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Strategies & Market Trends : Tech Stock Options -- Ignore unavailable to you. Want to Upgrade?

To: Jerry Olson who wrote (29203)	11/22/1997 3:53:00 PM
From: MonsieurGonzo	Read Replies (2) \| Respond to of 58727

Jerry; RE:" Japanese Candlestick Charts..." They fascinate me, too, Jerry - Candlesticks are interesting tools. An Englishman named Steve Nison, who is one of those gifted British traders who emigrated to the Far East, (Daiwa Securities) came across them being used by Asian traders several years ago. He then wrote an article about them in Futures Magazine, and a book about them: Japanese Candlestick Charting Techniques around 1991. elder.com Candlestick Charts were first drawn on rice paper the 1700's. The myth is that a formidable trader, named Homma, invented and used candlesticks to dominate the then-new rice futures market in Japan. Other than the way they draw the familiar "bars" as "candles", the charts look the same as ours; ie., you can still draw trendlines, support levels and moving averages on them. I first came across Candlestick Charts over here in Europe - they are commonly used now by futures traders (I work with aluminium / LME) - and I became very curious about this interesting way of adding more information to standard charts with very little ink. Nison wrote a second book, Beyond Candlesticks, which talks about even more obscure Japanese charting methods - variations of our Point-And-Figure charts, called the 3-Line Break Chart, the Renko Chart, and the Kagi Chart. elder.com Although many WWWeb site chart generators now offer Candlesticks as an option, there are no generators for these more obscure chart types that I know of. But since you have been reading the thread over on SI, "Candlesticks...", you can see that METASTOCK has this feature, and we are just starting to post these thingys up on the Web and talk about their usefulness, or lack thereof. I am encouraging the Candlestick thread to focus upon an INDEX, or some indices, as so far - most folks just pop in and want to know, "Hey, what do the candlesticks say about my stock?" {grin} This is a relatively new thread, and there is no organized effort to post index charts and maintain a reading of them (yet). We have just discovered a superb Candlestick chart generator on the WWWeb, a Java-applet that will generate candles of any time-slice, in real-time (for the indices), for free; including candlestick charts of OPTIONS intra-day, and (SP7Z) S&P Futures (delayed 10-min); as well as stocks. One can watch the Candlesticks as they are being formed. quote.com Last week was an interesting one because, many of us were comparing the "consensus" (as Judy calls it) of index traders Tom, Nemer and Kevin very closely. Here is a screen shot of my trading screen during that period. The candles that are marked are called, Hammers by the Japanese, as in hammering out a new trend. A Hammer Candlestick can be right-side-up, or upside-down; further, it can be a bullish, "white body" (close for that bar was higher than open), or a bearish, "red body" (close was lower than the open). They often have a climactic volume associated with them. The typical Hammer Candlestick looks just like the ones marked on my screen shot: right-side-up, with long "legs", as if plunging the depths with a stick to feel for a bottom. geocities.com Hammer Candlesticks require a "confirmation" by the following candle before the trader is supposed to act upon them - so one would have bought OEX CALLS after "confirmation" of a reversal indicated by the Hammer. Not unlike the Japanese language, there are dozens of different Candlestick types, each with its own name; then there are many patterns which consist of two or three candles in combination. -Steve