Candlestick Trading Blog
History repeats itself in the stock market. Stock price patterns are repetitive. This fact about markets has been known since Japanese rice traders used it during the days of the Samurai. Candlestick charting, Candlestick pattern formations, and Candlestick trading tactics all emerged as a result of traders identifying price patterns in the rice market. The use of Candlestick chart analysis has expanded in the modern age to be of use in stock trading, options trading, futures trading, and commodities trading. In the New York Stock Exchange (NYSE) and the NASDAQ stock price patterns allow traders to anticipate future stock price movement and allow stock traders to profit from subsequent stock trading.
Stock price patterns such as the Harami go back to when they were only used in rice trading in Samurai times. Depending upon the configuration this can be a bullish pattern or a bearish pattern. In each case the Harami signals a reversal of a current market trend. A “modern” market reversal pattern is the head and shoulders pattern. Like the Harami the head and shoulders pattern signals a pending price trend reversal and is bullish or bearish depending upon whether it is the standard configuration or its reverse. Both of these stock price patterns, old or new, allow the trader or investor willing to do the work the opportunity to profit from changes in any equity market. There are twelve basic stock price patterns seen in the dozen major Japanese candlestick patterns. Recognition of these stock price patterns will allow the trader to take advantage of upcoming stock price changes and trade accordingly. The use of stock price patterns works for short and medium term trading. For long term investing the investor will need to apply fundamental analysis the stock in question. However, when buying or selling for long term purposes it is still wise to look for stock price patterns. The use of Candlestick basics to assist long term investing will allow the investor to get the best price when buying and the best price when selling even when he or she is buying stock and selling stock years apart. Many investors favor growth stocks. These are stocks of companies with new technology, new products, new markets, and even trading in whole new market sectors. There is a tendency when trading these stocks to believe that the exceptional growth of the stock will negate any need for careful technical analysis of stock price patterns. This is really not the case. No growth stock goes on forever. Not all stocks that jump up in price temporarily continue to do so over the long run. Careful analysis of price patterns will help the investor avoid buying a growing stock just before a market reversal. Technical analysis of price patterns will allow the investor to optimize his or her profits over the long run. It would be silly to invest in a stock that returns twenty percent per year but ignore the chance to buy the stock for ten percent less and sell it for ten percent more based upon short term market fluctuation.Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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