Tip #3. Look for wide range candles
Wide range candles mark important changes in sentiment on every chart - in every time frame. They mark important turning points and can often be used to identify reversals. Take a look at the following stock chart:
This stock was moving lower in October (highlighted) and then suddenly it dropped more significantly than on previous days. This created the wide range candle and it marked an important turning point (actually the bottom!).
You can also use wide range candles to identify when a stock might reverse. Looking at the same chart...
This stock reversed inside of prior wide range candles. Why would a stock do this? Because all of the traders that missed out on "the big move" now have a second chance to get in. This buying pressure causes the reversal. Simple, huh?
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