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?