Single candlesticks and candlestick patterns

Candlesticks and Support

Single candlesticks and candlestick patterns can be used to verify or sign levels of support. Such a support level could be new after a longer decline or confirm previous support level within the trading range. In trading range, candlesticks can help select the entry points for buying near support and selling near resistance. The list below contains some but not all, candlesticks and candlestick patterns that can be used together with levels of support. The bullish reversal patterns are marked with (R).

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Bullish Rocks (R)
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Bullish Harami (R)
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Doji (Normal, long legs, Dragonfly)
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Hammer (R)
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Inverted Hammer (R)
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A long white candlestick or white Marubozu
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Morning or bullish Abandoned Babies (R)
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Piercing Pattern (R)
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Dial Up
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Three White Soldiers (R)

Bullish reversal candlesticks and patterns suggest that early sales of pressure has been exceeded and buying pressure emerged for a strong finish. Such bullish price action indicates strong demand and that support can be found.

The inverted hammer, long white candlestick and marubozu showing increased pressure to buy rather than the actual price reversal. With its long upper shadow indicates an inverted hammer intra-session buying interest faded from the finish. While security ended well below its high, the ability of buyers to push prices higher during the session's bullish. The long white candlestick and white marubozu sustained buying pressure indicates that prices advanced sharply from open to close. Signs of increased pressure to buy good, for support.

The doji and spinning top marked hesitation and are generally considered neutral. These are not models suggest a reversal of reducing the selling pressure, but not necessarily a revival of buying pressure. After the fall, the appearance of a doji or a spinning top indicates a sudden interruption of selling pressure. A stand-off developed between buyers and sellers, and support level to form.

Note: All above models will be covered in this series beacon in the next few weeks.

Electronic Data Systems C (EDS) Candlestick support such a scheme

Electronic Data Systems (EDS) [EDS] traded in a range bound by 58 and 75 for about 4 months in early 2000. Support to 58 was first established in early January and the resistance at 75 in late January. The state refused to previous support level in early March, formed a long legged doji and later spinning top (red circle). Notice that the doji formed after long black Marubozu (long black candlestick with no upper or lower shadows). This doji marked a sudden drop in relation to selling pressure and support held. Support was tested again in April and this test was also marked by long-legged doji (blue arrow).

Broadcom Corp. (BRCM) Candlestick support such a scheme

Broadcom (BRCM) [Brcm] formed a bearish pattern rocked to mark the new support level just below 210 (green ellipse) to the end of July 2000. Several days later a long white candlestick formed and engulfed the previous 4 candlesticks. The combination of bullish and shook long white candlestick serves to strengthen the validity of support around the 208th The situation has since tested support around 208 once in early September and twice in October. A piercing pattern (red arrow) formed in early October and a hammer at the end of October.

Medtronic, Inc (MDT) Candlestick support such a scheme of

Medtronic (MDT) [MDT] established support around 46 in late February with the spinning top (red arrow) and early March with harami. The stock has fallen in April and formed a hammer to acknowledge the support of 46 (green arrow). Mon reaction rally to oppose about 57, the stock declined sharply again, and again found support around 46 (blue arrow). The black candlestick with a long lower shadow indicated support, but the body is too big to qualify as a hammer.