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Strategies & Market Trends : Candlestick Charting--The unknown indicator -- Ignore unavailable to you. Want to Upgrade?

To: MonsieurGonzo who wrote (664)	11/20/1997 8:48:00 PM
From: MonsieurGonzo	Read Replies (4) \| Respond to of 1589

RE:" Continuation Patterns..." Dojis and Hammers and Engulfing Patterns are not difficult to spot, in that order, n'est-ce pas ? That's one of the things about Candlestick Charting that is so much fun - you can spot these candles after you learn them once and start to look for them pretty quickly. Perhaps the most difficult thing for me is not reversals, but continuation patterns. Take a look at the DJIA (INDU) on the chart generator... quote.com ...and note that if we sell every time we see a Shooting Star and buy every time a Hammer appears, we'd be whipsawed all over the place :-( Of course, there is the issue of confirmation that Esteban brought up - but what I mean is, Candlesticks do not inherently indicate the extent of a movement; rather, I am beginning to think that instead of movement, Candlesticks reveal sentiment. There is a section in Nison's book about "continuation patterns", and in it, he talks about the follow-through of trends with 3 marching candles, and so forth. But in his second book, he really goes in to how the Japanese combine candlesticks with moving averages, Western style trend lines, and horizontal support levels. Back to the DJIA - look at the slope of the rise (UpTrend) in the last six candles... can this be sustained ? And, draw a DownTrend line from the recent tops (the intermediate Downtrend) - we just busted through that; Further, draw a horizontal resistance line from the bottom of the candle-bodies (around DJIA 7860), and note: that's where the HIGH for today was. what do you think the next few DJIA candleticks will look like? More 100-point plus white-bodies, on up to DJIA 8010 ? I kinda doubt that {grin} Breaking trend lines usually results in some sort of retracement - note the red candle on Tuesday after we busted through the first DownTrend line (around DJIA 7700). -Steve