October 2022
Beginner to intermediate
288 pages
7h 2m
English
Content preview from Mastering Financial Pattern Recognition
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.
Chapter 11. Candlestick-Based Contrarian Strategies
This chapter covers the contrarian part of candlestick pattern strategies. Remember that candlestick patterns on their own are unlikely to provide stable returns, as they must join forces with more sophisticated techniques and indicators in order to transform simple ideas and observations into actionable trade setups.
You should recognize some of the indicators used in this chapter as they have already shown that they can be useful in trend following. Notably, the RSI can provide not only the current market state (helpful in determining the trend) but also extreme levels that could point to a reversal (helpful in determining contrarian trades). In other words, depending on how you use it, the RSI can be a trend-following or a contrarian indicator.
Make sure to focus on the intuition of combining patterns with indicators so that you can create your own combination of strategies. After all, the point of Chapter 10 and Chapter 11 is to help you design your own strategy.
Combining the Doji Pattern with the RSI
This strategy may be the most familiar one that combines a candlestick pattern and a technical indicator. With the Doji being the simplest contrarian configuration and the RSI being the most commonly used and researched indicator, both can give a good confirmation for the expected contrarian move.
Note
The RSI filter makes it possible to transform the Doji into a one-candlestick pattern instead of three. This is because the ...
Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Read now
Unlock full access
More than 5,000 organizations count on O’Reilly
O’Reilly covers everything we've got, with content to help us build a world-class technology community, upgrade the capabilities and competencies of our teams, and improve overall team performance as well as their engagement.Julian F.
I wanted to learn C and C++, but it didn't click for me until I picked up an O'Reilly book. When I went on the O’Reilly platform, I was astonished to find all the books there, plus live events and sandboxes so you could play around with the technology.Addison B.
I’ve been on the O’Reilly platform for more than eight years. I use a couple of learning platforms, but I'm on O'Reilly more than anybody else. When you're there, you start learning. I'm never disappointed.Amir M.
I'm always learning. So when I got on to O'Reilly, I was like a kid in a candy store. There are playlists. There are answers. There's on-demand training. It's worth its weight in gold, in terms of what it allows me to do.