LarryBF, Larry you asked for other indicators...try this one out and see if you like it....use two charts side by side: Chart 1.) Bollinger Bands Chart 2.) Bollinger Bands 20,50 SMA 20, 50 SMA Volume Volume RSI MACD OBV Money Flow 1 min 3 min Don't ever use RSI and MACD on the same chart because they rely on the same imputs...consider using OBV or Money Flow...RSI, On Balance Volume and Money Flow, rely on different inputs......I change the time from 1 min to 3min on chart one and change the time from 3 min to 5 min occasionally to get a diferrent perspective and then back again...you can change the number of days on this set up as others have suggested accordingly...watch the RSI on both charts...if the RSI is above 70 and heading towards 80 look for a reversal....like wise if the RSI is at 30 and heading towards 20 look for a reversal...this set up I think helps when things become range bound or suddenely becomes volatile because you can quickly move the chart time periods in and out ...also as others have suggested...you have more than one moving average to help you also...Lastly I use candlesticks with this setup and one of the things I like to key in on the most is...."Tails on top or Tails on bottom"....If I see a lot of tails poping up on the bottom of the candles in conjunction with the other indicators I look for a reversal or reactive move...conversely its the opposite the other way with tails on top ......I hope this helps you....maybe theres' a few things you can use!
Vinigar- the advice about the tails is terrific. I"ve incorporated it into my chart reading right away. Do you know where I can get more good advice for interpreting candlesticks?
larrybf, Do you know where I can get more good advice for interpreting candlesticks? Two books come to mind. Steve Nison, the man pretty much responsible for bringing candlesticks to the West, wrote the definitive book called Japanese Candlestick Charting Techniques. As it's a bit pricey you might also consider Greg Morris' fine book Candlestick Charting Explained.
LarryBF, Magna has posted a reply to your question which I think fills the bill pretty good....if you don't want to spend a lot of money, just use your web browser search function and surf the web...you'll find many sites with free information. However, I must add this...if you are DayTrading, its my opinion that speed or very early recognition of changes in the direction that your stock is taking is paramount...therefore, red candlestick down...green candlestick up...tails on top....tails on bottom are easily and quickly recognized....and most of all SIMPLE! These visual signals when combined with the other bells and whistles we discussed earlier help tip us off. Moreover, as you learn more about candlesticks I think you will find that most of the instuctions usualy lead to pattern recognition...this is fine and always good to learn something...but watch out using candlesticks daytrading and trying to recognize these patterns intraday...you'll get caught up in it...instead of keeping your FOCUS!!!!!!!!!!!!!!!!!!!!! If you are using them for swing trading ...that's a completely different story...and they work great....Not to say pattern recognition isn't important...Head and shoulders, cup and handle.double bottom etc. are important but I think in a much broader sense. Part of being successful is being able to imediately enter or exit or anticipate movement...I sincerley hope that I have answered your questions and have helped you
I don't want to knock any other person's style. But there is something to be said for relying only on price, volume and tape reading. ALL indicators are lagging. But when you get a feel for the above 3 concepts then you can be in tune with the market.
Good question, but in a word, "no". If you ever discovered a pattern or indicator that would do this with consistency, you would have the Holy Grail and become fabulously wealthy very quickly.
Candlesticks were originally developed for use on daily bars which correspond to a full session. There's a rational basis for modeling a session with a candlestick as the open, close, high, and low have a stronger meaning for a logical session. Candlesticks were never intended to be used for daytrading with intraday bars, even though they are often represented that way. An intraday bar is an arbitrary period of time. It is meaningless. I had a personal conversation with Greg Morris on this point many years ago and he agreed.