Candlestick Charting Demystified

Chapter 7

Basic Technical Analysis

Thus far we have examined the basics of candlestick charting and its origins, reversal patterns, continuation patterns, and the psychology behind these patterns. Now we will examine the framework for applying the mechanics of candlestick charting that we have learned. As the next step, we will add trend analysis, support and resistance, retracement levels, and a closer look at gaps to our trading arsenal. These are all components of modern-day Western technical analysis that, when combined with candlestick charting techniques, can generate a much deeper understanding of the position of the market and what it is likely to do next. Notice the word likely. In trading, there are no guarantees. Technical analysis ...