High wave candle
, on the other hand, portrays a situation where there is a active tug of war between
the bulls and bears. This candle shows a market has lost a clear sense of direction. If it occurs on high
volume, then it indicates the market’s general confusion about the direction prices are headed
•
High Wave candles show the confusion among traders
•
The size of the real body shows the lack of consensus among traders
to sustain the current
trend
•
Indicates an early sign of a possible shift in the current uptrend or downtrend
•
The candle has a small real body of either color
•
The size of both
shadows are particularly long, but are not required
to be the exact same
length
•
Ignore in a trading range: price is pausing before breaking out
•
Caution is recommended when encountering such candles
The three white soldiers
pattern is most potent when it occurs after
an extended decline and a
period of subsequent consolidation. When a particular stock posts a decline followed by sideways
movement, the appearance at that point of three white soldiers signals that
higher prices are likely
ahead. The first of the three white soldiers is a reversal candle. It either ends a downtrend or signifies
that the stock Is moving out of a period of consolidation after a decline. The candle on day two may
open within the real body of day one. The pattern is valid as long as the candle of day two opens in the
upper half of day one’s ra nge. By the end of dy two, the stock should close near its high leaving a very
small or non-existent upper shadow. The same pattern is then repeated on day three.
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