Pattern Analyis: Doji

[Reaver]

Thanks, this is actually helping me probably better than any book I could buy on the topic.

[brownsfan019]

	Quote:	james_gsx
	How would timing an entry on a gravestone doji differ from say a shooting star? Thanks for the thread brownsfan, I appreciate all the info.

James - good question, and that's 'step 3' of the process - putting it all together. How/when you enter a candle pattern is an important step. I'll try to get a thread up on that soon. Maybe others can chime in.

[brownsfan019]

	Quote:	Reaver
	Thanks, this is actually helping me probably better than any book I could buy on the topic.

Nate,
Thanks, but make no mistake - getting a solid understanding of the why's and how's of candlestick trading are built on a good library of books and then go from there. I'm trying to post SOME stuff here on TL, but there's just too much to possibly go over in a forum setting. At the very least, get a couple of the Nison books I reviewed here as well.

http://www.traderslaboratory.com/for...tion-1561.html

http://www.traderslaboratory.com/for...ison-1560.html

[Anonymous]

LOL. Looks like someone already stole my thunder (Apple Doji)............

$Idnu valid High Close Doji Pattern.

Some things to note:

1. Stopping volume on the doji line. We have Ultra High Volume on a Wide Spread candle that closes near its high and down from previous bar. If the volume was selling, then the close should not be in the upper portion. Also the next day should not be up.

* T1: possible first target- midpoint of the WRB.

* T2: possible second target-obvious top. Look for High volume wide spread bars PRIOR to this level if we are going to go thru. Or a Wide Spread Bar that trades thru this level on Ultra High Volume (pushing thru supply).

[stock]

This also highlights a problem with the colouring of the volume bars, for VSA. The stopping volume you refer to is very much a demand volume and as such should not be coloured red. I find it less confusing to use grey for both bars.

[Anonymous]

	Quote:	stock
	This also highlights a problem with the colouring of the volume bars, for VSA. The stopping volume you refer to is very much a demand volume and as such should not be coloured red. I find it less confusing to use grey for both bars.

You're correct and that is why MY charts color volume based on the relationship to the previous bars volume amount. This is a "stock" chart from an internet source.

[TinGull]

Had to post this up 'cause it's a beauty! Its on XME from this summer...note the low ass volume on the teeny spread/doji right at resistance....yum!

[Nick1984]

Tin using your VSA analysis how did you interpret the doji? I'm still trying to get used to candles so I'll give it a shot and just critique me if you don't mind.

The doji right at resistance is right in the middle of the range of the candle so to me that shows indecision by both bulls and bears with there being a "balance" between them...possible turning point.

When you look at the low volume on the candle it shows that there is a lack or both supply and demand and because of the indecision, the stock is likely to fall on its own weight.

I tend to believe that stocks only like to rise if there's a good reason to (insider knowledge, good announcements, general market rising), and if these conditions don't exist then the weight of price will drag it down.

All things constant, the low volume combined with a candle that shows indecision is a strong reversal signal when at a resistance point.

Hope that worked well lol!

Tin can I also ask how you determined that resistance level? Was it based off a previous high, or from pivots?

[james_gsx]

Tin, had that volume been very strong would you have seen the doji as strength to break through resistance?

[TinGull]

Nick...good start there. What I would say is that the spread was teeny showing no professional interest to continue the up move. If no one wants to continue the upmove, then the path of least resistance is DOWN. The next candle is DOWN on higher volume and then your last chance to get in is that low volume UP candle closing at the highs (4 candles after this doji) showing that there's no demand in this market. Then it heads down. Your analysis was great, tho.

As for where I found that resistance, you can see the previous high to the left on that chart.

And James, had that volume been very strong and it was still a small spread....my stance would be the same. If you have ULTRA high volume and a narrow spread, what's happening there? There is a lot of volume being traded in a small range. Theory is...if a lot of buying volume is happening, it's being done by the smaller players while the pros are selling into resistance, which is what you normally do see. The amount of selling indicated by the high volume is very telling for the strength of the eminent down move, IMO.