Wednesday, August 26, 2009

Possible Tri Star Candle formation on the indexes

It appears that if todays daily candle on the $spx and the $compq closes around the present postion we would have what Steve Nison (the candle pro) refers to as the tri star pattern.

Such a pattern is essentially made up of 3 doji candles with the middle doji day being more shooting star. The psychology behind the pattern goes along the lines  that the market has probably been in an uptrend or downtrend for a long time. 

Obviously in this case an uptrend. With the trend starting to show weakness  bodies are becoming smaller. 
  • The first Doji would cause concern. 
  • The second would indicate little direction left in the market  
and he indicates that the
  • The third doji would put the nail in the coffin of this trend.
Because this indicates entirely too much indecision,everyone with any conviction would be reversing positions .In this case obviously from long to short.As he says this pattern is EXTREMELY rare and so when it occurs it shouldn't be ignored.
thanks to hurricanemalta
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