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

To: The Perfect Hedge who wrote (1092)	1/15/1998 8:28:00 PM
From: Esteban	Read Replies (2) \| Respond to of 1589

Glen, If you get a clear buy signal with a candle and then get a confirmation candle the following day only then to get an inverted hammer that's black what does that mean. It means that the reversal occurred but it's going against the trend so it might be time to retest the low or make lower lows. If there was already a double bottom or decisive downtrend line break, the inverted hammer, or harami, which this might be since the upper shadow length is probably not quite twice the body length, wouldn't carry much weight. Two days is not much of a trend to reverse. But in this case there seems to be important resistance at this point, so I wouldn't ignore it. There is a window created by the open 5 days ago, and windows are important as support resistance areas in Japanese candlestick charting and of course, traditional bar charting. This looks like a closing of the gap and therefore a continuation pattern calling for a continuation of the bearish trend. There is no actual candlestick continuation pattern being generated by this gap, but the psychology holds. It looks like the downtrend line beginning around 52-53 and drawn through the minor high of 48 or so is also in the current price area providing additional resistance. It looks like down from here to me. If prices rebound and break through the window, that would be a bullish sign. Or if you get a new reversal pattern at or above the previous low that would also be a bullish sign that gives you a lower long entry point. I hope this helps. I wanted to make the point that canlestick patterns as important reversals need to be in the proper chart context because these are short term indicators. The hammer or harami in the context of an uptrend to reverse is questionable, but in the context of the resistance encountered here any weak candle line could turn things lower. Esteban