Three of the Most Consistent Candlestick Patterns
When Munehia Homma first created candlestick charts in they 1700s, he had no idea it’d change the way we look at stocks 300 years later.
To him, candlestick charting was meant for the rice trade.
He’d record the opening day’s price of rice, the low and the close. And over time, he’d begin to see price patterns in his recordings, mapping out repetitive signals in the price bars. He’d soon give them names, like spinning tops, dojis, and hanging man – candlestick names we still use to this day. The discovery of such patterns helped him successfully predict future direction of rice prices, giving him a significant advantage over other traders.
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Bollinger Band and Keltner Channel Trading: Similarities and Differences
Imagine jumping off a bridge with a bungee cord.
As you begin to reach the end of the cord’s pull, you’re quickly yanked in the other direction.
That very same thing happens with stocks when they become far too extended in overbought or oversold territory. And we judge exactly where that’s likely to happen with two key indicators.
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The Benefits of Combining Fundamental and Technical Analysis
Over the last 22 years, I’ve heard countless arguments for and against fundamental and technical analysis. While neither is perfect, they both have strengths we can capitalize on.
Fundamental analysis shows us what’s under the hood.
At its very core, it helps us arrive at a stock's intrinsic value. It helps us see:
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Three Valuable But Often Overlooked Technical Indicators
Oftentimes, technical analysis is written off as worthless.
However, as it has been proven time and time again, it should never be ignored because it gives us a very clear, defined picture of fear and greed. Or, the very psychology that drives stocks.
In fact, by simply using a unique combination of Bollinger Bands, MACD, Relative Strength, and Williams’ %R, we can spot pivots up to 80% of the time. However, it always pays to confirm even those indicators. Here are three other technical points to be well aware of.
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How to Use Full Stochastics in Your Trading
Fear can destroy a stock in seconds.
But it can also lead to quite a bit of opportunity.
Look at Coca-Cola (KO), for example in late February 2019.
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How to Trade the Parabolic Stop and Reverse (SAR)
The Parabolic Stop and Reverse (SAR), commonly known as Parabolic SAR is a trend following indicator that highlights current price direction.
It also provides entry and exit signals as well with dotted lines.
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