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Technical Analysis Information

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This thread will be designated for all technical charting assistance. Post any questions you may have, answer any questions posted, or add knowledge here. If we get enough posts and different topics, I will seperate the threads accordingly.

Have a wonderful trading day.

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I think everyone should start with the basics. First of all, turn Cramer off. Turn off your mountain chart style. First rookie mistake. Turn on the candles.

Here is a candle. The middle is the body, and the other stick above is the upper shadow, and the stick below the body is called the lower shadow. The entire candle length, including the shadows and body is the trading range of the day. If it skipped a price level to get there before trading started, this will not show up on the candle. Its just from the beginning of the trading day, until the end of the trading day. AH does not factor into this. If the candle body is black, that means from the exact point the stock started trading that day was lower then where it closed. Basically it closed lower than it opened. The length of the candle body is the difference between the open and the close. So a very flat body, you can barely see, would mean the stock opened for lets say .65 cents, and closed at .64 cents. Very small body.

If the body is white, the stock closed higher than it opened. Very simple.

The shadows are the ranges, regardless of the open or close prices. The max trading price will be at the top of the upper shadow. The lowest price it traded for will be at the bottom of the lower shadow. So if the stock traded from .65 cents to .60 cents that day, the top of the upper shadow would hit at .65, and the bottom of the lower shadow would hit off of .60 cents. Signals from candle formations comparing them next to other candles, or simply the candle themselves, can be used to determine reversals in price, or simply day to day price action. All traders use them, so might as well start here.

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On StockCharts.com, I see the white candles (closed higher), red candles (closed lower), but I occationally see black candles, what are these exactly. Looks like these close higher, but why the difference?

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On StockCharts.com, I see the white candles (closed higher), red candles (closed lower), but I occationally see black candles, what are these exactly. Looks like these close higher, but why the difference?

Black candle might be designating flat, or no movement. But if its using white and red, the black has to mean flat. But NORMALLY, black means a down day.

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On StockCharts.com, I see the white candles (closed higher), red candles (closed lower), but I occationally see black candles, what are these exactly. Looks like these close higher, but why the difference?

Black candle might be designating flat, or no movement. But if its using white and red, the black has to mean flat. But NORMALLY, black means a down day.

See the black candles in this chart. White up, Red down, Black ?

sc.png

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I only use 2 colors. Some setting on that chart, that is giving more information. Apparently are denoting 2 different colors for down days, depending on some condition. Not sure. Ill find out. I am looking at all my charts, and the red candles are simply black on mine.

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I only use 2 colors. Some setting on that chart, that is giving more information. Apparently are denoting 2 different colors for down days, depending on some condition. Not sure. Ill find out. I am looking at all my charts, and the red candles are simply black on mine.

Ahh Ha. Unchecked color prices. Not sure what that means, but this one looks better (although I've been used to red down for a while now)

Although that candle where the upper shadow hit .78 is an up day, but the candle is black. Am I wrong?

scblack.png

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I only use 2 colors. Some setting on that chart, that is giving more information. Apparently are denoting 2 different colors for down days, depending on some condition. Not sure. Ill find out. I am looking at all my charts, and the red candles are simply black on mine.

Ahh Ha. Unchecked color prices. Not sure what that means, but this one looks better (although I've been used to red down for a while now)

Although that candle where the upper shadow hit .78 is an up day, but the candle is black. Am I wrong?

scblack.png

Its confusing, especially in that situaion, and I can see the confusion. The black candle is simply a study of the trading day itself. NOT PM AND AH. Since the gap up from the previous day was so large, it opened higher than it closed, and hence the black candle, even though that days close was higher than the day before.

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I only use 2 colors. Some setting on that chart, that is giving more information. Apparently are denoting 2 different colors for down days, depending on some condition. Not sure. Ill find out. I am looking at all my charts, and the red candles are simply black on mine.

Ahh Ha. Unchecked color prices. Not sure what that means, but this one looks better (although I've been used to red down for a while now)

Although that candle where the upper shadow hit .78 is an up day, but the candle is black. Am I wrong?

scblack.png

Its confusing, especially in that situaion, and I can see the confusion. The black candle is simply a study of the trading day itself. NOT PM AND AH. Since the gap up from the previous day was so large, it opened higher than it closed, and hence the black candle, even though that days close was higher than the day before.

Got it. Understand it now, it's without PM & AH. Thanks. Just wanted to make sure the chart means what I think it means. White is up and black is down . . . well I guess you said that.

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Now that we know what the basic candle is, we can go into some candle Technical analysis.

First candle lesson will be the Fat Boy, I like to call it. Marubozu candle. It is all body. It is a very bullish candle. It means the stop opend low, went up all day, and closed at its highest point.

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The length of the candle is also important. A longer body indicates fierce price action, probably a lot of volume, and possibly shares were exchanging hands from one sector to another, smart to dumb money, retailers to insitutitions, etc... A short candle probably indicates low volume, and a period of consolidation.

Here are some examples of long candles indication tons of volume, and distrubution of shares, and the other one shows the consolidation candles.

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Mich,

With your original colours on, black means it was a down day but the close was above the previous close so it's a day to day gain, but an intraday loss.

You'll also see white candles with a red outline. These are where the price closed above its open, but below the previous close. Those are a day to day loss, but an intraday gain.

Rel, strike our earlier chat conversation on black candles. I use the multicolours. I thought you were calling for my version of a black candle today.

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Mich,

With your original colours on, black means it was a down day but the close was above the previous close so it's a day to day gain, but an intraday loss.

You'll also see white candles with a red outline. These are where the price closed above its open, but below the previous close. Those are a day to day loss, but an intraday gain.

Rel, strike our earlier chat conversation on black candles. I use the multicolours. I thought you were calling for my version of a black candle today.

GG, thanks a lot. You nailed it. I could not find anywhere what the black and red outline candles meant. Learned more today.

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Rel,

This is good....makes me feel all warm and fuzzy. I will have to figure a way to create a thread regarding bookviewer and level2. I was trying to explain it in the thread....but a place where it stays for all would be better! Of course it is much less complex a learning experience..but I would like to have it up for everyone.

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Rel,

This is good....makes me feel all warm and fuzzy. I will have to figure a way to create a thread regarding bookviewer and level2. I was trying to explain it in the thread....but a place where it stays for all would be better! Of course it is much less complex a learning experience..but I would like to have it up for everyone.

asm, that would be great. I have a basic understanding of level2, but would love to learn more.

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I was going to PM you to suggest the same thing. Would be great if you have time to devote to this. Maybe if you could suggest a link to get me started, then I could ask more intelligent questions.

Rel,

This is good....makes me feel all warm and fuzzy. I will have to figure a way to create a thread regarding bookviewer and level2. I was trying to explain it in the thread....but a place where it stays for all would be better! Of course it is much less complex a learning experience..but I would like to have it up for everyone.

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I have started a thread dedicated to Bookviewer and Level 2. If you have any questions...of course feel free to ask and I or someone else will be more than willing to help.

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I actually thought thats what red candles were indicating on your chart, but I wasnt sure. Thanks for clarifying that. I never use the 3 color setting. Still probably wont, as I can tell by looking where it opened lower, etc... but that is a nice thing to glance at.

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Next candle we can look at is the long shadow candle. It can be a long shadow above the close, or a long shadow below the close. They can occur on black candle days, and white candle days, meaning regardless of the close vs. the open, its the range and where it closed after that trading range that matters here. Take a look.

The first candle is generally bearish. Means it had traded higher earlier, but at the end it closed low, and near the low end of the range.

The second candle would be bullish. It traded lower earlier in the trading day, but closed near the high end of the range. Not as bullish or bearish as a solid white or black candle as shown earlier, the Marubozu, but its close. There will be one long shadow and one short shadow in these candles.

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Good to see this thread is still alive. Was looking for it the last couple of days. Really like what you're doing with this. Keep it coming.

Now with these two you've posted, it seems there are two more that could be similar. What would you say about a white candle with the body closer to the bottom of the range or a black candle with the body closer to the top of the range?

Next candle we can look at is the long shadow candle. It can be a long shadow above the close, or a long shadow below the close. They can occur on black candle days, and white candle days, meaning regardless of the close vs. the open, its the range and where it closed after that trading range that matters here. Take a look.

The first candle is generally bearish. Means it had traded higher earlier, but at the end it closed low, and near the low end of the range.

The second candle would be bullish. It traded lower earlier in the trading day, but closed near the high end of the range. Not as bullish or bearish as a solid white or black candle as shown earlier, the Marubozu, but its close. There will be one long shadow and one short shadow in these candles.

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Gazoo, you mean this candle.

This is the white candlestick. It means buying pressure, and can be bullish, but alone its not too much of an indicator.

There is a short shadow above and below the open and close.

The same with the black candlestick. Selling pressure, it can be bearish, but alone its not too much of an indicator.

That is called a black candlestick.

Keep in mind, these candle shadows dont have to look EXACTLY like this to have a white candlestick, or blackcandlestick. To various degrees, you can say one may be more bullish, or conversely bearish then the other. If the upper shadow of the white candlestick is a little longer, than that would be a little less bearish than if the candle had a shorter shadow, and appeared more like the fat boy I mentioned earlier.

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This thread confirms that I made the right choice joining this forum. I have learned allot from the "king", asm, sheree and others over the past year by just sitting on the sidelines and lurking.

The fact that you are making all investors, both seasoned and novice welcome is rare in a financial forum and your efforts are not unnoticed,

Thank you.

Swede

Now for my question. I understand the need for a retrace in the stock price to fill gaps but do gaps only occur in PM/AM and how do you see them in candle stick charts?

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This thread confirms that I made the right choice joining this forum. I have learned allot from the "king", asm, sheree and others over the past year by just sitting on the sidelines and lurking.

The fact that you are making all investors, both seasoned and novice welcome is rare in a financial forum and your efforts are not unnoticed,

Thank you.

Swede

Now for my question. I understand the need for a retrace in the stock price to fill gaps but do gaps only occur in PM/AM and how do you see them in candle stick charts?

Gaps occur from the close of one day , to the open the next day. In between this time is PM, and AH trading. It doesnt matter how it does it, regardless of trading in PM or AH. If the first recorded trade is higher than the close of the last day, and it never touches that previous days close, up or down, then there is a gap created. The larger the gap, the more likely it will be filled.

Gaps can stay unfilled for a long time however, and some will never fill. Like the .45 gap will never fill.

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This thread confirms that I made the right choice joining this forum. I have learned allot from the "king", asm, sheree and others over the past year by just sitting on the sidelines and lurking.

The fact that you are making all investors, both seasoned and novice welcome is rare in a financial forum and your efforts are not unnoticed,

Thank you.

Swede

Now for my question. I understand the need for a retrace in the stock price to fill gaps but do gaps only occur in PM/AM and how do you see them in candle stick charts?

Gaps occur from the close of one day , to the open the next day. In between this time is PM, and AH trading. It doesnt matter how it does it, regardless of trading in PM or AH. If the first recorded trade is higher than the close of the last day, and it never touches that previous days close, up or down, then there is a gap created. The larger the gap, the more likely it will be filled.

Gaps can stay unfilled for a long time however, and some will never fill. Like the .45 gap will never fill.

What is the reasoning behind why they fill?

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This thread confirms that I made the right choice joining this forum. I have learned allot from the "king", asm, sheree and others over the past year by just sitting on the sidelines and lurking.

The fact that you are making all investors, both seasoned and novice welcome is rare in a financial forum and your efforts are not unnoticed,

Thank you.

Swede

Now for my question. I understand the need for a retrace in the stock price to fill gaps but do gaps only occur in PM/AM and how do you see them in candle stick charts?

Gaps occur from the close of one day , to the open the next day. In between this time is PM, and AH trading. It doesnt matter how it does it, regardless of trading in PM or AH. If the first recorded trade is higher than the close of the last day, and it never touches that previous days close, up or down, then there is a gap created. The larger the gap, the more likely it will be filled.

Gaps can stay unfilled for a long time however, and some will never fill. Like the .45 gap will never fill.

What is the reasoning behind why they fill?

I don't think there really is any real reason. Prices skipped dont have to be offered again, but they usually are. It makes for a stronger up or down move if there are no gaps. They just tend to fill, probably more of an MM excuse to go back to that point, more than anything. This might be a subjective answer, not really any logical reason why a price HAS to go anywhere.

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So even if there was a long upper shadow on that white candlestick, you would call it a white candle. Not meaningful by itself, and need to look at other candles in the pattern for determination of bull/bear?

Kind of like the opposite of today? There was a black candlestick with a long lower shadow and no (or small) upper shadow. We opened at .616 traded as low as .587 and closed at .606 (only down 1 cent on the day, but a significant bounce from trading 3 cents down during the day). This by itself is not meaningfull without knowing the prior trend. You would just call it a black candlestick though it's somewhat bullish because of the strong rebound? Just trying to check my understanding.

Gazoo, you mean this candle.

This is the white candlestick. It means buying pressure, and can be bullish, but alone its not too much of an indicator.

There is a short shadow above and below the open and close.

The same with the black candlestick. Selling pressure, it can be bearish, but alone its not too much of an indicator.

That is called a black candlestick.

Keep in mind, these candle shadows dont have to look EXACTLY like this to have a white candlestick, or blackcandlestick. To various degrees, you can say one may be more bullish, or conversely bearish then the other. If the upper shadow of the white candlestick is a little longer, than that would be a little less bearish than if the candle had a shorter shadow, and appeared more like the fat boy I mentioned earlier.

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So even if there was a long upper shadow on that white candlestick, you would call it a white candle. Not meaningful by itself, and need to look at other candles in the pattern for determination of bull/bear?

Kind of like the opposite of today? There was a black candlestick with a long lower shadow and no (or small) upper shadow. We opened at .616 traded as low as .587 and closed at .606 (only down 1 cent on the day, but a significant bounce from trading 3 cents down during the day). This by itself is not meaningfull without knowing the prior trend. You would just call it a black candlestick though it's somewhat bullish because of the strong rebound? Just trying to check my understanding.

Gazoo, you mean this candle.

This is the white candlestick. It means buying pressure, and can be bullish, but alone its not too much of an indicator.

There is a short shadow above and below the open and close.

The same with the black candlestick. Selling pressure, it can be bearish, but alone its not too much of an indicator.

That is called a black candlestick.

Keep in mind, these candle shadows dont have to look EXACTLY like this to have a white candlestick, or blackcandlestick. To various degrees, you can say one may be more bullish, or conversely bearish then the other. If the upper shadow of the white candlestick is a little longer, than that would be a little less bearish than if the candle had a shorter shadow, and appeared more like the fat boy I mentioned earlier.

I think when I have presented all the different candles, it might start to make more sense to you. As you see , the white is simply stating a higher close than open. The shadows plus the body is the entire range of the trading day. The shorter the upper shadow on a white candlestick, in and of itself as a one candle formation, the more bullish the candle. I will accelerate these candle presentations so it makes more sense.

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Here are a few more formations.

This is what a dragonfly looks like. It is a bullish candle.

You had a nice range, but it closed very near, or right at the high. The open was near the high as well, if not the exact high. More bullish would be if it actually broke that high, and closed with a white top, which would be the next candle.

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Here are examples of some hammers. The ones on the left are generally bullish, but placement of them in a pattern is important as well. The ones on the right, the gravestone, are generally bearish. Hammer received some movement, price was battled on, and the bulls won, as it generated a close near the open(which was slightly higher), or broke past the open, and actually pushed higher, closing at the very top of the trading day(white hammer on the far left). Hammer on the far right is the reverse of that.

Positioning of where these candles are is also important.

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Dojis occur, regardless of range, when the close matches the open. This can be a signal of direction change, if other dojis are close by, or other candles accompany them. So the stock was fought for between bulls and bears, and it still closed where it opened.

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