What you don't know about candlesticks

  • By Thomas N. Bulkowski,
  • Stocks and Commodities Magazine
  • Technical Patterns
  • Technical Patterns
  • Technical Patterns
  • Technical Patterns
  • Technical Patterns
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One famous technical analyst wrote that continuations perform better than reversals. That would make sense, since it is easier for price to swim with the tide than against it. There is just one problem: That's wrong. If you're a serious candlestick player, then you'll want to know when candles work best. Since we know that reversals work better than continuations, make sure that the breakout direction agrees with the primary trend. For example, a bullish harami requires that the price trend downward into the candlestick pattern. Let's assume that you’re expecting an upward breakout. If the primary trend is upward and the harami appears in a downward retrace, you're set. The upward breakout will join with the existing price trend and the current will carry the stock upward. Read on to learn more...

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