you will see in many Hidden Base structures that they are actually just Yin-Yang candles.
But there are some differences. The second candle in a Yin-Yang candle has to have a clear wick, while the Hidden Base can be vague. If the second candle’s wick is unclear, we use the first candle’s wick to define the structure.
Have you ever wondered why HB is react? It’s because it reveals a lot when you zoom in to the lower time frame. You will find some significant patterns there, likeFTR, Flag Limit, Sup-Dem (Supply Deman Flip).
These are all signs of a trend continuation. The two wicks that you see with HB are actually part of an RBR, DBD, RBD, or DBR. These are key formations for Price Action, and they trigger a strong reaction.
Note: RBR = Rally Base Rally DBD = Drop Base Drop RBD = Rally Base Drop DBR = Drop Base Rally
Hidden Base Rules:
The wick of the 1st candle can cross the body of the 2nd candle.
The wick of the 2nd candle should stay within the first candle’s body.
The zone is defined by the second candle’s wick. That’s where we enter the trade.
If the wick of the 2nd candle is very small, the needle of the 1st candle is chosen as the zone.
Types of Hidden Base:
There are 2 types of candles: red and green. You can guess what they mean: red is for falling, green is for rising. But how do we enter a trade based on them? We have to look at the area where the wicks of the candles overlap. If it’s narrow, we can enter there.
But if it’s wide, like when the first candle has a long wick, we have to use the second candle’s wick to refine our entry point. That’s the thing about Price Action concepts: they don’t give you fixed rules for rote learning.
You have to adapt them to your own style and risk management. That’s why they say everyone has their own Price Action method.
The Bullish Hidden Base:
The Bearish Hidden Base:
How to Trade Using the Hidden Base Strategy?
Method 1: As soon as we see HB, we can trade with the trend. But we should be modest with our target in these trades.
Method 2: After HB appears, we should wait for the price to revisit this area. This area is now a possible supply/demand zone. We can observe how the price behaves here and trade accordingly.
Hidden Base Trading
Entry: How do we decide where to enter the trade? We look at the zone we aim for. We have two options: we can use a market order, or we can wait for a breakout on the low time frame.
It depends on how confident we are about the trade. Do we want to catch the move early, or do we want to confirm the trend first?
Stop–Loss (SL): The stop point is the lower point of the first candle for long and the upper point for short. However, some traders might go for the second candle’s close if the candles are huge.
This is a risky stop. The safest point is the first, but keep the second in mind as well. Trading is all about adapting and being flexible, right?
Take-Profit (TP): Pick a take profit level that aligns with other Price Action concepts. If you don’t have a clear goal, you can use a trailing stop.
Profitable Examples of the Hidden Base:
This video illustrates the concept with examples that are easy to follow.
Top 6 Tips for Trading the Hidden Base:
The core of the strategy is the 2nd candlestick.
Look for periods of consolidation or sideways movement in the market. This is where the HB is formed.
Find it in high time, trade it in low time.
HB is not a magic bullet. Trading involves risk, and we have to embrace failure as a possibility. Proper risk management is the backbone of this strategy.
Monitor your trade. Once you’ve placed your trade, keep a close eye on it. That strategy often offers good risk-reward ratios, so it’s crucial to take advantage of this.
Set up an excel sheet and do your backtest calculations. You will train your eyes to spot the pattern and the numbers will tell you the truth.
Common Misconceptions When Trading with Hidden Base:
The HB is always safe.
Well, I hate to burst your protective bubble, but safety is relative. It might buy you some time, but you still need to guard your tacos carefully.
Trading with HB is risky and dangerous.
It can be risky, but it is not necessarily more dangerous than using with any other concept. The key is to understand the risks involved before engaging in any type of trade.
Hidden Base and Blind Spot are the same.
This is not true, They are different concepts. In the Blind Spot Strategy, a single momentum Maribozu candle is enough for us.
They are foolproof indicators of market direction!
They can provide valuable signals, but they are not foolproof indicators of market direction. They are just one piece of the puzzle. Don’t rely solely on HB for your trading strategy.
HB zones can be reused.
Actually not, fresh zones are superior.
Conclusion:
Hidden Base Strategy is based on the idea that the price returns to the area where two candles of the same color intersect, creating a zone. This is like a game of hide-and-seek with the Forex market.
Two candles of the same color meet, and bam, you’ve got a HB. It is easy to spot and trade. What’s cool about it is that it’s not a one-size-fits-all deal. It is as flexible as a gymnast at the Olympics.
You can adapt it to your trading style, time frames, and whatever market you’re into. The trick is figuring out what vibes best with your trading mojo and your financial goals.
And here’s the kicker: it’s not one of those boring, static concepts. It’s like a living, breathing thing that evolves with the market and the price action. It can help you make more money and avoid losing money. It can also help you understand the market better.
And the best thing? It’s like a secret code for the Forex market. Just keep those eyes peeled, adapt to the ever-changing market, and you’ll be on your way to becoming a great trader!
FAQs:
How do I set stop-loss level with this strategy?
Use the first candle level to determine your stop-loss point. It provides solid reference points for managing risk and reward.
What is the difference between them and Blind Spot?
While in Blind Spot Strategy, breakouts occur with a single candle, this concept uses the intersection of two candles.
Can I use this method with any currency pair?
Absolutely. You can apply this strategy to any currency pair, but it’s more effective on pairs with strong trends and well-defined price levels.
Can I combine it with other indicators?
Literally, I do not like indicators and do not use them. But if it gives you additional confirmation, sure you can use it. Whatever you find useful is good.
Is this pattern suitable for day trading or swing trading?
You can adapt it to your trading style.
What if the hidden base gets “unhidden”?
Please practice more. Devote yourself to tests so you can find them as soon as you look at the charts.
How do I practice this tactic before using real money?
Practice makes perfect. Use a demo account in MetaTrader or paper trading in Tradingview to test your skills and get comfortable with spotting it in different market conditions.
Brian Miller is a Forex trader who uses price action, a method based on real prices instead of indicators. He learned this technique from hedge fund experts and has been trading full-time since 2011. He has a finance degree and writes about Forex on various websites. On this website, he shows his price action system and how it works in different markets.
