Chapter 5

Working with Straightforward Single-Stick Patterns

In This Chapter

bullet Taking advantage of purely bullish single-stick patterns

bullet Understanding bearish single-stick patterns and their uses

It’s time to begin diving into individual- and multi-period candlestick patterns. Many patterns give buy and sell signals, and some serve as a heads-up that a big move is on the horizon (although it’s not always clear just what that big move will be!)

Most candlestick patterns are valid based only on the market activity of the previous few days. For instance, some patterns indicate a change in trend. Using one of these without knowing about the previous trend wouldn’t be very useful. Usually, the context in which you find a pattern tells you a great deal about what you should do based on that pattern. There are, however, some single-stick patterns that are considered either bullish or bearish regardless of the context, and those patterns are what I focus on in this chapter.

This chapter explores the signals that may be given off from single-stick candlestick patterns, some bearish and some bullish. (The constructions of these patterns are covered back in Chapter 3 if you need to have a quick look at what’s behind these patterns.) I demonstrate what may have happened during a particular ...

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