3SOF

I'm starting this thread because I believe Candlestick Theory deserves a separate place in the general technical analysis issue. I saw this post from stocky on another thread that I believe belongs here:

Quote from: stocky on August 14, 2005, 01:08:37 AM
Ramsburg/elite, can you arrange them in order of the best technical indicators in your opinion top to bottom.

Bullish Engulfing
Piercing Line
Morning Star
Bullish Harami   
Three White Soldiers

These are not technical indicators. They are candlestick patterns. Technical indicators are, for example, moving averages, bollinger bands, volume, stochastic oscillator, relative strength, Directional Movement, Chaikin Money Flow, well, we got hundreds of them on Metastock.

Bullish engulfing, Piercing Line, Morning Star, Bullish Harami, Three White Soldiers are all candlestick patterns. Candlestick patterns are divided in two groups: reversal patterns and continuation patterns. There are 32 reversal patterns and 13 continuation patterns.

I'll use this thread to talk a bit about each one of them. With time we'll see that one can't make a top to bottom list of being better or worse patterns as stocky asks.

Thanks for your posts, let's go deep into the candlestick theory on this board !

David, its great that you are back. I am looking forward to learn TA inside out here. Thanks.

Lets get this thread running!

I'll start with the Rising Three Methods and the Mat Hold patterns.
I'm currently studying these and find them very interesting and usefull (and painfull .. look at the PETS thread )

Rising Three Methods and Mat Hold


1. 1st day is a long white day.
2. Three small body candlesticks follow the 1st day. Each trends downward and closes within the range of the 1st day. (Mat Hold: 2nd day is a black day that gaps above the 1st day.)
3. The last day is a long white day and closes above the 1st day's close.

My personal adjustments to these conditions based on my (at this moment small) study;

1. 1st day is a long white day
2. a fase of consolidation follows the 1st day. 3 or more candles trends downward and closes within the range of the 1st day. They don't all have to be black!
3. the last day is a long white day that closes well above the 1st day's close

In all the fases volume is very important. The long white days should be confirmed by high volume and the volume in phase 2 is preferably drying out to result in high volume white candle in the last phase.

NOTE: If the white candle of the last phase gets high enough above the first white, it often is the 1st day of the same pattern at the same time.

some charts:

This free site  has good description of about 60 bullish and bearish patterns so makes a nice reference and avoids people having to repost it all here.

Bullish Patterns

http://www.litwick.com/indicators/bullish.html

Bearish Patterns

http://www.litwick.com/indicators/bearish.html

I'll continue with some more charts:

One currently in play:

im looking into the importance of Volume in this pattern;




one more requirement; the pattern has to occur in a bullish trend

Dave: Here's another candlestick pattern reference where the patterns are rated by reliability.

Bullish: http://www.candlesticker.com/Bullish.asp

Bearish: http://www.candlesticker.com/Bearish.asp

Neutral" http://www.candlesticker.com/Neutral.asp

Thanks, nice info 

Quote from: metro on August 19, 2005, 04:23:09 AM
This free site has good description of about 60 bullish and bearish patterns so makes a nice reference and avoids people having to repost it all here.

Bullish Patterns

http://www.litwick.com/indicators/bullish.html

Bearish Patterns

http://www.litwick.com/indicators/bearish.html

Actually I saw this website and their pattern explanation isn't accurate many times. I'm sorry to say this but they didn't seem to study the Candlestick Theory very deep. For example, they have bullish and bearish patterns. But they mix continuation with reversal patterns and that doesn't make sense ...

I'll take a look at this www.candlesticker.com and later I'll say something about it ... great charts nikao