Candlestick patterns - NOT effective intraday?
- Thread starter hapaboy
- Start date
Hi Hapaboy,
I saw this thread but didn't initially reply because its a topic that's been discussed often enough for me here at EliteTrader.com
In addition...your a stock trader and I'm a Emini trader. Stock traders view and use candlesticks a lot differently than Emini traders...this is just my impression of the stock traders and Emini traders I personally know.
First of all...my discussion is that of an Emini Futures trader.
My favorite intraday candlesticks are different than the most reliable patterns accordingly to market conditions.
What I mean is this...my favorite patterns are always the same...no matter what the market is doing:
Bearish Engulfing
Shooting Stars (after parabolic uptrend)
White Hammers
Long Legged Dojis (after parabolic surges up or down)
Bearish Rising Shadows (Long Upper candlestick shadows)
Advanced Tweezer Tops and Bottoms
Advance Block
Advance Deliberation
Bullish Window and Bearish Windows
The above are my favorites simply because I have a trading plan for such and I'm quick at recognizing the trade signal as a discretionary trader.
Of the above...I've and others have discussed more details (including chart examples) about the Bearish Engulfing and White Hammers.
White Hammers:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=18381&perpage=5&pagenumber=1
http://www.elitetrader.com/vb/showthread.php?s=&threadid=20535&perpage=5&pagenumber=1
Bearish Engulfing:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=15131&perpage=5&pagenumber=1
My most reliable intraday candlestick patterns are accordingly to the current overall market conditions based on the daily charts.
Currently...after ES bounced off its daily chart 200eMA line support and the NQ bounced off its 50eMA line support around October 1st...the ES and NQ put in a very Long Upper candlestick shadow while above its 5eMA line last Thursday.
This tells me to look for any Bearish Reversal or Bearish Exhaustion patterns...particular...
My most reliable patterns for this particular and current price situation is Bearish Engulfing
Dark Cloud Cover
Incomplete Dark Cloud Cover
Bearish Rising Shadows
Shooting Stars
Bearish Advanced Tweezer Tops
Bearish Three Black Crows (also discussed here at ET)
My point is this...its impossible to make trading via intraday candlesticks easy via simply applying a reliable candlestick pattern for one type of market condition to another different type of market condition.
You really need to know what the overall market condition is doing...
know what the big picture is.
This...via position size managment...I'll most likely be going normal to heavy on the Short positions and light on the Long positions...
accordingly to what I see on the daily charts which to me represents more of a big picture than the intraday charts.
Something else...
I'm a trend reversal trader and divergence signals are a major part of my trade methodology.
I DO NOT use candlesticks while looking at a small part of the sky when sitting in a deep well...sometimes called using candlestick analysis all by itself.
Thus, via those candlestick patterns I've mentioned above...I will be looking first for divergence signals and secondly looking for intraday candlestick patterns within that divergence signal.
If there's no divergence signal...I'll be going normal size on any intraday bearish candlestick pattern...
if there's a divergence signal along with one of those above mentioned candlestick patterns...I'll be going large size.
Once again...any bullish signals like a Bullish Engulfing or Bullish White Hammer...
I'll be going light size regardless if its a Bullish White Hammer along with being a Bullish Divergence signal.
If I'm confused about the overall market condition...I'm either on the sidelines or light size on every trade signal.
Hapaboy, I use intraday candlesticks on any time frame...1min, 3min, 15min and daily charts.
I use them with indicators and in price action only methods. In price action only methods...I've very dependent upon intraday candlestick signals.
Indicators I use are price exponential moving averages, bollinger bands, CCI, MACD, volume et cetera...
all depending upon the price pattern...trade signal.
I also use Market Breadth Indexes like VIX, TICK and Advance Decline Line to make sure my intraday candlestick signals aren't going against what the Market Breadth is telling me.
Market Breadth Indexes are excellent when trying to determine if the market is trending or choppy and to help ensure your on the right side of the coin.
(Intraday candlesticks sucks in choppy or flat environments...reason why I tend to ignore such trading)
All the above has been discussed here before at ET in small bits as responses in other threads...just not generalized in one message post as this.
Hapaboy, if I failed to mentioned something important its only because I'm outta time with the message and have more important things to do...
trading and the market is about to open.
Good luck today and study every intraday chart you possibly can for a minimum of 3 months...
you will see repeatable intraday candlestick patterns and there reliability directly associated with the overall market condition.
NihabaAshi
Wow,
Thank you VERY much for taking the time and effort to encapsulate your ideas from various threads. I had indeed looked at the various threads and spent hours and hours skimming through posts looking for intraday info. This summary of yours will undoubtedly benefit not only myself but many other ET traders wanting to learn more about candlesticks.
I will definitely take your advice and study more and more. By the way, for a newcomer to candles like myself, whose books would you recommend first - Nison or Morris - for intraday candlestick education?
Again, this was very gracious of you - I know I'm but one of many who enjoys reading your posts and consider you one of ETs finest.
Thanks again and all the best,
H
Thank you VERY much for taking the time and effort to encapsulate your ideas from various threads. I had indeed looked at the various threads and spent hours and hours skimming through posts looking for intraday info. This summary of yours will undoubtedly benefit not only myself but many other ET traders wanting to learn more about candlesticks.
I will definitely take your advice and study more and more. By the way, for a newcomer to candles like myself, whose books would you recommend first - Nison or Morris - for intraday candlestick education?
Again, this was very gracious of you - I know I'm but one of many who enjoys reading your posts and consider you one of ETs finest.
Thanks again and all the best,
H
Check out today, 10/13, on the 5 minute ES chart...
1. Dark Cloud Cover at 10:35 = top
2. Triple Star at 11:35 = bottom
3. Bearish Engulfing at 12:50 = top
4. Morning Star at 13:40 = bottom
5. Piercing Line at 15:20 = bottom
These were good ones on this day... there were others, not all of which worked.
1. Dark Cloud Cover at 10:35 = top
2. Triple Star at 11:35 = bottom
3. Bearish Engulfing at 12:50 = top
4. Morning Star at 13:40 = bottom
5. Piercing Line at 15:20 = bottom
These were good ones on this day... there were others, not all of which worked.
In my HUMBLE opinion I like them. Although the mood of the issue and the market on the whole play a large role , hammers still are very good indicators of short term bottoms, doji on high volume is a nice one and after 3-4 greens an inverted hammer will send me to exits at least temporarily. I like this place, good threads. 
Hi gnome,
Yep...there were some very nice intraday candlestick patterns today.
I didn't see other patterns mainly because I spent most of the day monitoring the 3min chart interval...and that chart was boring concerning intraday candlestick patterns.
By the way...that Bearish Engulfing you saw occurred about 5mins before a Spike & Ledge support failure...it produced a nice trade.
Hi smknbul,
Yes...the pattern is in Nison's book's and all the other candlestick books.
Below is a copy-n-paste from my private source of intraday candlestick information...I've added (attached with this message post) a more recent chart to reflect current market conditions.
______________
However, like so many other candlestick patterns...the pattern may be described slightly different in one book to another.
For example...some sources calls it a reversal signal while others call it an exhaustion signal.
Also...some sources saids the 3rd candlestick (small real body) should gap above the close of the prior candlestick...others saids its ok if it doesn't gap but must open equal to the prior candlestick close (called riding on the shoulder).
What it comes down to is this...use it any way you want as long as it's profitable.
Here's how I use Advanced Deliberation which isn't text book.
To me...it's a bearish exhaustion pattern that either signals an exhaustion to a strong uptrend or an exhaustion to a counter-thrust failure (lower highs)...
causing me to look and prepare for any possible Bearish Reversal signals that may soon appear.
(Note: Daily chart candlesticks behaves differently and have different probabilities than intraday candlesticks)
Litwick has a simple explanation at the below link...
http://www.litwick.com/indicators/1207.html
(Note: I think litwick is only a daily chart site)
This three candlestick pattern puts all its emphasis on the 3rd candlestick that acts like a small real body.
I on the other hand put a little more emphasis on the first two candlesticks via needing decreasing body ranges from the 1st to the 2nd candlestick.
If its an Advanced Deliberation via a strong uptrend...1st candlestick must have a wider body range than the prior 3 candlesticks bodies and the 2nd candlestick must have a smaller body range than the 1st candlestick...
Also, I want to see expanding volume from 1st to 3rd candlestick.
If its an Advance Deliberation via a lower high (counter-thrust)...1st candlestick must have a wider body range than the prior 3 candlesticks bodies and the 2nd candlestick must have a smaller body range than the 1st candlestick.
Also, I want to see decreasing volume form 1st to 3rd candlestick.
As I've mentioned before...exhaustion signals are like big neon lights that suddenly starts to tell me to get off my butt and start preparing for a possible reversal signal...if (when) a reversal signal appears.
A reversal signal itself that doesn't have to be a candlestick pattern.
______________
The above is my version of the Advanced Deliberation that's only used in particular price pattern situations...
and hopefully the attached chart makes it look a lot easier than what I explained above.
Last of all...always make sure your data providor has good accurate intraday data.
Out of all the data vendors...eSignal and QCharts have the most problems with clean data.
This is critical for a serious candlestick pattern trader because the last thing you want to be doing is going Long on what is an obvious Bullish Engulfing to ffind out the next day the data has changed and there never was a Bullish Engulfing pattern.
NihabaAshi