Thursday, February 16, 2012

Doji can do more, but not all

Doji is an useful indicator but as other investment candles are a signal, an alert, but they are not complete indicators for trading position.
In the graph below, applied to FTSEMIB, a doji appeared in the middle of the last downside movement: one could suppose to close (and wait) the short postion, but this would be a mistake.
Why?
  1. Target of the previous cycle - Down target (put a stop to it) has not been reached
  2. Several candles of the current cycle - very few candles from the reversal of pattern (from long to short), not
  3. Analysis on "lighthouse" Dow Jones- Use of the "drive" american  market - Another analisys on Dow Jones (but avaible after the last close) would have revelead a clear reversal of pattern from long to short in US market
The presence of doji in this case would have revealed only the beginning of a (long) throwback inside a (short) pattern!!

(enlarge to see it better)


italian tags: inverione per doji, target del ciclo precedente, numerosità e numero minimo di candele per questo ciclo ed il precedente, analisi sul faro dow jones
Any source

No comments:

Post a Comment