Trendlines, moving averages, other technical indicators or other technical patterns are not market context. Simply, when someone slaps an indicator or pattern on a chart involving TA...its just TA and nothing more. Therefore, we just have a difference of opinion about the definition of "market context". Nothing wrong with that but lets keep in mind about what exactly is being said. In contrast, my definition of market context explains (does not predict) what has happen or currently is happening in the markets. For example, pretend the U.S. accidentally launched a nuclear missile on China @ 1pm est. China then declares war on the U.S... The markets drops hundreds of points and some newbie trader using Japanese Candlestick coding software gets a bullish harami pattern on the Emini ES futures. The market context of the day is the "accidental missile launch" and only a newbie will start buying into the Emini ES futures when he/she should be shorting or sidelined. That type of stuff can't be coded into Japanese Candlestick software. We as traders need to use common sense to know that the market context doesn't support what some candlestick software is saying to do. In contrast, we need to understand the markets and that understanding tells us when a trade signal has merits. Without that understanding of the market context... Yeah, any trade signal is useless including Japanese Candlestick pattern recognition software. Yet, I do understand why some traders navigate to coded trading software, automation trading and so on for the obvious reasons. By the way, they wasted their time testing something that was not originally designed to be used without market context (in reference to the below listed links). http://papers.ssrn.com/sol3/papers.cfm?abstract_id=980583 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=980583 Once again, coded patterns are useless if there's no understanding of the market context. It's blind trading in my opinion if someone think they can be profitable via trading by indicators or patterns without input of anything else not pend to TA (e.g. market context, money management, trade management, position size management, discipline, proper equipment and so on). Simply, use candlesticks analysis manually and with market context along with other key variables above. You'll know when that bullish harami has no merits and when it does have merit. Do not use candlestick patterns all by themselves because they were not designed to be used as such and to use them alone or text them alone is doing such without a complete trading plan. Therefore, why waste time doing such. think outside the box
Judging by the sheer amount of spam I get from him, he himself does not know how to make money of the candles.. I think, it was a CQG even he got my email from.
I call that "Stopping the Trend" ,when you are soo sick of that trend and you wanna break it by going in .
Any indicator, even a simple moving average, without proper context is just noise. That's given without saying.
Unfortunately, there's a lot of traders applying this stuff without context along with a lot of academia testing this stuff without context because they see traders applying it as such. Market context is more important today than it was in the past due to more markets and governments interconnected (impacting each other). Simply, there's arguably more important things in a trading plan than entry signals. Adapt or get left behind.