Quick Question for those proficient in reading candlesticks...

[dartmus]

Anyone up for another challenge must be willing to Study_Hard because I have a case study that's not going to be as quick as the earlier study. For this one u must come up with the 2nd pic by yourself or rely on team mates on the teams competing against u to do it for u.

So which one of these do you believe needs more bearish confirmation (left or right?) and WHY? Please post your answer, . Thanks.

 

[Study_Hard]

Its cold outside and I'm bored - various thoughts follow

Appreciate it, .

Blend the two.., on each side - they're essentially the same (thinkaboutit)

Yep cool, one on right has a slightly higher shadow, only difference when you blend. which means its slightly more bearish already everything equal when compared to its counterpart on the left side.

Difference is:


Early shorts - trapped on the left

Yep, agree.

Late longs - trapped on the right side

Shouldn't it be the early longs that are trapped? Given that the bulls pushed the price up early in the session, but then bears brought price back down to where it opened.

 

[Study_Hard]

When I first was introduced to this slide/question -- I thought it was quite flawed. However, before I 'dark clouded' any discussion I wanted to gather others opinions (pun intended, ). As mentioned, both need confirmation, but the specific question was which one needs more conformation. Do not get me wrong, candles in context is very important and the main reason why this question is a bit silly. But nonetheless, no more specific information was given, and I am going off the assumption (which may be erroneous) that this appears near the top of an uptrend where you are looking at a possible short position.


While they both have different shadows, the one on left shadow is more bullish (cant sustain bearish surge) and one on right has a shadow that is slightly more bearish (cant sustain bullish surge). For this reason, nison argued that the one on left needs more confirmation based purely on the shadow rejecting lower prices, being bullish in nature, and thus needing more bearish confirmation. Take note, the one on the right makes a higher high, which to me is very important if you have to answer this question in isolation of other important facts and has not been mentioned and to me would seem more important than the shadow implications (again, I understand a bigger market picture is needed). So I believe this is not a well stated question, keep in mind, at least for myself, the brief discussion seems far more valuable than most topics I come across while reading this section. Specifically appreciate redneck and wrbtrader for their input and insight, I am still very novice with many aspects of trading so I do not want to come across as a know it all. A few of the traders in here, specifically one who has been trading for many many years, had no idea who Steve Nison actually was, which I found a bit perplexing and I am sure they are laughing at my comprehension or lack there of with regard to candlesticks, . Thanks for replies.

 

[Redneck]

Shouldn't it be the early longs that are trapped? Given that the bulls pushed the price up early in the session, but then bears brought price back down to where it opened.

First

I could write an entire book addressing your question

I could also think of half dozen..., likely more..., scenarios just for the two candles on the right side (whereas I believe you're thinking them to be at the top)

Not that I'm all that smart mind you (actually I'm a simple minded dumbass) - its just that I've been at this for a day or two

Also..., one thing you're omitting are the techniques employed

So with the caveats - I'm isolating my thinking to just the two right side bars (actually candles)..., not including any context prior to these bars..., not factoring in where these two candles could be occurring in the overall

btw..., and imo..., nison never traded (I've have his book.., and you're more than welcome to it if you like - for free)

==================

Away we go.......


In my initial post I mentioned early shorts..., and late longs

Let's transition those terms to impatient shorts..., and reluctant longs - iow the less savvy (inexperienced) traders


The two bars (referencing the ones specifically on the right) can be seen as a cycle (see below..., source: investopedia)


DEFINITION of 'Stock Cycle'
The evolution of a stock's price from an early uptrend to a price high and eventually to a downtrend. The stock cycle is a buy-and-sell cycle that occurs over several years and has four stages:

1. Accumulation
2. Markup
3. Distribution
4. Markdown

====================

The late longs are entering @ above step 3 - during below bar 2

And even though price continues up on bar 2 - the savvy trader(s) is/ are selling (exiting their long / establishing a short) via the late buyer(s) - buying

With the intention of trapping these late longs.., then using their exiting to propel price down..., while removing them from their capital..., and putting their shorts in profit

It's a technique..., its orchestrated PA..., its quite common..., and its very exploitable


=================================

The long bar below encompasses stages 1 thru 3 above..., with a bit of 4 thrown in for good measure

The short bar (bar 2) below encompasses stage 4 above

Meanwhile the less experienced are buying because by this time the FOMO has exceeded their fear / reluctance of entering (talk about being a day late and a dollar short) - this is also quite common..., and exploitable

Told Ya I could write a flippin book - and yet we've barley breached the subject

Love this gig..., love it..., love it.., love it (but never in love with it)

Successful Journey Sir


RN

 

[dartmus]

When I first was introduced to this slide/question -- I thought it was quite flawed. However, before I 'dark clouded' any discussion I wanted to gather others opinions (pun intended, ). As mentioned, both need confirmation, but the specific question was which one needs more conformation. Do not get me wrong, candles in context is very important and the main reason why this question is a bit silly. But nonetheless, no more specific information was given, and I am going off the assumption (which may be erroneous) that this appears near the top of an uptrend where you are looking at a possible short position.


While they both have different shadows, the one on left shadow is more bullish (cant sustain bearish surge) and one on right has a shadow that is slightly more bearish (cant sustain bullish surge). For this reason, nison argued that the one on left needs more confirmation based purely on the shadow rejecting lower prices, being bullish in nature, and thus needing more bearish confirmation. Take note, the one on the right makes a higher high, which to me is very important if you have to answer this question in isolation of other important facts and has not been mentioned and to me would seem more important than the shadow implications (again, I understand a bigger market picture is needed). So I believe this is not a well stated question, keep in mind, at least for myself, the brief discussion seems far more valuable than most topics I come across while reading this section. Specifically appreciate redneck and wrbtrader for their input and insight, I am still very novice with many aspects of trading so I do not want to come across as a know it all. A few of the traders in here, specifically one who has been trading for many many years, had no idea who Steve Nison actually was, which I found a bit perplexing and I am sure they are laughing at my comprehension or lack there of with regard to candlesticks, . Thanks for replies.

These cases are built from synthetic data to illustrate a point. U should search real data for real examples of them. Put them in order of their strengths or weaknesses relative to whether they confirm or nullify the opinions you've been forming. Enjoy the (missing) context that occurs nearby. Get distracted by what u see and follow it wherever it leads. That's the viable path.

 

[Sergio77]

So which one of these do you believe needs more bearish confirmation (left or right?) and WHY? Please post your answer, . Thanks.

Japanese laugh...

 

[Buck95]

Don't overlook the valuable information that is being given to you by wrbtrader. Read his posts and you'll see that he shares practical trading advice with anyone willing to put in the effort.

Here is an old thread by wrbtrader (under his prior user name NihabaAshi) where he discusses Japanese Candlesticks at length. Great stuff that is still relevant today.

http://www.elitetrader.com/et/index.php?threads/trading-hammers-revisited.52880/

-Al

----------------------------------------------------


"Trading is about discipline...., patience..., repetitiveness..., with no opinion..., and one's ego set aside."

-Redneck

 

[dartmus]

When I first was introduced to this slide/question -- I thought it was quite flawed. However, before I 'dark clouded' any discussion I wanted to gather others opinions (pun intended, ). As mentioned, both need confirmation, but the specific question was which one needs more conformation. Do not get me wrong, candles in context is very important and the main reason why this question is a bit silly. But nonetheless, no more specific information was given, and I am going off the assumption (which may be erroneous) that this appears near the top of an uptrend where you are looking at a possible short position.


While they both have different shadows, the one on left shadow is more bullish (cant sustain bearish surge) and one on right has a shadow that is slightly more bearish (cant sustain bullish surge). For this reason, nison argued that the one on left needs more confirmation based purely on the shadow rejecting lower prices, being bullish in nature, and thus needing more bearish confirmation. Take note, the one on the right makes a higher high, which to me is very important if you have to answer this question in isolation of other important facts and has not been mentioned and to me would seem more important than the shadow implications (again, I understand a bigger market picture is needed). So I believe this is not a well stated question, keep in mind, at least for myself, the brief discussion seems far more valuable than most topics I come across while reading this section. Specifically appreciate redneck and wrbtrader for their input and insight, I am still very novice with many aspects of trading so I do not want to come across as a know it all. A few of the traders in here, specifically one who has been trading for many many years, had no idea who Steve Nison actually was, which I found a bit perplexing and I am sure they are laughing at my comprehension or lack there of with regard to candlesticks, . Thanks for replies.

30 minute ES with a few real life specimens rather than synthetic hypotheticals. Tho I do enjoy the theoretical discussions also so please don't take that the wrong way because some of the best learning opportunities are in that realm.