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

To: MonsieurGonzo who wrote (667)	11/20/1997 9:33:00 PM
From: Tom Shutters	Read Replies (2) \| Respond to of 1589

Steve, agree on the continuation patters, but I think you have it figured out by watching the stock throughout the day. What I do is try to anticipate the chart as it developes. This keeps me from selling too soon (n'est-ce pas?) Check the following chart. I am calling this a bullish harami. 207.95.154.130 I am hoping that it will open near where it closed and not gap up. If it opens near the close, then I will expect it to continue up. Maybe I can hold it another day. Enjoying your posts, Tom

To: MonsieurGonzo who wrote (667)	11/20/1997 10:07:00 PM
From: Esteban	Read Replies (1) \| Respond to of 1589

Steve, >>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).<< And notice that the Tuesday candle was an engulfing candle. If you didn't wait for confirmation .... WHIPSAW.... Since Monday gapped and made a star and was at horizontal resistance at 7800 it would have been tempting to sell the Tuesday engulfing pattern on the close. That's part of the problem with continuation patterns. Sometimes their makeup begins with a reversal pattern, like when a harami turns into a low or high priced gapping play. I find windows (gaps) confusing and I know they are a major part of candle analysis. Lots of reversals are based on gaps, and so are some continuations. When the patterns don't develop in a textbooks manner (most of the time) it's hard to judge reversal or continuation. Esteban

To: MonsieurGonzo who wrote (667)	11/21/1997 1:02:00 AM
From: Esteban	Read Replies (2) \| Respond to of 1589

>>Candlesticks do not inherently indicate the extent of a movement; rather, I am beginning to think that instead of movement, Candlesticks reveal sentiment.<< I agree. The candlesticks provide insight into psychology in a more visual way than standard bar graphs. Certain patterns reveal the psychology, often indecision or waning of enthusiasm. They don't seem to give any indication beyond that. The indecision could amount only to a pause of trend, or the start of a major reversal. I think an important point here is to look beyond the pattern and into the psychology. This can allow you to reverse back quickly if you went with the pattern and you realize that the psychology the pattern depicted is no longer in effect, or to take action on a movement that is not an established candlestick pattern that none the less reveals the same psychology. Example: A Dark Cloud Cover reveals deterioration in enthusiam after a strong open. But if the open was not so strong and opened within the previous day's body and then closed below it (a Tasuki Line) a recognized pattern has not developed, but to me it indicates sentiment at least as bad as the Dark Cloud Cover. So I'm thinking there are lots of variations of the classic patterns that reveal the same psychology. The biggest challenge for me is to learn how to pick the spots where candlestick patterns are most likely to signal something important and avoid being constantly whipsawed. Another is to realize that the trend has deteriorated WITHOUT an actual candle pattern forming, and recognize the deteriorating psychology in it's absence. Steve, thanks for the tip of people to pay attention to for index trading. Esteban