Thanks, I believe some of your knowledge held in trading is very wealthy to your students and viewers. I have a few questions on Candlestick Reversals please.
1. Some candle patterns like Hanging Man and Hammer are same in body form but different in which trend they appear, how should we recognize them a bit more, is a different colour to each reversal necessary?
2. Do Indicators play a key role with these phenomenal reversal candlesticks say like e.g. VOLUME, to tell you how much pressure that particular candle has given off for extra assurance along with where the next bar will close afterwards for traders to take action?
3. As Volatility is very important to traders from all sides, does it matter at which time or part of the day a Candle Reversal may appear and how valid is it before a news release?
4. You have not mentioned this in your videos and with due respect, can we say Piercing Patterns are both Bearish and Bullish Reversals with slight candle changes and appearing in a different trend?
Thanks for your email and your great feedback. I’m glad you’ve found value in my candlestick video series.
Before answering your questions, please let me address one point that you may or may not be aware of. There is a common assumption in the many emails I receive that I trade candlestick reversal patterns as an integral part of my trading strategy. This is not true at all. I teach candlestick reversal patterns (and similar price bar reversal patterns) simply because they are a useful stepping stone for people in learning to perceive the shifting sentiment within price movement. Candlestick patterns allow us to examine a small sequence of price movement (1-3 candles) and discuss how the sentiment shifts from bullish to bearish, or vice versa. If you desire to be a professional trader though, I highly encourage you to move beyond this information, to learn to see shifting sentiment within ALL price movement, not just those short sequences that fit a textbook candlestick pattern definition.
You will have mastered the lesson of candlestick patterns, only when you no longer need the candlestick patterns… and instead have learnt to read shifts in sentiment within all price movement.
Some articles that touch on this, from the top of my head: (there may be more if you search through my article archives)
See also the YTC Newsletter signup bonus ebook, “The LOST Files – 150 Lost YTC Blog Posts” for the following post: “Breaking the Pattern-Mindset”
And of course the concept is also a feature of the YTC Price Action Trader, so if you want to explore it further then check it out here: http://www.ytcpriceactiontrader.com/
Now, having said that, please let me address your questions: