Introduction to Candlesticks for pennystocks
Have you read part 1 of Introduction to Candlesticks for penny stocks? If so then Let’s move on!
In This article you’ll learn some basic candle stick patterns and potential risks to trading candlesticks.
Candlestick charting risks?
Candlestick analysis doesn’t work as well in the very short term e.i. five minutes or less. Candle stick patterns may not develop on very short time frames & might not be as useful for scalping or day trading activities.
Candlestick charts don’t take into account trade volume outside of regular market hours. There can often be significant volume traded outside of regular market hours & candle stick charts won’t take any of it into account.
So if your pattern says buy, it might really be a sell if you take into account after/pre market activity.
However, all in all these are fairly minor issues. Candlestick charting is still an amazing tool for penny stock trading.
Candlestick of the day: Bullish White Marubozu
The Bullish White Marubozu is a Long white candle stick and represents an extremely bullish trading period. It has no “wick” at the top nor bottom of the candle and represents a day where the stock continued to rise from the open all the way until the close.
Does a Long White Candlestick Signal an uptrend?
The Bullish White Marubozu can be strong indicator of an uptrend , especially if the long white candlestick appears at the end of a down-trend. However, beware of a long white candlestick at the end of an uptrend.
If the Relative Strength Index (RSI) is high above 50 it may indicate that the bullish move is almost over.
Closing Words
Candlestick charting can be overwhelming, thus it’s best to learn the basic concepts first before overloading your self with “techniques”.
Continue reading our series on candle stick charting for penny stocks if you want to learn more about how candle stick patterns can make you serious profits.
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