General discussion on Candlestick charting
stockcharts.com
And the use of candlesticks to discover support levels:
stockcharts.com
Hammers explained:
stockcharts.com
And the use of Dojis to find turning points in the market:
stockcharts.com
I also use Bollinger Bands quite extensively in conjunction with candlesticks in order to identify entry and exit points:
bollingerbands.com
equis.com
But I particularly watch for are Bollinger Band "pinches" between the upper and lower "arms" of the MA envelope. I've found that such pinches generally indicate that a large move (in either direction) is pending and one must then rely upon other indicators like stochastics, money flow, and MACD to indicate which direction the move will be in.
The logic behind a bollinger band pinch is that it coincides with reduced volatility in the stock. And no volatility suggests that there is a face off between buyers and sellers, with both sides uncertain about what the next move in the stock will be.
Btw, here is one of my favorite chart settings and serves as a good template for anyone trying to get an initial read on a stock.. (this is one of the few pennies I bother to follow, which currently completing a restructuring and is not embarking on a new product offering). But you can insert any stock symbol and it will use the same indicators:
bigcharts.marketwatch.com
As for Volume reversals, those are more subjective. They generally follow a decline in the stock, show far greater than average volume and generally, BUT NOT ALWAYS, are accompanied by a Hammer. Again, using my current favorite penny stock, we see that there was a volume reversal at the end of September, which lead to a 100% increase in the price during October:
askresearch.com
Some people argue that a volume reversal much equal more than 1 million shares before signifying such a reversal, but it all depends on the general liquidity of that stock's particular market. In the case of MUCP, the float is VERY thin, which sometimes leads to the spreads often being wide, and a minimum of volume creating a technical trend reversal.
And then there are Fibonacci retracement points and other arcane indicators that people use, which generally equal certain percentage retracements from lows or highs which some constitute as likely support levels.
How's that for an explanation?
Hawk |
