candlestick patterns question

Discussion in 'Technical Analysis' started by omegapoint, Jun 28, 2010.

  1. with a bullish engulfing pattern, does the engulfed candle have to be entirely above the engulfing candle's open? Or is it still a valid engulfing pattern if its within the engulfing's wick partially?
  2. The interval (Close > Open) that's doing the engulfing...must have it's Close > Open1 and it's Open < Close1 if the engulfed interval 1 is Open1 > Close1...if shadows are present on either one...they are not important for the engulfing relationship but may be important in other aspects of the price action.


    However, regardless if it's a valid pattern or not...the two interval candlestick pattern is not a valid trade signal. Thus, there's a difference between valid pattern signal versus valid trade signal. For something to be consider a valid trade signal you must have a reason why the price action is bullish or bearish prior to the appearance of any Japanese Candlestick pattern or any other pattern signal.

    Therefore, a two interval bullish engulfing pattern signal all by itself is not a valid reason for taking a trade. Simply, define the price action via context of what's causing it to do whatever it is doing prior to the appearance of any pattern signals.

    The two interval bullish/bearish engulfing candlestick pattern test poorly on the following futures instruments - Emini ES, NQ, YM, TF/Eurex DAX, DJstoxx50/Euronext CAC40, FTSE100/Treasury ZN, ZB, ZF/Energies CL, NG/Metals GC, HO and EuroFX 6E.

    Exchange Traded Funds DIA, IWM, QQQQ, SPY/GLD/BGU, TNA, FAS, FAZ/XLE, OIH.

    Since the birth of all the above. However, the reliability of the bullish/bearish engulfing pattern increases dramatically when traded within context in comparison to trading the pattern signal without context (all by itself).

  3. ===========================
    Assume adequate volume, QQQQ,SPY... have always had good volume.

    Agree with Don Bright & Co-dont put faith in 5 minute candlechart LOL.:D

    5 days, 5 months, 5 years,50 years mean much more.So no on 5 minutes;
    1 year uptrend candle, frankly , is uptrending.

    And a word to the wise;
    people do not trade/buy or invest in real estate,
    the same way they sell Citigroup or BP.LOL