Chapter 13

Sell Indicators and Bearish Reversal Candlestick Patterns

In This Chapter

bullet Using the relative strength index and candlestick patterns for your short trades

bullet Shorting with combinations of the stochastic indicator and bearish candlestick patterns

Technical indicators are useful in many trading situations, and as I describe in the other chapters in Part IV, you can use them in tandem with candlestick patterns to conduct some outstanding trades. In this chapter, I fill you in on how to combine a couple of common technical indicators with bearish candlestick patterns to help you make wise decisions about short trades.

I focus much more on the prospects for shorting than the opportunities to use candlesticks and indicators to tell you when to exit a long trade, because realizing when to exit a long is relatively easy: If it looks like a trend is ready to tank, sell and get out!

I know some people are resistant to short selling, but it’s part of the game, and not using the short side of trading puts you at a disadvantage. Risks are involved, but if you employ the methods I describe in this chapter, you can minimize those risks. With any luck, after reading my Chapter 13, you won’t have to file Chapter 13!

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