Fast & Easy Reading of Candlestick Patterns
When Candlestick
Charts were first introduced to the western markets, everyone using Stock
Charts and Technical Analysis relied on indicators more than Bar Charts, which
were the most popular charts back then. Bar Charts are much harder to read,
give less visual data, and take longer to interpret. Candlestick Charts
were instantly popular because they made reading price fast and sample.
In the beginning
Candlesticks were assumed to be the confirming indicator, which made pure price
subordinate to indicators such as MACD and Stochastic both very popular
indicators.
However decoding
Candlestick Patterns and using Candlesticks as the entry signal rather
than just confirming a continuation of the trend or a reversal of the trend,
enables traders to use pure price as their entry and exit signal.
Go to the Candlestick
Charts webinar to experience for yourself the excellence of TechniTrader
education.
Go to the TechniTrader
Spatial Pattern
Recognition Skills™ are something most traders do not have, and need to
develop. It takes a while to learn how to read Candlesticks as quickly and as
easily as you are reading this text, but when you can do so it opens up a world
of information about why price is moving as it is and how it will move
next.
During Trading Range
Market Conditions keen Spatial Pattern Recognition Skills are imperative.
Otherwise the markets seem merely volatile, unpredictable, and confusing. By
learning Spatial Pattern Recognition Skills you can speed up the entire
analysis process, and find strong picks to trade.
Beginners go watch The Basics of the
Stock Market for New Investors and Beginning Traders webinar lessons, and get
started today!
Go to the TechniTrader
"Basics of Stock Market New Investors & Beginning Traders" Webinar Lessons
Everyone who uses
Candlesticks knows what a Doji Candlestick is, however where it forms can
reveal a great deal. As an example using the Doji for decoding Candlestick
Patterns the Doji can be a resting day candle and the stock will continue
moving down, the Doji can be an exhaustion pattern in which the stock will
reverse, OR the Doji can expose giant Institutions using Dark Pools controlling
price.
The reason Dark Pool
Quiet Accumulation is easy to recognize in a candlestick formation, once it is
understood how giant Institutions using Dark Pools buy and sell, the patterns
become obvious and are instantly easily recognized. In the chart example below
the tight formation of Doji first being white, then black, and then white again
is a Dark Pool Quiet Accumulation Candlestick Pattern.
Since this is also a compression consolidation of Doji,
it is also indicating a likely Breakout pattern. The stock may either run with
High Frequency Trader triggers or gap. Entering early in this tight
consolidation of Doji, ensures that the trade is executed before a potential
run or gap.
The more compression there is then the more velocity behind the Breakout, with the pattern definitely favoring an Upside Breakout. The way the Doji have formed in the Candlestick Pattern tell the Technical Trader with strong Spatial Pattern Recognition Skills, that this is an Upside Breakout about to occur soon.
Summary
The chart example also gives other information regarding decoding Candlestick Patterns. The stock has bottomed decisively and recently. It has no strong resistance above price. The tight consolidation of Doji was preceded by speculative trading triggered first by Professional Traders, then High Frequency Traders, and then Smaller Funds. The stock went sideways as Professionals took profits while Smaller Funds bought. Now it is in a very tight formation. The control of price requires a very specific type of order that only Dark Pools use regularly.
The more compression there is then the more velocity behind the Breakout, with the pattern definitely favoring an Upside Breakout. The way the Doji have formed in the Candlestick Pattern tell the Technical Trader with strong Spatial Pattern Recognition Skills, that this is an Upside Breakout about to occur soon.
The chart example also gives other information regarding decoding Candlestick Patterns. The stock has bottomed decisively and recently. It has no strong resistance above price. The tight consolidation of Doji was preceded by speculative trading triggered first by Professional Traders, then High Frequency Traders, and then Smaller Funds. The stock went sideways as Professionals took profits while Smaller Funds bought. Now it is in a very tight formation. The control of price requires a very specific type of order that only Dark Pools use regularly.
Experienced traders go to the Learning Center and watch a wide variety of training webinars.
There are Libraries for TC2000, StockCharts.com, and MetaStock Users.
Go to the TechniTrader
TechniTrader
The Gold Standard in Stock
Market Education
Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using a TC2000 chart, courtesy of Worden Bros.
Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
TechniTrader DVDs with every course.
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Disclaimer: All statements are the opinions of TechniTrader, its instructors and/or employees, and are not to be construed as anything more than an opinion. TechniTrader is not a broker or an investment advisor; it is strictly an educational service. There is risk in trading financial assets and derivatives. Due diligence is required for any investment. It should not be assumed that the methods or techniques presented cannot result in losses. Examples presented are for educational purposes only.