How to trade stocks online
with candlestick patterns
Candlestick stock chart patterns
for best online stock trades
in bear market
Candlestick patterns are very usable stock trading tool. I like to use them very much in my every day stock trading. I do not use them alone. Their strengths are best when they are used in combination with other technical analysis tools.
Every day trading tools
I like to use candlestick patterns with other stock trading tools. This combination is important as it makes stock trade setups much powerful. The probability of positive result for such stock trade is much higher.My every day trading tools I use are
support and resistance
levels that include also moving averages and trend lines.
Best candlestick patterns for short selling
There are plenty of different candlestick patterns. I found that most of them are quite complicated as they are based on three or more candlesticks. I prefer simple usage of technical analysis tools and this also means that I like to use simplest candlestick patterns. I use single candlesticks as I think that they can tell a lot too. It is not necessary to have combination of three or more candlesticks to say something about situation on stock chart. When candles are used in combination with simple tools I mentioned above then also single candlestick or patterns based on two candles could be very usable and could provide a lot of information about situation. Here are examples of patterns that are most usable in trading when you want to use short selling.
First one is named Bearish engulfing. It can be seen as combination of white candle (positive) and long black candle (negative). The bearishness of this pattern is based on reading that black candle negates bullish bias from previous day. It also signalize changing in move direction.
Similar interpretation could be found from these patterns that are based on two candles.
I like to use them as warning signal that latest stock move could be finishing and we could expect reversal. It is very useful when such pattern is found in pullback against prevailing trend - in this case it is major bearish trend and corrective pullback that is moving price up a little bit.
Example of online stock trade
based on candlestick patterns
Here I publish example of stock chart analysis of ETF trade I made in my portfolio. DBC -
commodity ETF
was in
downtrend.
It has made correction to major resistance level. There is possible to see several important
single candlesticks
near this important level of resistance. There is also moving average and
trendline
in same position - it is making this level much more important. Negative pattern - bearish engulfing - developed and I have prepared ETF trading setup. The red line indicates entry point for short sale of this commodity ETF. Blue line indicates stop loss level. I expect that my target for this trade will be near October lows or lower.
I entered trade in next days and here is current chart how trade developed since then. It is now clearly in profit area and I can use my
trade management techniques
to move my stop loss level and also to
take partial profits
from this trade.
Best stock trading book
about these patterns
If you want to understand details of these patterns then it is critical to read this book from Mr. Steve Nisson.
There’s a lot of theory in this book, but when you study your own charts and use the knowledge from this book, you’ll recognize why it’s so important to read, and you’ll have an “aha” moment. You can find details about this book and you can
buy it from Amazon.
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