Applied science of Candles…

Guyz,

Here I'm starting thred to discuss practical implication of candles... Senior members, kindly give your suggetions.....

Per Japanese, Doji indicates indecisiveness… Scrip is tired after one sided run… For this, market/stock has to have defined trend. Below mentioned is example where I consider Doji as important and where it’s not important.

In below mentioned chart at Point ‘A’, we got first signal that mkt may be tired, what we needed was, confirmation in the form of bearish candle (close below Doji) but what we got next day??? One more Doji which gave us indication of indecisiveness. Now what we got very next day? Long real white body hence, no confirmation of trend reversal, but as Japanese say that fall of one leaf can be sign of potential season change!!! We needed to be a bit cautious about the strength of move.
Then at point ‘B’ we got one more Doji (small real body but I take it as Doji only) i.e. one more sign of equal power between bulls and bears, we need to watch who is winning this battle. Very next day, once again we got white real body making pattern voided. After that at point ‘C’ mkt displayed one more Doji, we became cautious once again. Next day we got black real body forming Evening doji star. It gave us sell signal keeping stop loss of highest high of evening doji star pattern. I went on short with my stop loss of 4647 (high of doji at point C).

Now after that we got long real black body (first crash). Now what should be our strategy???? Should we close our short position???? I followed below mentioned strategy…
Mid point of long body mostly work as supp/resis. I moved my stop loss from 4647 to 4525 (a bit higher than mid point of long real black body). Now once again we got Doji at point ‘D’ but since, we did not have defined trend, doji at point ‘D’ is not that much important. However, we can not ignore it also as it was showing equal power of bulls and bears. Then we got real white body making morning doji star. Once again since we did not have defined trend that pattern was not so significant. But we can’t even ignore it so hold short position with tight stop loss of mid point of long black real body (I used a bit higher than mid point i.e. 4525). Mind well, here we are tightening our stop loss but not going long. Since it was dead cat bounce it could not go beyond that.

Day before yesterday we got one more doji followed by long white real body completing morning doji star. What should be our action now? I put it in this way,

1> we don’t have defined trend yet (mind well, down movement is still being developed, we can say that down trend is defined.)

2> Look at the long upper shadow telling us bulls could not hold higher levels…. Here, what we need to do is, once again let’s tighten stop loss for short positions. What’s next in store for us, will be proven by mkt on Monday….

Senior members:- plz plz plz, give comments and explaination of some more patterns.

PFA chart for better explaination.

Attached Files

Nifty.doc (37.5 KB, 80 views)

Hi

Nice explanation….

looking at the chart my view is this ---

On Thursday there was a Gravestone Doji

Shows the opening and closing price at the low for that day and is quite bearish.
It is a sign of exhaustion…..but followed by white candle…no idea!

If on Monday Bear won the battle then more downtrend is confirmed...
lets see what happens...

Regards,
Luckytrader

No one interested in this kind of practical educational thread?

HI
NOW this is not true.Someone is interested.Their should be many others who will pick up the thread i am sure.The board has many enlightened people.
....Perhaps your post went unnoticed.Just persist a bit and continue to post your views.
Now on teusday we have a Doji.It warns us that the pullback is now indecisive.The confirmation eitherway shall come on thursday.

Combine Candles with Fibs will be much better.

thanks

Swagat!

I would really appreciate if you could post some practical example... Because books write something from the old perspactive... In today's mkt, It's difficult to apply what is written in books... We have to alter and build strategy...

I started and tried to explain how could candles be used in today's mkt... I'm gonna post some more as and when I will get good example.

Thanks,
Apurv
"Heartily appreciate power of candles"

Apurv,
I do not have the exact idea,but there is a good corelation inbetween candles formed in diff.
fibonacci retracement/expansion levels.Tried to find the corelation,but all in vain.
Thanks,
Anirban

HI
The candlestick patterns had given a alert.
Now the gap down move is perhaps going to be a 'shaven head' in all probability.we'll know at the end of the day.
One does not need further signal's for the next 2/3 days.Do we?

Yes, u r right.

The Downtrend is confirmed......

Waiting for candles to give reversal signals..