Candlestick
Examples
Courtesy of Candlestickshop.com
Daily Candlestick Charting
Weekly Candlestick Charting
Bearish Harami (Weekly) Candlestick Play
Instructions
Step 1 - Pull up a Weekly chart of the stock.
Step 2- Look for a BEARISH HARAMI against MINOR PRICE
RESISTANCE, and/or a declining Major Moving Average (10 MA, 20 MA, or 50 MA)
on the Weekly chart.
Step 3 - Pull up a Daily chart of the stock. Note that
the Harami pattern formed on the Weekly chart is made up of 5 individual
daily candlesticks.
Step 4 - Look for consolidation of the last 3 or 4 daily
candlesticks at the low price of the week. This consolidation line represents
an area where the stock takes a rest before resuming it's downtrend. The
objective is to enter the stock just before the next big downward move.
Step 5 - Enter the stock only if it breaks 1/8th below
the area of consolidation line. This will often correspond to the low price
of the week. If the stock does not break through the area of consolidation,
DO NOT ENTER THE TRADE.
Step 6 - Mark off the 50% retracement line. This will be
the halfway point between the line of resistance where the stock began it's
decline, and the line of resistance where the stock began it's last major
rally.
Step 7 - After entry, place an initial protective stop
1/8th above the high price of the previous day's candlestick. Cover the stock
immediately if the stock breaks above this price.
Step 8 - On each new day, adjust the trailing protective
stop to 1/8th above the previous day's candlestick's high price. Continue to
use a trailing stop as long as the stock remains above the 50% retracement
line.
Step 9 - After the stock has broken below the 50%
retracement line, look for a reversal candlestick. This will most likely be a
bullish candlestick which closes near it's high price of the day. Cover the
stock for profit either before the market close, or at the market open the
next day.
Financial Ad Trader
© Copyright 2003 Sunset Capital Management Ann Arbor, Michigan
