Japanese Candlestick

Re: Japanese Candles - Technical Discussion

Postby kennynah » Wed Nov 11, 2009 12:42 pm

last night SPX ended with this candle stick...

what does this mean? does it mean it is signalling a reversal? i duno....

what do you think?
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Re: Japanese Candles - Technical Discussion

Postby millionairemind » Wed Nov 11, 2009 12:48 pm

Nobody won?? (bulls and bears both don't have the upper hand, yet)
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Re: Japanese Candles - Technical Discussion

Postby kennynah » Wed Nov 11, 2009 12:52 pm

i oso agree...from that candle pattern, it appears there was a tussle last night...no winner emerged... but now that SPX is re-challenging recent highs, this candle should be telling us that market players are cautious now...
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Re: Japanese Candles - Technical Discussion

Postby iam802 » Wed Nov 11, 2009 3:05 pm

Just to add on to the discussions...

Even though the doji signal a possible reversal, we need to put this into context and think in terms of 'trend'.

Just like when we drive a car and wants to do a U-turn, we start applying brakes first before we finally turn....

Likewise, the appearance of a doji does not necessary mean the trend will turn immediately.

That is why we need confirmation for this.

For now, I am just going to sit back and continue to watch. Set my stop-loss for all my long positions.

And I have my 'short list' ready as well :)
1. Always wait for the setup. NO SETUP; NO TRADE

2. The trend will END but I don't know WHEN.

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Re: Japanese Candles - Technical Discussion

Postby iam802 » Wed Nov 11, 2009 3:30 pm

Here, I am attaching a chart of NOL highlighting how 2 reversal signals are sighted but they do not necessary confirm the reversal.

In the first case, after the Umbrella line is sighted, the confirmation is found on the 2nd day.

If you look at the second case, the day after the doji is sighted, it actually go up. So, in this case, it make the doji an invalid reversal signal.

Hope my candlestick reading is correct.

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Re: Japanese Candles - Technical Discussion

Postby kennynah » Wed Nov 11, 2009 7:48 pm

802 :

astute observation...

to note that while the volume seems high and liquid, remember that this is a <S$2 stock.. it is very different when you see millions of shares traded on Goog, aUSD560/share counter... my point being that candles are useful only when there's sufficient liquidity and thus making it lesser manipulated, which will render candles read less useful...

i would be very careful about using candles on singapore listed counters, especially illiquid counters. in fact, TA is much less useful on these charts.

next...as 802 rightfully pointed out, reversal candles are especially useful when prices are at over extended, either being a highs or lows.... and specifically when formed after single directional multi-sessions... the interpretation will be more "accurate"..

when dojis are formed in the middle, like what 802 has on his NOL chart, that kind of doji could simply signal a pause before continuation...as evident in NOL's case.

right now, SPX is challenging new highs, and it has also clocked multi sessions rally... these 2 ingredients ar potent concoction to seriously take note of the "doji" formed on Tues... however, the thing with candles is this... we almost always need subsequent confirmation candles to validate the directional bias... usually 3 candles are sufficient to give it accuracy.

thus, even with the recent doji formation, we still need Wed and possibly Thurs candles to form a more concise technical view of the market directional bias...

for now, i will be watching it closely to see that Wed does not form a dominant red candle. if it does, the danger of a rally reversal will multiply significantly.

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Re: Japanese Candles - Technical Discussion

Postby lithium » Wed Nov 11, 2009 9:09 pm

Walau! I can learn something again!!! Yahoo!!!!!! :lol:
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Re: Japanese Candles - Technical Discussion

Postby lithium » Sun Dec 20, 2009 9:47 am

Any comments on this doji on Friday? Bouncing back on Monday?
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Re: Japanese Candles - Technical Discussion

Postby helios » Sun Dec 20, 2009 10:26 am

i will also look at the "legs" of doji to have a check on the indecisiveness, plus a reflection on the volume.

for example, the longer the legs are, the higher the chances of rebounce - indirectly - the doji day deeply dived, and followed by swift closing at mid-upper ... hence, there are many different [kinds of] doji characters, graveyard doji, dragonfly doji, etc.

by itself, doji don't signify much, it is the position where it is sighted. In this case, i prefer the doji to have "longer" legs with a higher than average volume transaction ...

i hope to find the Steve Nelson's book to read and refresh ...
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Re: Japanese Candles - Technical Discussion

Postby helios » Sun Dec 20, 2009 9:38 pm

although, i have yet to see a triple doji, one might have sighted a double doji (2 doji formations in succession) in a neutral market conditions ... possible?
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