Suppose you were looking for an opportunity to trade a trend reversal and saw a candlestick with a particularly long real body, in the direction of the trend. Would this signal that
[ol]
[li]The market still has a lot of momentum in the direction of the trend, so a reversal is unlikely?
[/li]
[li]The market is overextended and a reversal is likely?
[/li]
[/ol]
I have seen both of these interpretations of a long bodied candlestick suggested in Steve Nison’s book ‘Japanese Candlestick Charting Techniques’, which seems contradictory. Can anyone please help me to understand this?
The only thing that is certain is uncertainty.
Sometimes a “candlestick with a particularly long real body, in the direction of the trend” will be a buying signal. Other times a “candlestick with a particularly long real body, in the direction of the trend” will be a selling signal.
Do you play golf?
What would Tiger Woods’ answer be to this question: What club would you use if you were 80 yards away from the pin?
His answer would be- DEPENDS.
Long story short, that’s my answer. DEPENDS.
Context trumps candlesticks.
Hi everyone,
Try reading “Japanese Candlestick Charting Techniques” - By Steve Nison
It will help with understanding of Candlestick techniques that can go a long way.
Let me know if this was helpful.
Cheers, V