Doji after a long with candle

Discussion in 'Technical Analysis' started by jrs3, Jan 6, 2004.

  1. jrs3


    divergence in MACD histogram, ADX at an extreme. all we need is a gap down tomorrow with some good down volume, and this just could be a minor top. Yea right, that seems to be my mindset of late. Some broker will come out tomorrow morning and up grade five dow stocks and that Doji will be VOID.
  2. i like to short downtrends myself.
  3. The Doji isn't so strong a downturn warning, at least not in itself. A Harami line would mean more, with the star within the range of the previous long candle. More important, the $INDU isn't yet overbought - sigma hasn't exceeded the 95th percentile of the local data. The high ADX value shows strong momentum but not an overbought market. Normalization distorts those values. I think it's going higher with little correction, if any. Using the dominant 27-day cycle to get a slow non-lagging MA in the MACD I see mild divergence but the histogram is still positive. Looks more like a mild pullback and/or ledge than a reversal.
  4. Doesn't look overbought to me. Peaks are still within 2 sigmas from the mean. Lots of momentum and only mild divergence in the MACD - my configuration still has a positive histogram. It may slow or stumble but I think it's going higher. A Harami line or Dark Cloud would mean more than the Doji.
  5. The system reprted the first one had failed. Second one is better written anyway... :)
  6. The position of the doji doesn't look right. Right at Close of yesterday. I can see up or pullback from here.
  7. jrs3 and valleyvintner,

    It's been awhile since I've seen a thread here at ET that would prompt me to post in the open forum.

    Thanks for the thread and good analysis eventhough it may be too advance for those that aren't into sigmas.

    Here's my take on the INDU via price action only (Japanese Candlestick indicators):

    That wide range body white candlestick is a powerful candlestick to me...

    Arguably one of the most powerful single candlestick line and I use it often.

    With that said...since late Nov 2003...this is the strongest candlestick pattern I've seen and it took developed over the past 3-5 trading days.

    The key to that candlestick is what occurs in the few candlesticks prior and the first candlestick after.

    For example...the prior candlestick produce a very long upper candlestick shadow. Further, today's candlestick lower shadow retested the price area of the long upper candlestick shadow...

    signs of exhaustion (not reversal).

    Last similar price action the INDU declined about 305 points over 7 trading days back in Oct 2003 that then bounced off a nice Hammer in bullish position.

    More importantly...the wide white body candlestick has dual meanings...

    Bearish Reversal pattern or Bullish Continuation pattern depending upon the action of those prior candlesticks and the first candlestick after.

    Another key is the volume action in that Hammer like or Hangman's candlestick that occurred after the wide range body white candlestick...

    jrs3's chart has me bias to the Short side. position size would be normal to heavy in Short positions and light in Long positions.

    My chart...that has volume different than jrs3's. Thus, has me bias to the Long side. position size would be normal to heavy in Long positions and ligh in Short positions.

    I've already took a peek at the weekly chart for help with my daily chart analysis on the INDU...not much there to help with my position size strategy.

    Thus, I'm going to play it conservative for the next few trading days and be light on Short and Long positions until the daily chart produces another strong candlestick pattern.

    If the INDU does start should at least retest the Open of that white wide range body candlestick.

    Therefore, this is a pattern that Shorts and Longs should be profitable and happy...

    everybody happy because it usually produces lots of profitable opportunities for everybody.

    Back to Lurking.

    P.S. I'm not a swing/position trader...I use the daily charts to help me decide my position size management for my intraday trades.

  8. It's coming!

  9. jrs3


    A retracement to 10,000 in the Dow would be very healthy.
  10. kowboy


    What is your most favorite and useful reference on candlestick patterns?

    #10     Jan 13, 2004