The Trend

Three of the Oddest Candlesticks to Trade

When traders first hear that candlesticks can help predict stock direction, most roll their eyes to the back of their head.  But truth be told, candlesticks are a great way to gain insight into the very market psychology that drives all stocks and indices.  

In fact, three of my favorites are doji crosses, the three black crows, and the hanging man. 

Odd Candle No. 1 – The Doji Cross

Let’s start with the doji cross – one of the most popular indicators, especially when found at the top or bottom of a trend. These are formed when the candlestick opens and closes at the same level, implying indecision among traders, and take the shape of a + sign.

Look at Activision (ATVI) for example.

In February 2018, a doji-cross marked bottom of trend, which gave way to a rally from $63 to $79 for example.  Or, we can look at the doji cross at top of trend in mid-April 2018, which gave way to a short-lived pullback from 68 to $64.

Free “Dummies Guide” to Trading Options

Did you know trading options can actually be safer and more profitable than buying and selling stocks?

Best-selling author reveals his simple & safe way to start trading options in this FREE GUIDE.  It’s 100% free until the end of the month.

Access now.

Odd Candle No. 2 – Three Black Crows

Three black crows is a term using to describe the start of a market downturn, typically unfolding over three trading sessions and consisting of three long candlesticks trending downward like a staircase. Each candle opens below the previous day’s open, dropping with each passing day. It can indicate a strong price reversal from a bull to bear market.

Odd Candle No. 3 – The Hanging Man

The Hanging Man is a bearish candle that can form at top of trend. It’s typically created when we find a significant sell off near the market open at top of trend.  When we see this candlestick, it can be an indication that the bulls are just beginning to lose control and demand for the stock or other asset is starting to fall apart.

For example, in this chart of the Dow Jones Industrial Average (DJIA), we can see one. Shortly after forming we begin to see the stock start to breakdown.

While these are just a few of the oddest candlesticks in existence, all must be confirmed with other technical indicators. The last thing you ever want to do is buy an asset based on the appearance of a candle. Confirm at all times.

Special Bonus Gift:  Can You Control 100 shares of AAPL for less than $20 bucks?

That’s the power of trading options.  In the past, trading options was risky or confusing.  Not anymore. This guide – Simple Options Trading For Beginners – reveals a safe, simple and sane way to trade options.  Perfect for beginners.

Download Here.