In specialized trading,a very simple candlestick pattern is an up or down trend displayed graphically over a candle chart which some think can predict an approaching market motion. The recognition of this pattern itself is usually subjective and automated applications that are widely used in charting must rely upon predetermined rules to follow the trend. These patterns are generally displayed as a series of horizontal lines that signify either a rising or falling trend. The simple idea behind the routines is simple; the longer the time period of the line,the greater the probability of the trend continuing.
Many investors will purchase a stock based on the idea thatit will go up or down according to the candlesticks pattern beingused by their anti virus applications. However, while this notion may be tempting,it’s actually not a great one. The reason is that all trends can vary from day to day and even hour to hour. There are times once the market can go up but thendrop whenever you depart the stock exchange.
Another issue with using candlesticks patterns in your charts is thatthey don’t provide you with a way of identifying a trend. What the charts does is enable you to easily see if the market has taken a certain pattern and proceeded on. Therefore,it’s very important that you understand when to examine the chart and when to remove from it.
While most stock market patterns can be hard to interpret,it’s possible to find a better feel for the trend by paying careful attention to this volume. To put it differently,if the stock is creating a sudden rise in volume,there is a very good chance thatit will probably be going up and when it has been decreasing for a while,it could indicate that the trend is starting to turn downward.
Candlestick patterns are a very good way to evaluate the market’s direction and allow you to get an awareness of the market. But,keep in mind thatthey cannot tell you the direction in which the industry is led and can only provide you with a guidepost.
There are a number of different indicators that can provide you a much better feeling for the direction the stock market is heading. The most essential thing to bear in mind is that all of them are distinct and the best ones are the ones that you locate that give you a feeling of consistency.