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Japanese Candlestick Reversal Pattern in the Dow

admin — Mon, 30 Jan 2012 14:43:30 +0000

It is nearly a certainty that the Dow Jones Industrial Average posted a top and a reversal of trend in January 2012. The top and the reversal are illuminated by two charts of the Dow in Japanese Candlestick display.

The 180-minute chart of the Dow reveals a telling, although imperfect, “Shooting Star” reversal bar. Typically, this pattern appears “high in the sky” above the preceding and succeeding price bars. This one is “too low in the sky” to be accounted as a perfect example; but when it appears at the top of a long price advance we nevertheless take notice of it.

As it happens, this particular trend reversal pattern has proven its worth. The 15-minute chart of the Dow shows the top at 12841.87 on January 26, 2012, followed by a persistent falloff in the price of the Dow through the balance of that day and into the Low of January 27, as highlighted by the succession of tall black Japanese Candlestick price bars which predominated throughout the decline.

William Kurtz

http://www.CandlesticksOnSteroids.com

January 28, 2012

Japanese Candlestick Price Bar Reveals a Manipulated Currency

admin — Mon, 30 Jan 2012 14:37:50 +0000

The Japanese Government has a history of intervening in the currency markets by selling the Yen and buying the US Dollar, thereby helping its domestic manufacturers by lowering the price of its exported goods in terms of the Dollar. The attached Japanese Candlestick chart of the USD-JPY currency pair depicts a strong surge in the relative value of the Dollar on a single day. There is a likelihood that such a swift increase in the Dollar was caused by a massive sale of the Yen and a corresponding purchase of the Dollar by the Japanese Central Bank.

The chart also shows the emergence of a Japanese Candlestick “Shooting Star” trend reversal warning pattern. This particular pattern is imperfect in that (1) it has not appeared at the top of a long price advance; (2) it is a little “too low in the sky” to be a good Shooting Star; (3) the “Real Body” of the price bar is not at the very bottom of the total price range of the day. Even so, we do pay attention to it; and so far, at least, its bearish implications are coming true.

William Kurtz

http://www.CandlesticksOnSteroids.com

January 28, 2012

Evening Star and Morning Star Japanese Candlestick Trend Reversal Patterns

admin — Mon, 30 Jan 2012 14:32:46 +0000

The attached chart of the NYSE Composite depicts two Japanese Candlestick Trend Reversal Patterns – the Evening Star and the Morning Star. The Evening Star pattern appears at the top of a long price advance. It is characterized by a tall white candle, which indicates a strong Up day; followed by a candle which exhibits a small Real Body (indicating “indecision”), which appears at or near the top of the white candle; and then by a tall black candle which indicates a strong Down day and therefore a change in investor psychology and a change of trend from Up to Down.

The Morning Star pattern is the inverse of the Evening Star. It will be found at the bottom of a long price decline. It is characterized by a tall black candle, indicating a strong Down day; then a candle at or near the bottom of the tall black candle and which contains a small Real Body (again indicating “indecision”); and finally by a tall white candle which indicates a strong Up day and therefore a change in investor psychology and a change of trend from Down to Up. This particular Morning Star is less than perfect, in that we would prefer to see an even taller black candle than the one that we see here.

In each of these cases, the bearish implications of the Evening Star and the bullish implications of the Morning Star (respectively) were realized. These two Japanese Candlestick Trend Reversal Patterns are generally very reliable, especially when they appear at the end of long price trends and when they are perfectly formed, or nearly so.

William Kurtz

http://www.CandlesticksOnSteroids.com

January 28, 2012

Japanese Candlestick Bearish Engulfing Trend Reversal Warning Pattern in NetApp

admin — Wed, 25 Jan 2012 20:01:42 +0000

The Japanese Candlestick Bearish Engulfing Pattern occurs at the top of a long advance in prices. As its name implies, it has bearish connotations. It will display a tall black candle whose “Real Body” fully wraps around, or subsumes, or engulfs the Real Bodies of one or more price bars which precede it. The more previous Real Bodies that are engulfed, the more powerful the pattern. In this example of the Bearish Engulfing In NetApp shares, the Real Body of the tall black candle totally subsumed the Real Bodies of the ten price bars which preceded it.

We need to sit up and take notice when the Real Body of the tall black candle engulfs as many as ten previous Real Bodies. Such a “mass engulfing” typically signifies a strong pattern that is likely to result in a serious price drop.

That is what occurred in this case: The price of NetApp shares fell from a High of $61.02 during the week of February 11, 2011 to a Low of $33.00 during the week of October 7, 2011.

A Japanese Candlestick Bearish Engulfing Pattern as well-developed as this one may not be seen all that frequently; but when it does appear, the likely result is a meaningful falloff in prices.

William Kurtz

http://www.CandlesticksOnSteroids.com

Japanese Candlesticks Bearish Engulfing Pattern in F5 Networks

admin — Wed, 25 Jan 2012 19:48:17 +0000

The “Real Body” of a Japanese Candlestick price bar is that “fattened-out” part of a typical Open-High-Low-Close price bar which represents the price range between the Open and the Close. If the Close is higher than the Open, then the Real Body is not filled-in; rather, it is left “white.” If the Close is lower than the Open, then the Real Body is filled in, or made “black.” Obviously, a white Real Body demonstrates that prices rose between the Open and the Close; whereas a black Real Body demonstrates that prices declined between the Open and the Close.

Most often, when we see a Japanese Candlesticks Bearish Engulfing Trend Reversal Warning Pattern the “Real Bodies” of the price bars which are engulfed by the Real Body of the tall black candle are all bunched together at the top of a long price advance. In this example, however, we see that the black candle was so very tall that its Real Body engulfed the Real Bodies of eleven previous price bars which still were in the process of driving toward the peak.

The Bearish Engulfing Trend Reversal Warning Pattern is aptly named: it forecasts a price decline.

In this example in the price record of F5 Networks, we see that the pattern lived up to its billing. From a price High of $145.76 during the week of January 14, 2011, prices fell to a Low of $69.01 during the week of August 26, 2011.

At the completion of the downtrend which had been foretold by the Bearish Engulfing Pattern, prices nearly formed its counterpart, the Japanese Candlesticks Bullish Engulfing Trend Reversal Warning Pattern. It is seen at the bottom-right of the accompanying chart. The Real Body of the tall white candle very nearly engulfed the Real Bodies of the eight preceding price bars. It was a little short on the bottom end of the Real Body to properly be identified as the “real thing;” but, as we can see, it was close enough to the real thing to result in a meaningful rally. As I say in my book “Candlesticks For Brighties,” we do not always find perfection; and frequently, “close is good enough.”

William Kurtz

http://www.CandlesticksOnSteroids.com

Very Large Japanese Candlestick Bearish Engulfing Trend Reversal Pattern

admin — Wed, 25 Jan 2012 19:37:59 +0000

The example which is shown on the accompanying Weekly chart of Urban Outfitters is the largest Japanese Candlestick Bearish Engulfing Trend Reversal Warning Pattern that I have ever seen. The “Real Body” of the tall black candle completely engulfs the “Real Bodies” of the seventeen previous price bars.

What does “Real Body” mean? It is the price distance between the Opening price and the Closing price, which is visually shown by “fattening-out” that distance on the price bar. If the Close is higher than the Open, the Real Body is left blank, or “white.” If the Close is lower than the Open, the Real Body is filled-in, i.e., colored “black.” Therefore, the Real Body of an “Up” day would be white; and the Real Body of a Down day would be black.

The bearish intimations of this particular Japanese Candlestick Bearish Engulfing Reversal Warning Pattern were amply borne out: From a High of $39.26 during the week of March 11, 2011, the price of Urban Outfitters shares fell to a Low of $21.47 during the week of October 7, 2011.

William Kurtz

http://www.CandlesticksOnSteroids.com

Strong Japanese Candlestick Bearish Engulfing Reversal Warning Pattern

admin — Wed, 18 Jan 2012 23:02:01 +0000

The Bearish Engulfing Pattern is one of the most powerful and reliable of all Japanese Candlestick Reversal Warning Patterns. It is found at the top of a long price advance, and is characterized by a tall black candle whose “Real Body” (i.e., the price distance between the Opening price and the Closing price, shown as a “fattened-out” part of the total price bar) “engulfs,” or entirely subsumes, the “Real Body or Bodies” of one or more price bars which precede it. (The fact that the tall candle is black signifies that the Opening price was at the top of the Real Body, while the Closing price was at the bottom of the Real Body).

In this example, we see that the Real Body of the tall black candle engulfed the Real Bodies of the seven price bars which preceded it. We do not often see a Bearish Engulfing Pattern which engulfs as many previous Real Bodies as this one.

We can readily see that the bearish promise of this particular Candlestick Bearish Engulfing Reversal Warning Pattern bore fruit: the price of Applied Materials stock fell from a High of $16.93 during the week of March 4, 2011 to a Low of $9.70 during the week of October 7, 2011.

William Kurtz

http://www.CandlesticksOnSteroids.com

Candlestick bearish “Shooting Star” pattern in Coca-Cola

admin — Tue, 17 Jan 2012 19:02:58 +0000

The Candlestick “Shooting Star” trend reversal warning pattern arises at the top of a long uptrend. It is so-called because it looks very much like its namesake: it is high in the sky (above all recent prices), it has a tiny “head” (the “Real Body”), and a long tail. It is a bearish pattern, foretelling the probability of a price decline.

This example is just about as good as one could hope to find. The price bar itself is well-formed; it is high in the sky; it arose after a long uptrend in prices; and “the proof is in the pudding:” prices have declined from a High of $70.71 on January 3, 2012 to a Low of $66.57 on January 13.

The Candlestick “Shooting Star” is one of my favorites, because it is easy to spot when it appears, and over time it has proven to be a very reliable reversal warning pattern.

William Kurtz

http://www.CandlesticksOnSteroids.com

Japanese Candlestick Bearish Engulfing Reversal Pattern in Cognizant

admin — Tue, 17 Jan 2012 18:44:29 +0000

In Japanese Candlestick terminology, the “Real Body” of an individual price bar is the “fattened-out” part thereof. If the Real Body is left “white,” the Open was at the bottom of the Real Body while the Close was at the top of the Real Body. The reverse is the case if the Real Body is filled in, or made “black.”

The Bearish Engulfing Pattern is one of the most powerful trend reversal warning patterns of all. It is found at the top of a long uptrend. Its distinguishing characteristic is a tall black Real Body (which signifies a strong Down day) which completely engulfs the Real Bodies of one or more of the immediately preceding price bars.

In this example of the price action in Cognizant Technologies stock, we see that the Real Body of the tall black candle completely engulfed the Real Bodies of the five preceding price bars.

In this case, the Japanese Candlestick Bearish Engulfing Reversal Warning Pattern accurately foretold a decline in the price of Cognizant stock: from a High of $83.48 during the week of May 6, 2011 the price fell to a Low of $53.54 during the week of August 19, 2011.

William Kurtz

http://www.CandlesticksOnSteroids.com

Candlestick Bullish Engulfing Pattern in Intel

admin — Wed, 11 Jan 2012 15:17:32 +0000

The Bullish Engulfing Pattern is one of the most reliable Candlestick Reversal Warning Patterns. It appears at the bottom of a long downtrend, and is characterized by the “Real Body” (that is, the price distance between the Open and the Close) of a tall white Candle (signifying an “Up” day) completely subsuming, or engulfing, the “Real Bodies” of a Candle or of more than one Candle which preceded it. The pattern is bullish, as its name implies.

The accompanying chart displays a Bullish Engulfing Pattern which arose in Intel stock in March 2009. (This coincided with the Low early in that month which marked the beginning of the Great Rally which persisted into 2011). The pattern is outlined in red at the bottom of the chart. The “Real Body” of the tall white Candle completely engulfed the “Real Bodies” of the three Candlestick price bars which preceded it.

Note that prices rose from a Low of $12.05 in February 2009 to a High of $25.78 in December 2011. The bullish implications of the pattern obviously bore fruit.

The Bullish Engulfing Pattern is just one of a short series of Candlestick Reversal Warning Patterns which are usually successful in anticipating significant reversals of trend. They are equally effective in all time frames in all financial markets – Indexes, individual stocks, bonds, commodities, and Forex.

William Kurtz

http://www.CandlesticksOnSteroids.com