There are two candlestick patterns I like to see in analysis particularly. One is tweezer top/bottom and the other is another reversal pattern which either is a "hybrid" shooting star type of pattern or a hammer type of reversal. I hope that this thread will serve to help technical analysis of the market. At the moment here are two examples of recent accurate use of this system I've had.
1) Tweezer bottom. (highlighted yellow) I also call this a double bottom as reflected off two consequetive candles but no one else does it would seem. Here's the criteria I like to see in place when finding a contrarian trade like this:
a) Long, deep penetrating wick/shadow
b) Steep prior move or a "blow off" - see "Jiler - Stock Charts" on Amazon
c) New high/low
d) The higher the timeframe, the better
e) It is also a reversal hammer candle
This covers the candlestick aspect.
2) Fibonacci. I was immediately looking for an entry order @ 50% retracement ON THE PREVIOUS CANDLE for the long giving an entry of 1.7750 (RED arrow). The low of the next weekly candle was 1.7734 - so within 16 pips of accuracy there. This gives 50% of the previous week as a retracement area to take out long stops.
Just as an observation, taking fibonacci numbers in pips of the downmove from 2.1160 gives target of 1.8672. 1.8667 hit after break of 161.8 ext (RED thumbs up). You can see my own sell order in the frame on the returning "spike" (candle) from this level (fibonacci) which is still in play presently with a profit of 421 pips and the stop moved to 1.8210. This is based on a downtrend which has tested and bounced off fibonacci number 1.8672 of downmove from 2.1160.
More to come on this...
http://www.sambeatson.com/images/tweezer.gif
1) Tweezer bottom. (highlighted yellow) I also call this a double bottom as reflected off two consequetive candles but no one else does it would seem. Here's the criteria I like to see in place when finding a contrarian trade like this:
a) Long, deep penetrating wick/shadow
b) Steep prior move or a "blow off" - see "Jiler - Stock Charts" on Amazon
c) New high/low
d) The higher the timeframe, the better
e) It is also a reversal hammer candle
This covers the candlestick aspect.
2) Fibonacci. I was immediately looking for an entry order @ 50% retracement ON THE PREVIOUS CANDLE for the long giving an entry of 1.7750 (RED arrow). The low of the next weekly candle was 1.7734 - so within 16 pips of accuracy there. This gives 50% of the previous week as a retracement area to take out long stops.
Just as an observation, taking fibonacci numbers in pips of the downmove from 2.1160 gives target of 1.8672. 1.8667 hit after break of 161.8 ext (RED thumbs up). You can see my own sell order in the frame on the returning "spike" (candle) from this level (fibonacci) which is still in play presently with a profit of 421 pips and the stop moved to 1.8210. This is based on a downtrend which has tested and bounced off fibonacci number 1.8672 of downmove from 2.1160.
More to come on this...
http://www.sambeatson.com/images/tweezer.gif
PhD with a specialty in economics & finance.