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Book Discussion: Bloomberg Visual Guide to Candlestick Charting

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mahanik21 View Post
i just think the whole candle stick pattern argument is so unsubstantiated.

I have no proof either (and don't use candle sticks). But I have read the Steve Nison book on Japanese Candlestick Charting techniques and tend to think there could be validity in there use on longer timeframes, such as Daily, Weekly or Monthly charts as they were originally used. Basically time periods that are actually a valid unit of measure that means something. A day had a pit open and a close and what price did that day is important. The same for a week or month. If on a weekly chart price opens at the bottom of a range and then pushes down out of the range but then fails to attract more sellers and closes back within it, then that "Hammer" means something. Candlestick patterns can provide a nice visual shorthand for easily classifying market states.

I think where people can get in to trouble is they look at candlestick patterns with no consideration of whether the time frame they are using actually has any relevance in the real world. They then try and use candlestick patterns on a 5 minute chart or something completely meaningless.

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