Candlesticks, Fibonacci, and Chart Pattern Trading Tools : a synergistic Strategy to Enhance Profits and Reduce Risk

CANDLESTICK CHART PATTERNS
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Signal 6
If we are a little f lexible, we can see an evening star chart pattern in
the sixth signal. It would be a perfect pattern if the body of the small
white candle showed a gap to the candlestick bodies to the left and to
the right.
The sell signal is at the lowest low of the candlestick with the
black body to the right.
Signal 7
The seventh signal is based on a very rare candlestick pattern, a so-
called tri-star bottom. Since it shows up so seldom, we did not describe
it in our presentation of candlestick chart patterns. The tri-star bot-
tom pattern looks very much the same as a morning star. The only
difference is that all three candlesticks are dojis.
We get a buy signal at the high of the right doji chart pattern.
A Tabular Summary of the Trading Signals
Table 4.8 provides a summary of all seven trading signals.
The ratio of four winning trades and two losing trades (with one
of the positions still open) is a promising indication of how powerful
candlestick chart patterns can be as stand-alone trading strategies.
Summary
A major advantage of candlesticks is that they show the momentum of
every day’s price moves. They are def initive, easier to understand
than bar charts, and especially helpful for short-term traders.
Table 4.8
Trading Signals
Profit/
Loss in
#
Entry Rule
At
Exit Rule
At
Points
1
Sell short
3,042.00
Buy reverse
2,828.00
214.00
2
Buy reverse
2,828.00
Stop-loss
2,612.00
(216.00)
3
Buy long
2,552.00
Sell reverse
2,661.00
109.00
4
Sell reverse
2,661.00
Buy reverse
2,612.00
49.00
5
Buy reverse
2,612.00
Sell reverse
2,676.00
64.00
6
Sell reverse
2,676.00
Buy reverse
2,708.00
(32.00)
7
Buy reverse
2,708.00
Open
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