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Strategies & Market Trends : Candlestick Charting--The unknown indicator
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To: Anaxagoras who wrote (1521)2/22/1999 10:26:00 AM
From: MonsieurGonzo  Read Replies (1) of 1589
 
Anaxagoras; RE:" extent "

>take for example a prolonged downtrend in which a reversal pattern occurs. How am I to interpret your "no promise of extent" comment there ?

There is some correlation between the "extent" of some indicated reversal and the "duration" of the chart with which you are working; eg., weekly chart reversals tend to carry farther than daily.

As Nison and Morris elaborate in their books, combining candlesticks with other tea leaves will improve your success. Nison talks a lot about moving averages, and Morris uses stochastics.

In addition to more traditional TrendLines and Horizontal Supports, I use fibonacci levels to estimate near- and far-targets and supports on some charts. Recently I have been exploring the use of momentum to help me ride an UpTrend longer (I tend to exit too soon).

Candlesticks favour the position trader, who is often a contrarian - looking for some turning point. OTOH Point&Figure charts tend to favour the momentum trader; some combination of the two might be useful.

Another candlestick reader named Esteban, who enjoyed using candlesticks on index charts as I do, once coined the phrase "...that candlesticks of index charts were like mass psychology in pictures" and were often more 'pure' than stock charts themselves.

FWIW one thing I have learned over the years is that, if you are gonna stay in the game for the long haul, try to find stocks/charts that - whatever means you use - you can read well.

-Steve
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