Hello everyone, Should I be looking at candle sticks or line graphs while searching for patterns on a chart? Or I should look at both and see if a pattern can be found. Some sites use line graphs but others seem to be using candle sticks. What is better or is it a matter of personal taste? Thanks.
On the one hand, nobody ever posts charts of pure close lines. Candles or OHLC graphs are all we see. On the other hand, most of us around here aren't profitable, so mayhaps there's something to lines. Back on the first hand, every book on the subject I have ever seen uses candles or OHLC's.
Depends on what type of patterns you're looking for. Therefore, it's the pattern that you plan to be using that will decided if you can do such via line charts, bar charts, candlestick charts, P&F charts or whatever type of charts. Mark
Line graphs miss important information, like a new low and then reversal above previous day high. Candlesticks are useful only when used with other methods. They are also a subset of a large class of price patterns, which are best described by Boolean expressions. Here is an article with some details. I use price patterns with basic TA and some other techniques of my own. I have stopped using indicators long time ago. Many of the price patterns I use a very similar to cancle sticks.
Thank you folks. So I would go by candle sticks as well. I got some more questions now. Does the definition of higher-highs or higher-lows change in case of candle sticks? For example, higher-lows still remain lows which are greater than the previous lows? Joining such points to form trend line should I join the closing points or the days low?
What? lol A higher low would be trending higher but if you are looking at candle charts you need to define if you are looking at a daily chart or hourly or 15 min etc.. Just draw a line connecting the lowest lows.. Im not sure what you are saying here
I was talking about the daily charts. So I connect the days lows rather than the closing points for joining higher-low? Can I say whether it's a white or black candle is irrelevant and I just need to join using the days low?
http://www.sierrachart.com/userimages/upload_2/1269409496_10_UploadImage.png That fat yellow line I drew you there for instance would be the support line for this tick chart I just brought up for example
Yes, you should use the low of the candlestick or bar when plotting an up trendline and the highs for a down trendline. One reason being that much trading which could have significant meaning regarding supply and demand could have taken place between the high/low and the closing price.
Perfect. Thank you so much for clearing it up. Thanks to everybody who responded. I appreciate the help here.