7th Day Chart Pattern / Bearish Engulfing Pattern

                            Bearish Engulfing Pattern

A bearish engulfing pattern is a two candlestick trend reversal pattern that follows an uptrend. The bearish engulfing pattern criteria are:

• The first day should be a bullish candlestick, but can be a doji.
• The second day candle is bearish and is taller than the first day’s candle.
• The open and high of the second day should be greater in price than the first day’s close and the second day’s close and low should be less than the first day’s opening price.
• The strictest definition of a bearish engulfing candlestick pattern necessitates that the real body of the second day be larger than the first day’s candlestick (including the upper and lower shadow).

Occasionally the bearish engulfing pattern is referred to as the three outside down pattern. The difference is the addition of a third bearish candlestick that closes below the low of the second day’s bearish candlestick.

Traits That Improve the Bearish Engulfing Pattern's Effectiveness

Nison, in his book Japanese Candlestick Charting Techniques (1991, p. 39) states that the following factors increase the likelihood that the bearish engulfing pattern is an important trend reversal indicator:

• The first day candlestick has a very small real body and the second day candlestick has a very long real body.
  Reasoning: After an uptrend, a small bullish candle appears showing that bulls are unable to push prices very much higher as they have been able to do previously. As a reminder, a small bullish candlestick shows bulls having less power compared to large bullish candlestick which shows bears having more power. Similarly, a large bearish candlestick that appears after an uptrend shows that bears are able to come back into the market and the bulls were unable or unwilling to stop this bearish assault. The longer the bearish candlestick is, the more powerful the bears were.
• The bearish engulfing pattern takes place following a long uptrend or a rapid move higher.
  Reasoning: It can be reasoned that after a long upward move, that most traders who are going to buy have already done so, this leaves fewer traders to buy and push the price higher. This is why a small bullish candlestick or doji is important as the first day in the pattern; it shows that bulls are getting tired. In contrast, explosive moves higher are often overbought and are vulnerable to reversals downward. The bearish engulfing pattern can signal that the move was too fast and too much and the trend is about to change.
• Volume on the second day candlestick is very large.
  Reasoning: Generally, high amounts of volume transacted on a large bearish candlestick indicates that there was a large turnover of shares throughout the day and that traders had to sell at the asking price of buyers, therefore decreasing prices were required in order to complete a transaction, this is very bearish. Clarifying this using the concepts of supply and demand, if there are more traders willing to sell their shares (ie more supply) and there are less traders willing to buy shares (ie less demand), then prices should fall, consequently creating a bearish candlestick where prices opened and fell during the trading day to close lower.
• The real body of the second day is larger than candlestick height (including shadows/wicks).
  Reasoning: Multiple small candlesticks show uncertainty. The appearance of a large bearish candlestick that is larger than the previous short candlesticks shows that the market has finally decided to move downward.
• The bearish engulfing pattern occurs in an area of resistance.
  Reasoning: Resistance is a historical area in which bears previously have come into a market to sell at a certain price level. If the bearish engulfing pattern occurs at this resistance price level, then a trader might feel more confident selling short because the resistance acts as yet another bearish confirmation that the trend could be changing.

Invalidated Bearish Engulfing Pattern

Nison (1994) states that the bearish engulfing pattern is no longer valid when prices close above the top of the bearish engulfing pattern which includes the upper shadows; in fact he states that the outlook turns from bearish to bullish (p. 78).

Bearish Engulfing Blended Candle = Shooting Star

When combined into one candlestick, the first and second day of the bearish engulfing pattern look like a shooting star candlestick which is a bearish reversal candlestick.

Bearish Engulfing Pattern Confirmation of Resistance

The chart above of the Energy SPDR ETF (XLE) demonstrates how the blue resistance line acted as resistance for the high of the second day of the bearish engulfing pattern. Once the upper shadow of the bearish candle reached the resistance area, the bears took charge for the rest of the day. Confirmation of resistance plus the bearish engulfing pattern were a potent combination for the bears who took the ETF downwards for the next few months. The bearish engulfing pattern in this chart was a good example of the second day candle’s real body being larger than the entire first day candle. It was also good that the bearish candlestick on the second day was so large, showing much force behind the bearish move downward.

Bearish Engulfing Pattern Creating New Resistance

Nison (1994, p. 78) suggests that bearish engulfing patterns can become an area of resistance for future prices. The chart above of the Energy SPDR ETF (XLE) illustrates a bearish engulfing pattern with many solid traits: the first day candle is small; the second day candle is very large engulfing five candlesticks prior to it; and it occurs after a long, continual uptrend. After the bearish engulfing pattern, prices fall but after a week prices begin to trend back up until they reach a high equal to the high of the bullish engulfing pattern’s second day candle close. An aggressive trader could attempt to sell short at the price level established by the bearish engulfing pattern over 17 trading days prior. In the example above, the trader would have been rewarded with a profitable trade. It is noteworthy that the candlestick that approached the resistance was almost a bearish engulfing pattern in and of itself. The precise candlestick definition for that two candlestick pattern is the Dark Cloud Cover.

Bearish Engulfing Pattern 2nd Day High Volume Confirmation

Notice on the chart above of the Dow Jones Industrial Average ETF (DIA) how the second candle of the bearish engulfing pattern had the second highest volume of any of the day’s shown in the chart. It is important confirmation to see high volumes accompany the second day large bearish candlestick in the bearish engulfing pattern. This shows that bears were serious about selling that day. Also note that the two days prior to the pattern were very low volume and were very small candles. It can be inferred that bulls were running out of energy (small candlesticks) and weren’t interested at buying at these higher prices (low volume). The large bearish candlestick with high volume proved that the bulls had no energy left and prices subsequently wandered downward for weeks thereafter.

Source :-http://www.finvids.com/Candlestick-Chart/Bearish-Engulfing-Pattern/

Bearish Engulfing Pattern Trading Strategy Guide

Last Updated on January 3, 2020

Do you know why most traders lose money when trading the Bearish Engulfing pattern?
It’s because they treat them all the same!
Here’s the thing:
You can have two identical Bearish Engulfing patterns but, one is a high probability setup and the other is to be avoided (like how you run away from a stinky ol’ skunk).
Why?
Because you must pay attention to the context of the market.
I know that’s not useful (like telling a blind man to watch his step).
That’s why I’ve written this trading strategy guide to teach you all about the Bearish Engulfing pattern — so you can trade it like a professional trader.
You’ll discover:

• What is a Bearish Engulfing pattern and how does it work
• The ONE mistake you must avoid when trading this pattern…
• How to use the Bearish Engulfing pattern and profit from “trapped” traders
• How to “predict” market turning points with the Bearish Engulfing pattern
• The Moving Average and Bearish Engulfing combo
• 3 trading hacks that increase your winning rate

You ready?
Then let’s get started…

What is a Bearish Engulfing pattern and how does it work?

A Bearish Engulfing Pattern is a (2-candle) bearish reversal candlestick pattern that forms after an advanced in price.
Here’s how to recognize it:

• The first candle has a bullish close
• The body of the second candle completely “covers” the body first candle (without taking into consideration the shadow)
• The second candle closes bearish

And this is what a Bearish Engulfing Pattern means…

1. On the first candle, the buyers are in control as they closed higher for the period
2. On the second candle, strong selling pressure stepped in and closed below the previous candle’s low — which tells you the sellers have won the battle for now

In essence, a Bearish Engulfing Pattern tells you the sellers have overwhelmed the buyers and are now in control.

Don’t make this BIG mistake when trading the Bearish Engulfing pattern…

Here’s the thing:
Many traders would spot a Bearish Engulfing pattern and look to short the market.
Why?
Because you think a Bearish Engulfing pattern is a sign of weakness that the market is about to reverse lower.
Wrong!
I’ll explain.
Yes, a Bearish Engulfing pattern shows the sellers are in control — but it doesn’t mean the price is about to reverse lower.
Why?
Because in an uptrend, the price is likely to continue higher and not reverse because there’s a Bearish Reversal pattern.
Think about this…
A trend can last for weeks, months or even years.
Do you think the entire move will reverse just because of one reversal candlestick pattern?
Unlikely.
In fact:
If you look at the lower timeframe, a Bearish Reversal pattern is usually a retracement within the trend
Here’s what I mean…


So, what’s the lesson here?
A Bearish Engulfing pattern doesn’t mean jack shit.
If you want to know where the market is likely to go, pay attention to the trend and not the candlestick pattern.
Now you’re probably wondering:
“So what’s the use of the Bearish Engulfing pattern?”
Well, that’s what I’ll cover next.
Read on…

How to use the Bearish Engulfing pattern and profit from “trapped” traders

On its own, a Bearish Engulfing pattern is meaningless.
However, if you combine it with market structure (like Support & Resistance) — that’s where it really shines.
Here’s what to look for…

1. A strong rally towards market structure (like Resistance or swing high)
2. A Bearish Engulfing pattern that reverses at the highs

Here’s the idea behind it…
When the market rallies strongly towards a key level, many traders will think…
“The market is so bullish. Let me buy now and capture some easy gains!”
The next thing you know, the price does a 180-degree reversal at the highs and now this group of traders is “trapped”.
And if the price continues lower, it’ll trigger their stop-loss fueling further selling pressure (which a short trader can profit from).
Here’s an example:

Next…

How to “predict” market turning points with the Bearish Engulfing pattern

Here’s how…
A downtrend consists of a trending move lower, followed by a retracement, and then another move lower.
So, you want to pay attention to the retracement move towards previous Support turned Resistance.
Why?
Because that’s where selling pressure lurks that could push the market lower.
However, you can’t “confirm” if the price will reverse from that area because it could also break above it.
So that’s when you use the Bearish Engulfing pattern to “confirm” the sellers are in control — and the market is likely to move lower.
Here’s an example…

Pro Tip:
This technique works best in a weak trend. For a strong or healthy trend, you should go with the next trading technique…

The Moving Average and Bearish Engulfing combo

In a healthy downtrend, the market tends to stay below the 50-period Moving Average (MA).
So any pullback towards the 50 MA presents a trading opportunity to go short.
Here’s what to look for…

1. Identify a healthy trend with the price respecting the 50MA
2. Wait for a pullback towards the 50 MA
3. Watch for a Bearish Engulfing pattern to reject the 50MA

Here’s an example:

Pro Tip:
This technique can also be applied to a strong trending market (where the price respects the 20MA).

Bearish Engulfing Pattern: 3 trading hacks that increase your winning rate

Now…
If you want to take your trading to the highest level, you must understand the nuances of the market.
So, here are 3 questions to ask yourself whenever you’re about to trade a Bearish Engulfing pattern…

1. How did the price approach a level?
2. Is the price rejection strong or weak?
3. What’s the market structure on the lower timeframe?

I’ll explain…

1. How did the price approach a level?

Warning: This is an advanced trading concept so please pay attention.
When you’re trading a reversal, you want to see a strong momentum move into a level.
Here’s why…
When you get a strong momentum move lower, it’s because there isn’t enough buying pressure to hold up the prices — that’s why the price has to decline lower to attract buyers.
Now the entire “down move” is called a liquidity gap (a lack of interest) since not many transactions took place on the decline.
This means the market can easily reverse in the opposite direction due to a lack of interest around the price level.
That’s why you often see a strong move down into Support, and then BOOM, the price does a 180-degree reversal.
Here’s an example…

So remember, if you want to trade price reversals, always look for a strong momentum move into a level.

2. Is the price rejection strong or weak?

Here’s the thing:
When you’re trading the Bearish Engulfing pattern, you don’t want to see a weak price rejection at a key level.
Because it doesn’t convince you the sellers are in control.
This is what I mean…

Instead, you want a strong price rejection.
It’s so strong that the range of the Bearish Engulfing pattern exceeds the preceding candles.
An example:

See the difference?
When you get a strong price rejection at a key level, the market is likely to reverse lower.

3. What’s the market structure on the lower timeframe?

Now…
The reason why you want to watch the lower timeframe is that it shows you who’s in control.
For example:
A strong move into Resistance on the Daily timeframe is a series of higher highs and lows on the 4-hour timeframe.
Now imagine…
The price is at Resistance (on the daily timeframe) and you get a lower high and low (on the 4-hour timeframe).
An example…


What does it mean?
Well, it tells you the sellers are in control and the market is likely to reverse lower.
With this insight, you have a low-risk opportunity to short the market and ride the next wave down.
This is powerful stuff, right?

Conclusion

So here’s what you’ve learned:

• The Bearish Engulfing is a reversal pattern that tells you the sellers are in control
• Don’t trade the Bearish Engulfing pattern in isolation — you must take into consideration the trend, market structure, etc.
• You can combine the Bearish Engulfing pattern with the market structure to identify high probability trading setups
• The 3 hacks I shared with you will improve your winning rate (a strong move into a level, a strong price rejection, and a break of structure)

Source :- https://www.tradingwithrayner.com/bearish-engulfing-pattern/

PREDICTING THE FUTURE: THE ROAD AHEAD

PREDICTING THE FUTURE: THE ROAD AHEAD

Forecasting is the most difficult task but the irony is that a few people make most of the money by predicting the future (in the case of astrologers / numerologists) or by selling dreams into the future (the marketing guy who sells a flat / villa for secondary rental income or selling Systematic Investment Plans / financial products for financial freedom). However, let’s aim to jot down a few life defining changes this pandemic has brought about.

Please keep in mind that the below predictions are based on the habitual changes which we have discussed above since the beginning of the lock-down. As new habits can be a bit radical, it would be futile to underestimate its far-reaching consequences.

A. Let’s start with life after COVID 19 and the impacts in our lives and families:

• Loss of jobs, food inflation arising from scarcity and online themes (see below for further comments on online themes) would be the new normal along with social distancing;
• Start-ups and business entrepreneurs operating in non-essential sector will face grave recessionary impacts. Where these businesses are run on debt, they may feel immense pressure to pay their suppliers / employees as no fresh credit would be available from banks;
• Many sole proprietorship businesses would be forced to wind up, leaving their employees jobless and penniless;
• With no certainty of future cash flows, people would generally spend less or defer large expenses. All big-ticket items such as purchase of house/ expensive cars such as Mercedes Benz /Audi or Rolex watches or Birkin bag would be a ‘touch-me-not’;
• I wonder would consumers get paid, if they buy certain consumer discretionary items similar to what happened in the case of oil. While some of you may ridicule this, Chinese firms are more than happy to offer some (less needed) discretionary products for free if you can pay the shipping cost;
• Growing veggies in our backyard and posting it via Instagram would be the new style statement;
• We will witness the growth of Telemedicine apps more than ever. This would be touted as the next big recession proof businesses;
• Engineering / management students are wondering how effective their online education would be and if there is any merit in paying millions to get foreign degrees from Stanford / INSEAD;
• Coursera / Udemy / Khan academy and such online education apps would be more famous than ever. New students and people who have lost their jobs would flock to these websites to train / up skill;
• Next millionaires / billionaires will be YouTube / Tick Tok account holders;
• Film actors / actress would be wondering as to when can they ‘act’ again. They would be in fact thanking the monetization scheme of Instagram which would help them to earn while in lock-down. They might be wondering as to whether animation movies would take the centre stage in the coming years and the ways in which they can become integral parts of popular animation franchises;
• Cricket and baseball stars / personalities would be much relieved as there are no better sports than cricket and baseball which can be played with safe distancing;
• Medical students are wondering how to learn medicine with safe distancing and PPE. Dentists and dental students would also be pondering the same;
• Court system in India would be checking out innovative ways to work online;
• Packaged foods and QSR delivery may still function at reduced level solely for takeaways. The opening-up of this sector will feed several people such as cooks, Swiggy / Zomato delivery guy and the hotel owner;
• We will witness employed people based in metros / tier 1 cities flocking to small towns / villages. If ‘work from home’ would be the new normal, people who rent in cities would ‘unfollow’ dense cities to live in their home town / villages.
• Families falling within lower strata / daily wage earners may consider venturing into cattle rearing and may buy one or two cattle / goats. These families can earn by selling milk in the neighbourhood and more importantly the payback time is less for their investments;
• People will travel less and in case of urgent travel, least preference would be given to travel via public transportation. This will create demand for automobiles available in lower to mid segment price points;
• There will be a pent-up demand for insurance products (both health and life) to protect from unexpected COVID 19 expense / death;
• Home-schooling might emerge as the new mode of schooling. Alternatively, parents would be curious to know whether their kids’ school would start online teaching. Also, they might be busy reading reviews to find out who’s the best teacher offering online tuition;
• Online libraries / on-demand reading app may gain popularity among a minority section of the people who hate Netflix dramas;
• Similar to on-demand libraries / food delivery apps, there could be a wave of on-demand hair salon / hair stylist business with required safety protocols;
• Online gaming / dating websites will gain more popularity than ever with youngsters;
• With the possibility of recession, we will start looking at fixed interests offered by public sector banks than attractive rates offered by private / co-operative banks for greater safety. There is a contrarian view in light of what is happening across many countries in Europe that interest rates may nose-dive to negative rates in India o;
• Investment in gold would be the new norm as Systematic Investment Plans into equities may see a drop. Investment managers and relationship managers would advise fresh money and money from equity / equity-oriented products to be invested in gold via ETFs / gold funds or even Sovereign Gold Bonds issued by Government of India;
• The foreign returned worker will turn into cultivation in his own / leased agricultural land to the extent possible. The management level executives will try to compete in the local job market with their better foreign experience;
• We will see the rise of new technological development that would alert us when 6m safe distance is not kept. Apps in mobile phones or larger tools for the police force to monitor the population at large, would be rampant, once the lock-down is lifted.

Source  :- https://medium.com/mathews-p-mathew/covid-19-a-sneak-peek-into-the-future-through-the-rear-view-lens-de96c6dceb39

6th Chart Pattern/Advance Block Candlestick Pattern

                                                             Advance Block Candlestick Pattern

The Advance Block and Stalled Pattern (also known as the Deliberation Pattern) are candlestick patterns made of three bullish candlesticks that often occur during an uptrend and warn of a slowing uptrend, but not necessarily a trend reversal.

 

The advance block pattern occurs when on the first day a long bullish candlestick appears followed by another long bullish candlestick that opens within the real body of the first day’s real body and closes above the first day’s close and high. Also, a long upper shadow should appear on this second day. The third day is a small bullish candlestick that usually opens within the second day’s real body and closes above the second day’s close; it should have a upper shadow as well. The focus of this pattern is that the market is making new highs, but the bullish candlesticks’ real bodies are getting progressively smaller as prices make these new highs. The upper shadows are showing that bulls wish to push prices higher, but during the day the bears are able to successfully push prices down off of the highs and the bulls have to settle for gradually smaller gains.
For a definitive definition, ThinkorSwim (2011) charting package defines the advance block as:

• Each candle is bullish
• Each candle opens within the real body of the previous candlestick
• The second day’s candlestick real body must be 70% or less of the first day’s real body and the third day’s real body must be 70% or less of the second day’s real body.
• The second and third day have a long upper shadow that is at least 75% of the height of the prior 20 day average of candlesticks’ real bodies.

Stalled Candlestick Pattern or Deliberation Candlestick Pattern

The stalled pattern or deliberation pattern is like the advance block in that it occurs during an uptrend and warns of a slowing uptrend and is made up of three bullish candlesticks. The defining characteristic is the third day is a small candlestick that gaps up like a star or is located at the upper end of the second day’s bullish candlestick real body much like a harami pattern.

Advance Block and Stalled Candlestick Pattern Suggest Selling of Longs

Nison (1991, p. 144) suggests that the advance block and stalled pattern be used to sell out existing longs, but does not suggest going short. The advance block and stalled pattern should not be considered as reversal patterns. Often the advance block and stalled pattern lead into a period of consolidation, though at times they can lead to a reversal of trend to the downside.

Advance Block Candlestick Chart Example

The chart above of the Nasdaq 100 ETF (QQQ) shows an advance block candlestick pattern. The first candlestick of the pattern was a long bullish candlestick that closed near the high of the day. The second day’s candlestick closed above the high of the previous day but was a smaller candlestick than the first day’s real body. Also, the second day had a large upper shadow, showing that the bears “blocked the advance” of the bulls to close at the high of the day. The third day was a small candlestick that was almost a doji, emphasizing that the bulls had run out of power. The third day also had an upper shadow that was unable to go passed the second day’s high price. From there, the market fluctuated at these high prices for four days and then began moving downward.

Stalled Pattern or Deliberation Pattern Candlestick Chart Example

A stalled candlestick pattern is illustrated on the chart above of the Nasdaq 100 ETF (QQQ). The first and second days are both bullish candlesticks. The third day is a small candlestick that barely closes higher than the second day’s closing price. This inability of the bulls to push prices higher shows that they are weakening and either a consolidation period will emerge, or like in the chart above, the bears take over and a downtrend emerges.

Source :- http://www.finvids.com/Candlestick-Chart/Advance-Block-Stalled-Pattern/

 

 

Guide to the Advance Block Candlestick Pattern- Advance Block Meaning, Definition & Strategies

By Therobusttrader

Candlestick patterns are some of the most popular ways to analyze the movements of markets. With their colorful bodies and eye-catching wicks, they are of great help when it comes to quickly discover and identify different patterns and signals. One such pattern is the advance block candlestick pattern.
An advance block is a three candle candlestick pattern that’s traditionally considered a bearish reversal pattern. However, some suggest that it acts more like a bullish continuation pattern.
In this guide to the advance block, we’ll cover everything you need to know about the pattern, such as its meaning, definition, and tips on how to trade it live.
We’ll also discuss whether the advance block should be seen as a bullish or bearish signal, since many claim that it works better as a bullish continuation pattern.
Let’s start!

Advance Block Definition

Advance Block

An advance block consists of three candles and forms in an uptrend. Here are the conditions that have to be met:

1. Both three candles are positive
2. Each candle has a smaller body than the preceding candle, and opens in the previous candle’s range
3. The last two candles have quite big wicks.

Is the Advance Block Bullish or Bearish?

As we’ve touched on already, the traditional interpretation of the pattern is that it’s a bearish reversal pattern. However, some suggest that it instead signals a coming bullish move.
So what view should you adopt?
Well, there is no right or wrong answer here. The performance of any pattern varies greatly depending on the market you apply it to. Following this, the advance block pattern could be a positive signal in one market, but a negative signal in another market.
In order to know what applies to your market, you must perform a test to see how the advance block has fared on your market historically.
We recommend that you use backtesting since it’s a quick and easy way to test the performance of most patterns and signals. Our complete guide to backtesting goes into backtesting in greater detail.
Having covered that the advance block could be both bullish and bearish, from now on, we’ll regard the advance block by its traditional interpretation. That is as a bearish reversal pattern.

Advance Block Meaning

Every candlestick tells us a unique story about the market state in which it formed. This means they not only provide a visual clue about the exact moves of a market, but also what happened inside the market.
Now, it might be hard or impossible to know exactly why a market performed as it did. However, by trying to analyze and understand why a market moved as it did, we will start to increase our understanding of the market and its mechanisms.
And by scrutinizing market data, you’ll also start to note recurrent patterns, which may even lay the groundwork for an upcoming strategy. In fact, many of our trading strategies have come about this way!

So let’s try and see what the market has been up to as it forms an advance block!

The market is in a bullish trend which means that market sentiment is overwhelmingly positive. Most traders and investors believe that the positive trend is here to stay, and add to the buying pressure.
As a result, the first candle of the advance block becomes a long bullish candle.
However, as the trend now has persisted for quite some time, more and more market participants are becoming worried that a correction might be on its way. As a result, buying pressure starts waning, albeit still remains positive. As the market attempts to head higher, sellers stand ready to interfere and release selling pressure that keeps the market from moving higher. This, in turn, pushes the market lower and gives rise to the upper wicks.
All in all, this tells us that the market is becoming depleted of its bullish strength, meaning that there is a great chance that we’ll see a dip soon!

Advance Block Example

Here follows a real-world example of the advance block pattern.

Advance Block Example

How to Trade the Advance Block Pattern

After learning about candlestick patterns like the advance block, many traders dive headfirst into the markets and act on the pattern without hesitating.
While this might seem tempting, this is something most experienced traders never would do. Most patterns taught online can’t be traded in their original form, and must be tweaked to hold any edge worth trading.
Now, in this part of the article, we wanted to share some quite powerful methods that we’ve had great experiences with ourselves.
However, as with every strategy or pattern you’ll learn, it’s highly dependant on the market and timeframe traded. One filter or method that works on one market most likely isn’t going to hold any significant edge when applied somewhere else.
As a result, it would be highly irresponsible of us to claim that some methods work better than others. This also is the reason why we highly recommend you use backtesting to ascertain where the real edge lies.
Having said this, let’s have a look at the filters!

Volatility

In trading, volatile is one of those concepts that tend to show merit in a lot of markets. In that sense, it could be said to be a universal concept, which is not so strange, considering that volatility is inherent in anything that moves.
Now, the success rate of a strategy or pattern like the advance block could vary greatly depending on the current levels of volatility. For example, some patterns work great only in high volatility conditions, while others work better when the market is calm.
While it’s impossible to say that the advance block would work better in high or low volatility settings without knowing the market, it might be tempting to assume that high volatility is favorable.
The reason is that markets like stocks and equities tend to revert to their mean, meaning that they perform an exaggerated move in one direction and then fall back. And if the advance block was formed with high volatility, it tells us that the market is more likely to have gone too far to the upside, meaning that we are helped by the market’s mean reverting traits.

Here are our two favorite tools when it comes to gauging volatility:

1. ADX- ADX is one of our favorite indicators, and is used to measure the momentum and volatility of the market. A reading of 25 or more is considered to show a strong trend, while readings below 20 signal indecisiveness. You may read more about the ADX in our guide to the ADX indicator.
2. Average True range- Also called ATR, it simply is a moving average of the average true range. Its output can be used as a reference to be compared with the range of the current bar. You may read more about the ATR in our complete guide to the ATR indicator.

Market Breadth or Sentiment Indicators

Sentiment Indicators

In addition to the price chart, there are many other data streams that you may use in your analysis. And the fact is that most traders either don’t know about them, or haven’t cared to incorporate them into their analysis.
Some of the most common external data streams are market sentiment indicators. In short, these attempt to give a broader picture of the current market situation, by incorporating a larger share of the market in their calculation.
For example, there are market sentiment indicators that compare the number of advancing stocks to declining stocks. Others look at the volume of declining and advancing stocks, to come up with a relevant measure.
Now, when applying indicators like these to the advance block pattern we first must recognize that the advance block consists of bullish candles. 
Having recognized this, we may add the overall state of the market into the mix. For example, if the advance block was formed at a time when most stocks actually were declining, we might not want to short the pattern. As a matter of fact, the security we’re analyzing shows relative strength, and could ascend quickly if just the overall market climate turns more positive.

Advance Block Trading Strategies

Now that you know two powerful methods to increase the accuracy of the advance block, we wanted to just show you a couple of example trading strategies.
Just like with everything we’ve shown you so far, the effectiveness of the strategies mentioned is highly dependant on the market and timeframe. As we told you earlier, we recommend that you use backtesting to see what works in your market!
Having said this, the following two strategies will be a great opportunity for you to see how we would go about when creating a trading strategy. As will become apparent, you really don’t need that many conditions!

Trading Strategy 1: Advance Block With Volume

Sometimes, volume has a significant impact on the performance of strategies and patterns. High volume often means that the pattern was backed by more market participants, making it more significant.
Now, in the case with the advance block, we might want to see waning volume as the pattern forms. That way we draw the conclusion that the market is losing in strength, which adds to our bearish view.
So, to take a trade we require that:

1. There is an advance block
2. Each of the three candles forms with less volume than the preceding candle.

Then we exit the trade after 5 bars.

Advance Block Trading Strategy

Trading Strategy 2: Advance Block With Oversold Condition

As we mentioned earlier, stocks and equities tend to revert to their mean once they’ve moved excessively to the upside. And by using a filter that reflects this, we can capture this tendency.
To be more specific, we’ll use the RSI indicator, and demand that it’s higher than 70 before taking a trade. If you aren’t familiar with the RSI, you may be interested in our complete guide to the RSI indicator.
So, the rules to short become that:

1. We have an advance block
2. The RSI is above 70.

Then we exit once RSI crosses below 50.

Advance Block Trading Strategy

Source :- https://therobusttrader.com/guide-to-the-advance-block-candlestick-pattern-advance-block-meaning-definition-strategies/ 

Chart Pattern/ Double Bottom :-

                         Double Bottom

Double bottoms look like the letter "W". A double bottom is formed when a new low is created (a bottom) and is followed by a rally upward; this middle part of the "W" is called the middle peak.

Middle Peak Relationship to Bottoms

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Kirkpatrick & Dahlquist (2010) suggest that the middle peak be about 10% above the bottom of the lowest low (p. 309). After the retracement upward, prices move lower once again to the level of the previous bottom and from there, prices bounce off an area of support and move higher.

Relationship of Right and Left Bottom

Time Spacing between Bottoms

According to Bulkowski (2008), the two bottom prices should be within 2-5% of one another and should be separated in time by 2 to 6 weeks; anything over 8 weeks and the success of the pattern deteriorates; it should also be noted that the double bottom performs best when they occur within the bottom third of the yearly low price. Once prices penetrate above the price level established by the middle peak, then a buy signal is suggested. It is emphasized in multiple sources cited on this website, that the middle peak price must be penetrated for a valid buy signal to be activated.

Psychology of Double Bottom Chart Pattern

The psychology of the double bottom pattern is given next: The first bottom of the pattern is just a continuation of the previous downtrend and is a new lower low. The middle peak of the double bottom is an expected retracement after the lower low. However, trouble arises when prices move down from the middle peak and attempt to make yet another lower low for the downtrend. Traders have been able to push prices progressively lower thus far, but when prices fail to fall past the previous low, traders become worried. Once the high of the middle peak is penetrated, the downtrend is considered dead by traders. Prices were unable to make lower lows (making lower lows is one of the definitions of a downtrend) and now since the high of the middle peak (technically a high) has been broken above, now a new high has been created (making a higher high is one of the definitions of an uptrend). Now that the downtrend has been broken and a new uptrend has been created, it is expected that traders will pile onto the new uptrend and prices will move higher.

Price Target

When calculating price targets after the buy signal is suggested, Bulkowski (2008) promotes the following formula:

Double Bottom Price Target: Price of the Middle Peak + ((Price of the Middle Peak - Price of the Lowest of the Two Bottoms) * 66%)

4 Double Bottom Chart Patterns

There are four anatomically suggestive double bottom patterns: Adam & Adam, Adam & Eve, Eve & Adam, and Eve & Eve. Bottoming price bars that are sharp "V"s, usually one day events, are referred to as "Adam"s. Whereas, rounded "U"s that are usually multiple day bottoming bars are referred to as "Eve"s.

Eve and Eve Double Bottom

The Eve and Eve (EE) double bottom contains two soft multi-day "U" bottoms. The research of Bulkowski claims that of the four double bottoms, the Eve and Eve pattern is the most successful, with the average highest high (before any retracement of 20% or more) after the price breakout of the pattern being 40% (2005).

Eve and Eve Double Bottom Chart Example

The Eve and Eve chart example above of Procter & Gamble (PG) shows two "U" bottoms. With the exception of an anomaly price bar, the first bottom is created by four bars creating a rounded bottom. Prices smoothly ascend creating a round middle peak and then flow downward creating another smooth bottom that consists of roughly a week of price action. Prices gap up and the price level established by the middle peak is pierced giving a buy signal. In this example there is no retracement after the breakout, prices continue higher.

Adam and Adam Double Bottom

The Adam and Adam (AA) double bottom contains two sharp "V"s. The research of Bulkowski claims that of the four double bottoms, the Adam and Adam pattern is the least successful; however, the AA pattern is nevertheless successful, the average highest high (before a retracement of 20% or more) after the price breakout of the pattern is 35%.

Adam and Adam Double Bottom Chart Example

The chart above of the S&P 500 ETF shows an Adam and Adam double bottom. The double bottom pattern is preceded by a downtrend and a two-day sharp move downward forming the first bottom, followed by a two week retracement upward before moving once again downward. The second bottom consists of three days but is emphasized with a sharp long bar that tests the first bottoms low price area. Prices once again move higher, breaking past the middle peaks high and triggering a buy signal. But, as is very typical 2/3 of the time, prices pullback after the breakout (Bulkowski, 2008). However, after this very typical pullback, prices move ever higher.

Adam and Eve Double Bottom

The Adam and Eve (AE) double bottom pattern consists of a sharp "V" bottom followed by a more rounded "U" pattern. Bulkowski's (2005) research states that the AE double bottom pattern is the second best performing of the four double bottom patterns with an average rise of 37% after the price breakout confirmation before any retracement of 20% or more occurs.

Adam and Eve Double Bottom Chart Example

The chart above of Boeing (BA) exemplifies a typical Adam and Eve double bottom. The first bottom is sharp and consists of only two days; however, the second bottom contains five bars that have roughly the same low price support level and slowly begin to roll upward. As is typical in technical analysis, once a resistance line is penetrated it becomes the new support. The high of the middle peak is penetrated and hence a buy signal is given. Prices rise, but then begin to rollover. This is typical per Bulkowski's research, that states that the AE double bottom should retrace after a breakout 59% of the time (2005). Once the price hits the prior resistance level, the retracement is complete and the resistance level switches to support and prices move upward from there.

Eve and Adam Double Bottom

The Eve and Adam (EA) double bottom pattern consists of a rounded "U" pattern followed by a sharp "V" bottom. Bulkowski's (2005) research states that the EA double bottom pattern is the third best performing of the four double bottom patterns with an average rise of 37% after the price breakout confirmation before any retracement of 20% or more occurs.

Eve and Adam Double Bottom Chart Example

The chart above of the Consumer Staples SPDR ETF (XLP) shows a modified Eve and Adam double bottom. A downtrend begins the pattern that also contains a, typically bearish, continuation gap down within that downtrend. The first bottom of the double bottom pattern is a soft curvy bottom establishing an area of support. This is followed by a move higher creating the middle peak and additionally filling in the gap. What looks to be another "Eve" bottom begins to establish itself; however, a sharp two day "V" ends the bottoming price action. Bottom prices should typically be within 5% of one another. Prices move higher approaching the middle peak high. A buy signal is signaled when the middle peak high is penetrated. Prices shoot up with a large bullish price bar the day after the first close above the middle peak high. Typically, there is a retracement after the breakout; Bulkowski research suggests 57% of the time (2005). However, in this example there was no retracement, prices rocketed up higher

 Source:-    http://www.finvids.com/Chart-Pattern/Double-Bottom/ 

What One Should Not Do ?

                             What One Should  Not Do ?

1.Revenge  trading.  

2.FOMO (Fear Of Missing Out).

3. Taking  too many trades in a day.

4.Make your trading boring don't  make it full of  excitement.

5.Don't  search for holy grail. 

6.Practice only one method and keep practicing that. 

7.There is no the best strategy in market.


Source ;- https://www.facebook.com/artofchart/photos/a.817678525059100/1586474318179513/?type=3&theater

The Real Truths Of Now

Never have I seen such a mess in life.

The air is pure but wearing a mask is mandatory.

Roads are empty but it is impossible to go on long drive.

People have clean hands but there is a ban on shaking hands.

Friends have time to sit together but they cannot get together.

The cook inside you is crazy, but you cannot call anyone to lunch or dinner.

On every Monday, the heart longs for the office but the weekend does not seem to end.

Those who have money have no way to spend it.

Those who don't have money  have no way to earn it.

There is enough time on hand but you cannot fulfill your dreams.

The culprit is all around but cannot be seen.

If someone leaves this world, he cannot be bid adieu.



Collected from  social media

5th Candlestick pattern /Morning Star Candlestick Pattern

Morning Star Candlestick Pattern

Are you getting tired of a downtrending market? Are you wondering when it is going to end? If so, the morning star candlestick pattern is one formation to watch for. This pattern is a strong indication of a bullish turn on the way.
This pattern begins in a bearish market, with the first candlestick seeming to continue this with a long black stick. The second day begins at a significant gap down, but may be any color so long as it is short. This type of candlestick is commonly called a star. A star is suggestive of market ambivalence and possibly a bottom floor for prices. The third and final day has a long white candlestick that extends past the midpoint of the first day’s candlestick.

The ‘V’ pattern of this candlestick pattern is easy to interpret. The market has been in a steady downturn, but it hits its lowest point and begins the long climb back upward. Clearly, sellers are losing strength while the buyers are rallying. Because of this, the morning star pattern is considered a strong indicator of a bullish reversal in the future.

Your Next Move

Your next move when you see the morning star pattern should be to buy while the price is still low. Because this is a three day pattern, the reversal that it suggests is even more likely to happen; in fact, many traders see the third day as confirmation of the first two days. However, if you want to wait for confirmation on the fourth trading day, it will likely present itself.

Confirmation

Confirmation of this pattern can include any kind of bullish move, such as a sizeable gap up at the opening of the fourth trading day, a higher close, or a white candlestick of any length. The higher the third and fourth day compared to the first, the more likely this reversal is to happen. Again, confirmation is nice, but not necessary.

Variations

There are a few variations of the morning star candlestick pattern that can be significant. First, if the second day of the pattern has a white candlestick, a reversal is all the more likely. Second, the further into the first day’s candlestick the third day penetrates, the more indicative of an uptrend this pattern is.

Similar Pattern

The morning star is a confirmation of the reversal-indicating bullish doji star. This is why the formation does not require confirmation; it is confirmation in itself of another pattern. It is similar to the abandoned baby, except that with the abandoned baby, the third day both opens below and closes above the first day’s candlestick. Because this is very rare, the morning star is both less rare and less strong of an indicator. However, the morning star is certainly a strong indicator of a reversal on its own.

If you are looking to get in on some great stock at a bargain basement price, the morning star pattern is an important one to look for. While this formation may be unusual, that makes it all the more significant. If you ignore this stock, you are setting yourself up to miss out on a healthy profit.

https://www.technicalanalysisofstocks.in/articles/morning-star-candlestick-pattern/ 

                   Morning Star Candlestick Pattern

The Morning Star and Morning Doji Star are three day bottom reversal patterns. Just as the morning on earth predicts that the sun will rise, the morning star candlestick pattern suggests that prices will rise. The first day of the morning star pattern consists of a long bearish candlestick after a previous downtrend. The second day candlestick gaps down, therefore the candlestick opens at a lower price than the first day’s closing price. This second day candlestick must be a small candlestick and can be either bullish or bearish; however the key is that the real body of the second day is below the real body of the first day.
The third day of the morning star pattern is a large bullish candlestick that closes into the first day’s real body. The charting package of ThinkorSwim (2011) requires that the third day candlestick close above the midpoint of the first day’s candlestick real body. In addition, it is best that the third day’s candlestick gap up, but this is not absolutely required for the pattern’s validity.
Nison (1994, p. 118) suggests buying after the completion of the morning star pattern.

Morning Doji Star Candlestick Pattern

The difference between the morning star and morning doji star is that on the second day, the candlestick is a doji for the morning doji star candlestick pattern. As a quick summary, a doji occurs where the opening and closing prices are roughly equal.

Abandoned Baby Bottom

If a doji occurs on the second day and the doji’s high price is less than the first and third day’s low price, then a very specific and rare form of the morning doji star has occurred and is called an abandoned baby bottom.

Psychology of Morning Star Candlestick Pattern

The psychology of the morning star candlestick pattern is described next. The first day of the morning star candlestick is a large bearish candlestick that reinforces the prior continual downtrend. The second day candlestick opens lower than the prior day’s close, thus gapping down and once again reinforcing that the bears are in control of the market. However, the bears are not able to push prices downward much further. The doji, or small real body of the second day shows there is a stalemate between the bulls and the bears. Only after the third day’s bullish candlestick do the bulls show that they are now in control of the market.

Traits of the Morning Star that Increase Likelihood of Trend Reversal

Nison (1991, p. 63) points out attributes of a morning star that increase the likelihood of a trend reversal:

• There is indeed a gap between the first day’s candlestick real body and the second day’s candlestick real body and a gap between the second day’s candlestick real body and the third day’s candlestick real body.
• The higher the bullish candlestick on the third day closes into the price levels of the first day’s bearish candlestick, the stronger the showing of the bulls.
• There is low volume for the first day’s bearish candlestick, and in contrast, there is high volume on the third day’s bullish candlestick. High volume reinforces that bulls are serious about having reversed the previous bearish trend.

Morning Star Pattern Candlestick Chart Example

The chart above of the Energy SPDR ETF (XLE) is a textbook example of a morning star candlestick pattern. The previous 10 days could be characterized as a downtrend, with the first day of the morning star pattern being a large bearish candlestick (in fact a bearish marubozu candlestick). The second day gaps down and opens below the closing price of the first day. This is even more proof that the bears are in charge of the market. However, once prices reach the uptrend support illustrated by the blue line above, prices stall and bulls are able to make a small push higher. It is important to emphasize that the third day is required in order to complete the morning star candlestick pattern. If the third day opened lower and broke the uptrend support, then the bears would be in control once again. However, the third day candlestick opened higher and closed the day having penetrated over 50% into the first day’s bearish candlestick real body and completed the morning star candlestick reversal pattern. If a trader were to buy using this chart, they would have enjoyed nine bullish candlesticks over the next 10 days.

Morning Star Candlestick Pattern (3rd Day Higher Volume Than 1st Day)

One of the traits Steve Nison says increases the likelihood that a morning star candlestick is a bottom reversal, is that the third day’s volume should exceed the first day’s volume of the morning star pattern. Notice on the chart above of McDonalds (MCD) that the volume prior to the third day of the morning star pattern is falling; however, on the third day the volume increases, surpassing the volume of the first and second day. To quickly summarize, generally increased volume means increased attention by traders at the price levels representing that particular trading session. In the chart above on the third day of the morning star pattern, increased volume as well as a bullish candlestick can be interpreted that many stock shares were transferred between buyers and sellers and that the buyers had to buy at higher prices in order to get the sellers to sell to them. This eagerness and impatience by buyers to buy many shares and to pay higher prices for these many shares is a powerful sign of the bulls’ bullishness.

Morning Doji Star (and Abandoned Baby Bottom) Example

An example of a morning doji star candlestick pattern is illustrated in the chart above of Apple (AAPL). The morning doji star pattern follows a similar format to the morning star pattern with the exception of the second day candlestick being a doji rather than a small bullish or bearish candlestick. A doji is a great visual representation of indecision. As is seen in the chart above, the doji on the second day of the morning star doji pattern opens far below the close of the previous day, having gapped down. The long lower shadow of the doji shows that during the day bears were able to push prices far lower. Similarly, during the day, the bulls were able to push prices higher from the open of the day. Nevertheless, the bears move down was counteracted equally by the bulls, and the bulls move upward was counteracted equally by the bears, and eventually by the close of the day, prices were exactly where they had started at the beginning of the day.
Clarification only comes on the third day of the morning star doji candlestick pattern when prices rise over half-way into the price area of the first day’s bearish candlestick real body. Technically, the third day candlestick in the chart above is not a large bullish candlestick; in fact it is yet another doji. Even so, using Nison’s criteria for the increased likelihood of trend reversals of the morning star pattern, the third day doji candlestick gapped higher and the close of the candlestick penetrated about two-thirds of the way into the first day’s bearish candlestick.
Not only is the chart above an example of a morning doji star candlestick pattern, it is also an example of a rare abandoned baby bottom. To qualify as an abandoned baby bottom, the high of the second day must be below the lows of the first and third day; hence, there is truly a gap in the price action where no trades (i.e. no volume) occurred at those price levels in between.

Morning Doji Star (2nd Day is 2 Dojis) Candlestick Chart Pattern

It is possible for a morning star or a morning star candlestick pattern to consist of more than three candlesticks. Notice in the chart above of the Energy SPDR ETF (XLE) how the two doji candlesticks reveal the very same idea – the bulls and the bears are indecisive. Since the doji candles of both days could easily be combined into one candlestick without any loss of information, the above chart is easily considered a morning doji star pattern. The first day of the pattern was a large bearish candlestick, the “second day” was an indecisive doji day that was a gap down from the first day’s close, and the third day was a bullish candlestick that gapped up from the “second day’s” close and that penetrated over 50% of the way up into the real body of the first day’s candlestick. As a side note, the piercing pattern that occurred 15 days prior to the morning doji star pattern suggested a support level (shown by the blue line). Both dojis closed above that support line, giving even more confidence in the bullishness of this chart’s morning doji star candlestick pattern.
The opposite pattern of the morning star pattern is the evening star pattern.

http://www.finvids.com/Candlestick-Chart/Morning-Star/