TUTORIAL
Today's candle might be called a Gravestone Doji but it is not a Shooting Star. You might call it a Gravestone Doji but the real body is technically too tall. Today's candle is not a Shooting Star as Shooting Star's only occurs after an upward trend but this market is trading sideways in a trading range. If today's candle is not technically a Gravestone Doji then what do we call it? I call it simply as a weak bearish candle and here's why: The upper shadow is a long upper shadow indicating price is rejecting higher prices. If today's candle was a bullish candle I would not expect it to reject higher prices I would expect it to embrace higher prices. The candle closed below its "open". One identifier of a bearish candle is that its "Close" is below its "Open" therefore today's candle is a bearish candle. The real body of today's candle is short or small meaning that its "Open" and "Close" are close together. Small real candle bodies are an indication of a lack of momentum indicating weakness, therefore today's candle indicates weakness. Putting all this evidence together defines today's candle as a "Weak Bearish Candle".
TRADING
How do we trade today's candle? We don't! Notice the real body of today's candle is contained between the High and the Low of yesterday's Doji. A Long trade setup occurs when a candle closes above the High of yesterday's Doji and a Short trade setup occurs when a candle closes below the Low of yesterday's Doji. Since neither occurred today we take no action.
Today's candle might be called a Gravestone Doji but it is not a Shooting Star. You might call it a Gravestone Doji but the real body is technically too tall. Today's candle is not a Shooting Star as Shooting Star's only occurs after an upward trend but this market is trading sideways in a trading range. If today's candle is not technically a Gravestone Doji then what do we call it? I call it simply as a weak bearish candle and here's why: The upper shadow is a long upper shadow indicating price is rejecting higher prices. If today's candle was a bullish candle I would not expect it to reject higher prices I would expect it to embrace higher prices. The candle closed below its "open". One identifier of a bearish candle is that its "Close" is below its "Open" therefore today's candle is a bearish candle. The real body of today's candle is short or small meaning that its "Open" and "Close" are close together. Small real candle bodies are an indication of a lack of momentum indicating weakness, therefore today's candle indicates weakness. Putting all this evidence together defines today's candle as a "Weak Bearish Candle".
TRADING
How do we trade today's candle? We don't! Notice the real body of today's candle is contained between the High and the Low of yesterday's Doji. A Long trade setup occurs when a candle closes above the High of yesterday's Doji and a Short trade setup occurs when a candle closes below the Low of yesterday's Doji. Since neither occurred today we take no action.