I have
always said that I prefer making my trading decisions based on the Japanese
candlestick formation signals. What happens, however, when I see conflicting
signals on different time-frames? For example:
As you can
see for yourselves, on the four hour filter chart there is a very well-formed
doji candlestick above the support that indicates a movement to the upside, while on the daily filter chart
there are a hammer and a doji candlestick under
the resistance that that indicate
a movement to the downside. The question is, which signal is the correct one?
I, personally, tend to believe the candlestick formations on the longer
time-frame, i.e. the daily filter chart, although I remain wary of unpleasant
surprises. Of course, in a situation like this one can always simply take a
look at the shorter time-frames and use a suitable scalping strategy.
Very good article. Longer candlestick formations (time-frame) are more important.
ReplyDeleteI agree with the analysis, good point.
ReplyDeleteYou've raised a very interesting question.
ReplyDelete