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Strategies & Market Trends : Candlestick Charting--The unknown indicator

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To: Pierre Borczuk who wrote (1581)5/27/2002 2:47:09 PM
From: sean sanders   of 1589
 
What do you mean exactly by this "Have you ever tried to look at the sensitivity/specificity of using various candlestick patterns on predicting the next day's close?"

Do you mean looking at certain candlesticks and them indicating a biased toward a certain direction and fiding the next days candle agreeing with the previous days bias?

I still have a lot to learn about charting' but I tend to look at a whole group of candles normally. There are obvious ones that stand out to me at times. Hammer bottoms; hanging men (but I have found these to not be as indicative of a downward biased as perhaps a hammer is to a reversal). Wick placement is often key in drawing support and resistance. I have often saved some money or was able to take more of a profit when a stock pulls back and makes a slightly longish wick.

another example; I was looking thou my beyond candlestick book and read a little exerpt on spinning top candles with high volume indicating a emminent price reversal. Most of the time I was accustomed to looking at spinning tops when we were forming a flag of some kind; ie a pause in the current move. These spinning tops often had slightly less volume then normal. The spinning tops the book beyond candlesticks talked about were those with highvolume and it Mr. Nison was suggesting that whomever was buying or selling ie buying at the top or selling at the bottom was getting taken out by the opposite. So basically all the buyers for tops, sellers for bottoms were getting absorbed. Thus leaving room for the stock to rise with any slight pressure for a contertrend move.

example
geocities.com
(left click location tab then hit enter to view chart)
this is a old SLAB chart I have the daily and the 60 min up there if I am not mistaken. If you look at the daily ie on the left of the chart; near october 1st or 2nd you see a couple decent full down body candles followed by a spinning top with volume. A nice example of the spinning top with volume. Looks like it has similar characteristics as a hammer bottom with volume.

anyways ...

Sean
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