"The Technical analyst"

Price action is the movement of a security's price. Price action is encompassed in technical and chart pattern analysis, which attempt to find order in the sometimes seemingly random movement of price. Swings (high and low), tests of resistance and consolidation are some examples of price action. The candlestick and price bar are important tools for analyzing price action, since they help traders visualize of price movement. Candlestick patterns such as the Harami, engulfing pattern and cross are all examples of visually interpreted price action. BREAKING DOWN 'Price Action' No two people will analyze every bit of price action the same way, and that is why a lot of traders find the concept of price action so elusive. Quite literally, price action is everything that a security's price does, and just like every other facet of analysis, it is purely subjective. Technical analysis is a trading tool employed to evaluate securities and attempt to forecast their fu...

There are two types of harami patterns – the bullish harami and the bearish harami. The harami patterns both take into account two trading sessions. Here are the defining features of the harami candlesticks. The first candle is usually longer than the second. The two candles are generally of the opposite colours. Bullish harami The bullish harami is a bullish candlestick pattern that features two candlesticks, with the first one being a long red candle, followed by a much smaller green candle. The smaller green candle needs to be contained within the long red candle. The structure of the pattern looks like this. Inference: The bullish harami pattern bears significance only when it occurs during a downtrend. It is considered to be a sign of bullishness in the market and can be construed as one of the turning points or a reversal of the trend. The logic for bullish harami goes like this. The stock is in a bearish trend with its prices going down every trading session, and wit...

The three outside down candlestick pattern generally occurs during a bullish trend and involves three consecutive candlesticks. The movement of these candles invariably indicate whether a trend reversal is on the cards or not. The pattern is characterised by a single bullish candle, followed by two bearish candles. Accurate identification of this pattern is essential for executing counter-trend trading strategies. The three outside down candlestick pattern - an example Understanding this technical indicator is quite easy. Let’s take an example to see what the three outside down patterns actually look like. As you can see in the figure, the price is trending hard in the upward direction, indicating that the bulls are in control of the market. In keeping with the trend, the first candle in the pattern closes positively. However, the body of the candle remains small, which can be construed as an indication of a slow down in the buying interest. The second candle opens ‘gap up’...

A bullish formation, White Marubozu is formed when price action suggests that the bulls have dominated the trade from start to the end of session. Since the bulls have dominated the whole trading day, there is a high probability that in the short-term, further upward movement might be witnessed at the counter. Appearance of White Marubozu after a long phase of southward or sideways movement should alert a trader and that particular stock should be brought up on the trading screen for a possible long trade.

What Do Three White Soldiers Mean? Three white soldiers is a bullish candlestick pattern that is used to predict the reversal of the current downtrend in a pricing chart. The pattern consists of three consecutive long-bodied candlesticks that open within the previous candle's real body and a close that exceeds the previous candle's high. These candlesticks should not have very long shadows and ideally open within the real body of the preceding candle in the pattern. What Do Three White Soldiers Tell You? The three white soldiers candlestick pattern suggests a strong change in market sentiment in terms of the stock, commodity or pair making up the price action on the chart. When a candle is closing with small or no shadows, it suggests that the bulls have managed to keep the price at the top of the range for the session. Basically, the bulls take over the rally all session and close near the high of the day for three consecutive sessions. In addition, the pattern may be preceded...