Understanding Market Environments
In order to take full advantage of single-stick patterns that rely heavily on the market context in which they appear, you first need to know how to quickly and effectively determine the market environment. Being aware of the current market environment is key to properly using most candlestick patterns in general, but especially for the ones I describe in the rest of this chapter.
The three market states
A market or stock is usually defined as being in one of three states:
Bullish: Price behavior trending up
Bearish: Price behavior trending down
Range bound: No discernable trend
Identifying the market trend
For a quick ...