What is a convergence trade?
Candle Traders
- Thread starter Rickshaw Man
- Start date
HI all,
The way i see it was that this current range in the Dow
broke to the upside yesterday, Thursday 16th.
Strong resistance
was shown by the 2 Doji on May 27th and June 2nd, both had
5 point bodies. The daily high of the 2nd June doji was 10,559 -
yesterday's Open / Close was above this and also the low @
10,540 was approx. mid-point the body of the first doji on 27th
May, showing that previous resistance is now support.
The way i see it was that this current range in the Dow
broke to the upside yesterday, Thursday 16th.
Strong resistance
was shown by the 2 Doji on May 27th and June 2nd, both had
5 point bodies. The daily high of the 2nd June doji was 10,559 -
yesterday's Open / Close was above this and also the low @
10,540 was approx. mid-point the body of the first doji on 27th
May, showing that previous resistance is now support.
Quote from reddragon:
Hi all,
The drop in the Dow over the last 2 days shows that it didn't
provide strong support - i was expecting it to consolidate and
then move up. Live and learn !!!.
Hi reddragon,
After June 17th, did your candlestick pattern analysis give you any warning (hints) the support wasn't as strong as you originally thought ???
NihabaAshi
Don't mean to jump in but all those winks and small bodies (what ever name you wish to call them) on the daily where a good indication that there was not a lot of conviction either way and anything could have triggered this kind of reaction.
In this case Oil prices won out.
Just my opinion.
Hi Samson77,
I don't know if he saw anything or not...
If he did...I'm just curious to what it was.
Like you, I saw key things outside of candlestick analyis such Oil, Eurodollar, U.S. Dollar, other index price action et cetera but I'm hoping to just stick to candlestick analysis.
Also, lately I have been talking about the importance of the big picture here at ET and using candlesticks as only a support methodology but wanted to just talk candlesticks here unless there was a candlestick pattern in one of the above I mentioned.
However, I agree with you back on June 15th concerning the DJIA daily chart candlestick analysis...
Yet, on June 22nd via daily chart candlestick analysis in the DJIA...things got very interesting...
Especially since it supported what had occurred on a weekly chart pattern elsewhere (swing trading talk).
http://www.elitetrader.com/vb/showthread.php?s=&threadid=51412
Whether there'll be further follow-through downwards is dependent upon those other key markets...
Ooops...I'm discussing the big picture again
NihabaAshi
Hi all,
My apologies for being slow to reply but it's been a very
warm, sunny weekend and i've been outside enjoying it.
My interpretation of the C/stick chart for the Dow up to the close
of 22nd June is as follows:
5 point Doji on 27th May followed by a drop of 75pts next
trading day showed Resistance.
Another Doji on 2nd June followed by a 93pt drop next day
confirmed Resistance.
The open/close on the 16th June was above the close of the
Doji of 2nd June, and the 45pt rise on the 17th June showed
that the Resistance had been overcome.
The concensus in Technical analysis is that what was Resistance
now needs to be support before the market moves up.
The first show of support , IMO, came on 20th June when the
Daily low @ 10,562 was 3pts above the Daily high of the Doji
of 2nd June , which was 10,559.
The daily lows for the next two days, 21 + 22 June were above
10,562 - with the second show of support given by the low of
22nd June @10,578 which was the close on the 16th of June.
Finally, the Open/Close for the C/sicks on 20/21/22 June were
all inside the Open/Close for the 17th June.
My analysis was for a move up and i set my stop @ 10,550 which
was a few points below the close of the 2nd June Doji.
Of course what happened on the 23rd + 24th shows how wrong
you can be !!
My apologies for being slow to reply but it's been a very
warm, sunny weekend and i've been outside enjoying it.
My interpretation of the C/stick chart for the Dow up to the close
of 22nd June is as follows:
5 point Doji on 27th May followed by a drop of 75pts next
trading day showed Resistance.
Another Doji on 2nd June followed by a 93pt drop next day
confirmed Resistance.
The open/close on the 16th June was above the close of the
Doji of 2nd June, and the 45pt rise on the 17th June showed
that the Resistance had been overcome.
The concensus in Technical analysis is that what was Resistance
now needs to be support before the market moves up.
The first show of support , IMO, came on 20th June when the
Daily low @ 10,562 was 3pts above the Daily high of the Doji
of 2nd June , which was 10,559.
The daily lows for the next two days, 21 + 22 June were above
10,562 - with the second show of support given by the low of
22nd June @10,578 which was the close on the 16th of June.
Finally, the Open/Close for the C/sicks on 20/21/22 June were
all inside the Open/Close for the 17th June.
My analysis was for a move up and i set my stop @ 10,550 which
was a few points below the close of the 2nd June Doji.
Of course what happened on the 23rd + 24th shows how wrong
you can be !!
Hi reddragon,
Thanks for the reply.
I notice you call the small real body on May 27th a doji.
You also called the almost like hangman on June 2nd a doji.
With that said...is your analysis based on interpretation of a doji line or more about just price action itself (less emphasis on candlesticks).
Here's my question especially since you saw the bodies of June 20th, 21st and 22nd within the body (difference between Open and Close) of June 17th...
Did the Dark Inverted Hammer on June 22nd change your bias that the probabilities for an up move to whatever profit targets you had wasn't likely to occur. ???
I guess I saying that you obviously consider long lower shadows as support than the long upper shadow on June 22nd must have been a strong resistance line to you.
Therefore, if your Long and you see a bearish signal...what do you normally do...
* Stay with the Long
* Reverse your trade
* Close your position eventhough your stop was not hit
* Another option I failed to mention
NihabaAshi