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Candlestick Patterns Provide the Best Technical Analysis Tools

If you want the Best Technical Analysis Tools then you need to learn the simplicity of Japanese Candlesticks!!

The Candlestick Forum strives to provide the best technical analysis tools available over the internet. Stephen W. Bigalow, author of "High Profit Candlestick Patterns",  explains the history and profitable trading techniques for the best technical analysis tools -- Japanese Candlesticks --for centuries of  proven profitable results.

Even investors new to trading, quickly identify price movements with a high degree of accuracy. due to the simplicity of candlesticks. Trading the stock market requires a great degree of discipline.  Ask any trader what is the biggest obstacle they had to overcome. Repeatedly, the answer is letting go of a bad trade. Even the best technical analysis tools can not help you fight the urge to hold onto loosing trades. Candlestick Signals remove the emotional trading that cause good trades to go bad.

The best technical analysis tools provide quick and easy methods for identifying price reversals, strong trends, weakening trends, and chart patterns ready to put money in your pocket. The 12 Major Candlestick Signals  provide  the best technical analysis tools you will ever need! Be sure to follow our Free Resources area for all the trading explanations of:

Major Candlestick Signals, These 12 Major Signals provide more profitable trades than most investors will ever need. However, it does not mean the remaining patterns should not be considered. 

The Candlestick Continuation Patterns, Identify periods of 'rest' in a trading entity. The Japanese insight is, 'there are times to buy, times to sell, and times to rest." Learning these continuation  patterns will help investors know to place their money elsewhere. 

Finally,  the Candlestick Reversal Signals, are highly effective patterns for identifying price reversals. An important element to any portfolio is the ability to identify when it is time to take profits, or close poor performing trades.

This week we add the "Concealing Baby Swallow" for identifying reversal of a downtrend.

CONCEALING BABY SWALLOW

Description

The first two days of the signal, two Black Marubozus, demonstrate the continuation of the downtrend. The third day, the Reverse Hammer illustrates that the downtrend is losing steam. Notice that it gapped down on the open, then traded up into the previous days trading range. This demonstrated buying strength. The last day opens higher and closes below the previous days close. It completely engulfs the whole trading range of the prior day. Although the trading ended at the trends low point, the magnitude of the downtrend had deteriorated significantly. Expect buying to show itself at these levels. This is a very rare signal.


Criteria

  1. Two large Black Marubozus make up the beginning of this pattern.
  2. The third day is a Reverse Hammer formation. It gaps down from the previous day’s close.
  3. The final day completely engulfs the third day, including the shadow.


Pattern Psychology

The bears have been in control for awhile. At the end of a downtrend, two Black Marubozu days appear. The third day gaps down at its low, then trades up into the trading range of the previous day. This buying is then negated by the sellers stepping back in. However, the bears have taken notice of the buying that occurred. The final day opens higher, again causing much concern for  the sellers. As it sells off for the rest of the day, the concerned shorts have time to cover their positions. The new closing low is not of the same magnitude of the previous down days of the trend. The buyers do not run into very much selling resistance from here.

 

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