[larsdelgars]

Originally Posted by Sledge »

sevensa-
I think you are correct that their is a misunderstanding. I didn't want to bring any VSA "schtuff" into the Candlestick Corner, but maybe to help with the clarification side of it- I can utilize a VSA example to clarify this topic.

Ok we have in VSA a "No Demand bar" as you stated. That is an up bar with volume less than the previous two bars. That bar- by itself means virtually nothing. But if you place that bar in the context of the chart after a wide spread bar up- it has a lot more significance. That exact bar placed at the bottom of a bear run means that we are not ready to rise just yet. That same bar at the top means we are exhausting. Add a few more of those at a market top together and we get a stronger justification for going short.

I am not shooting down ideas of candles or candle formations at S/R- I know they are significant and VERY worthwhile. Any spotting of exhaustion at either S or R is significant. So please do not think I am trying to shoot down the idea in any way.

Not sure if that helps.
Aaron

the name of this thread is "candles in context" and yet it seems you don't want to talk about S/R as context. Since this is the case... why don't you let us know what you would like to use to establish context... for example... long shadows... solid wide range bars... etc... these are candles that can establish context.... however they really reflect the hidden S/R anyways so really its just another layer of abstraction...

maybe it would be actually useful if we first create a list of candles that can be used as context... then move forward and interpret other candles within the context of these "context" candles.

[CandleWhisperer]

Dojis:

We will start with the three main types.

1. Close on the top(High).
2. Close on the bottom (low).
3. Close in the middle of the range.

If you divide the candle into three 3 equal segments and label them from the bottom 3,2, and 1. We can talk about the first Doji as 1-1. This implies the open was in the top third and the close was in the top third.

This candle represents an "approach-avoidance type of behavior. The market opens, starts to move in on direction and then comes back to where it started. The wick can be seen as sellers selling as it moves down and then buyers buying as the candle moves up. Net effect is to be back where we started. Hence, we KNOW that the sellers where in charge at the beginning of the day and the buyers where in charge at the end. How else can this candle develop?

According to Bill Williams, 85% of the time the market will change directions within the next 1 to 5 Candles of the same duration of the candle you are examining when you see this 1-1.

Obviously, the same holds true but in the opposite when dealing with 3-3, a Doji with the close equal to the open on the low.

The 2-2, close and open in the middle is neutral. We can't really know who was in charge at the open or the close of the day.