3 Best Patterns For The Candlestick Trader
There are lots of candlestick patterns but there are only several that you definitely ought to learn.
These patterns are more worthwhile when you are aware what is going on in each pattern.
Candlesticks need to be used with other forms of technical analysis to truly be useful. For instance, when you witness one of these candlestick patterns on the daily chart, move down to the hourly chart. Does the hourly chart agree with your expectations on the daily chart? Has the MACD gone above the 0 line? If so, then the chances of a reversal increase.
Bullish Engulfing: This is investors favorite candlestick pattern. This pattern consists of two candles. The initial day is a tight range candle that closes lower for the day. The bears are still in control of the stock but because it is a tight range candle and volatility is low, the bears are not very aggressive. The second day is a wide range candle that "engulfs" the body of the first candle and closes near the top of the range. The buyers have inundated the sellers (demand is greater than supply).
Bullish Kicker: The "kicker" is one completely remarkable candlestick pattern. The dilemma is that it is seldom witnessed but when it does appear, it is one of the more reliable candlestick patterns you will see. The stock is moving down for 3 or more days and the bears are firmly in control. Then, on the next day, the stock gaps open above the previous days high and close. This utterly shocks the bears and forces them to cover their shorts as new stock traders pile in on the long side.
The Doji: The "doji" is a on the fence pattern. It is in all probability the most prevalent candlestick pattern. The stock opens up and goes nowhere during the day and closes right at or near the opening price. This signals uncertainty and causes stock traders to question the existing trend. This can frequently set off reversals in the opposite direction.
Article Source: FxTradingStock.com
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Find breaking wall street news, stock tips, and stock chart analysis. Go to candlestick trader
by: Fred Stiles
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Word Count: 346
Date: Mon, 26 Jul 2010
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