Candlestick Charting For Dummies, 2nd Edition

Chapter 13

Sell Indicators and Bearish Reversal Candlestick Patterns

IN THIS CHAPTER

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

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 4, 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 make wise decisions about short trades.

I focus much more on the prospects for shorting than on the opportunities to use candlesticks and indicators to decide when to exit a long trade, because realizing when to exit a long position 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!

Shorting with the RSI and Bearish Candlestick Patterns

The relative ...