Candlestick formation Vs Indicators

Trading Discussion
1

Do people see candlestick patterns or indicators as more important?

I know ideally you want the candlesticks and indicators to suggest the same market movement but this isnt always the case.

Often I will see a candlestick pattern form, for example a pin bar or engulfing candle suggesting a reversal into an uptrend, but the all the indicators, MACD, Moving average, RSI etc suggest a continuation of the downtrend.

Or, all the indicators will suggest a reversal and Im waiting for that confirmation candlestick that never appears.

What are your thoughts?

2

Having backtested the past two years, results are mixed. Candlesticks can be subjective in definition outside of the dojis.

You will have to test through different environments in the past and understand their context.

Volume, direction, volatility, structure all play a role.

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3

Personally, candlesticks are always my starting point. I’m a technical trader, my starting point is a plain chart and I’m looking for generalist setups. I’ll then use wider analysis, including RSI, to make a case for my initial instinct. If the case can’t be made, I don’t take the trade.

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4

You need to use both. If you use either one by itself you’ll lose money as they are unreliable.

5

Technical indicators aggregate data from price action, some of which is represented in candlesticks, so clearly they will lag the formation of candlesticks themselves. If the strategy depends on finding reversals, they will always be accused rightly of being late.

But maybe reversals are a low-success, high-risk strategy anyway. The thing is, not even price action of any sort definitively shows that a trend is going to reverse into the opposite trend. That would be showing the future and how could the market participants, who make price move, possibly know that? The best a pattern or indicator of ANY sort can show is a trend failure, and this is not a reversal.

6

I tend to favour candlesticks more, but in cases of very obvious contradiction I don’t trade the signal at all.

7

Both candlesticks and indicators are important. I would say candlesticks formation are more immediate, and depicts a more current momentum. Indicators are usually more lagging because of the period that was use to generate the data. The purpose of Indicator serve to help us visualize the trend better from a longer term perspective.

On the other hand, if the candlestick pattern were to be analyse from a larger timeframe, then it pretty much serve the same purpose as indicators use on a lower timeframe.

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8

don’t choose one use both. for example I am practicing my strategy of breakouts (while scalping) and without the indicators I would have the wrong entry. so I use the sessions indicators, EMA, and volume. basic indicators but it changes a lot when trading breakouts. you can even add MACD, there is a substitute called STC which is apparently a better version of the MACD. But again I am not here to give advice because I am not a professional, however the best advice I received from my brother is 1)scalp- because that is where the money is if you have a small account 2) learn a strategy and only use it, make it better but stick to the same strategy. if you lose once don’t be mad at the strategy just keep going . finally my best advice is to replay on trading view with the sessions on and practice that strategy during the proper session times. I legit sat for 6 hours straight and just backtested and now I can see breakouts, support, resistance easily (without even going to the bigger time frame)