Today’s “Osaka Clipper” Japanese Candlestick Trend Reversal Warning Pattern in the 60-minute chart of the Dow Industrials, and the Dow High of 13004.97 that was an integral part of it, may have marked the top end of the rally which began on October 4, 2012 as well as “Wave 2 Up of Primary Degree” in Elliott Wave terminology, which began in early March 2009. If this indeed was the top, it has marked an exceedingly important reversal of trend which will adversely impact the stock market for years to come. If 13004.07 was not the top (and, therefore, that there is a higher peak yet to come), the true top is very close in point of time, and is inescapable.
Candlestick Reversal Warning Patterns are exactly that: “warnings” of possible Reversals, not “guarantors” thereof.
The “Osaka Clipper” pattern, a variation of the “Evening Star,” is composed of four price bars. All four bars, of course, show the price distance between the Open and the Close as the “fattened-out” area of the total price bar, which is called the “Real Body.” If the Close is higher than the Open, the Real Body is not filled in; it is left “white.” If the Close is lower than the Open, the Real Body is filled in, or made “black.”
The first of the four price bars which comprise the “Osaka Clipper” is a tall white bar, indicating a strong upmove. The next two price bars (the “Stars”) show limited price travel; ideally, their Real bodies are small and are situated at or above the top of the tall white candle; and the fourth price bar is a tall black candle, indicating a change of investor mood from bullish to bearish, and a change of trend from Up to Down.
The pattern example which is shown on the accompanying chart is a pretty fair Japanese Candlestick “Osaka Clipper” Reversal Warning Pattern. It would have been closer to perfect if the two “Stars” had been situated above the tops of the tall white candle and of the tall black candle. Even so, the pattern is near enough to perfection that we take notice of it, and suspect that it does indeed carry bearish implications.
William Kurtz
http://www.CandlesticksOnSteroids.com
February 21, 2012
