21 Candlesticks Every Trader Should Know (Trade Secrets by Melvin Pasternak

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By Melvin Pasternak

Examine the 21 key candles and also you should still increase your buying and selling functionality whether it slow body is numerous weeks or a number of hours. as soon as might simply ask, why do candlesticks proceed to realize such strength out there? the reply are available within the transparent and straight-forward nature of the candlesticks themselves--offering investors the power to work out the larger photograph. Continuation styles, reversal styles, rising traits, backside and tops--all of those insights happen in a fashion that different charting structures simply cannot compete with. And from an array of approximately a hundred charts, Dr. Pasternak has selected the 21 most crucial ones.

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Extra resources for 21 Candlesticks Every Trader Should Know (Trade Secrets (Marketplace Books))

Sample text

This is my nursery rhyme for the evening star: "IF YOU SEE THE EVENING STAR, A TOP IS OFTEN NOT VERY FAR. On the first day we see a candle with a long white body. Everything looks normal and the bulls appear to have full control of the stock. On the second day, however, a star candle occurs. For this to be a valid evening star pattern, the stock must gap higher on the day of the star. The star can be either black or white. A star candle has a small real body and often contains a large upper shadow.

Intraday, the stock was off nearly $5 and left a large gap between approximately the $60 and $62 level on the chart. Note also the large volume spike on that day. As we shall see later in this book, gaps in candlestick theory are called "windows," and create resistance to further price advances. 64 and began to recover. By mid-June it was back above $60 and trading into the window it had created the day of the acquisition. That in itself should have made any long cautious on AVID. Another reason for prudence, however, was that it was overbought.

This one was doubly significant as it held the very upper end of the gap or window created several days earlier. 90 in mid-May, topping out just below "round number" resistance at $5. 20. 16 low as well as was still above its late April gap. The piercing candle appeared at support two days later. It was not a large range day and was accomplished on low volume. A trader who observed it might have made a mental note and watched with interest the trading action of the second day. Now the trend became much clearer.

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