I am not a financial adviser so you should not take any part of this blog as being financial advice. Observing and interpreting charts is a hobby and so is this blog. The information in this blog is just my opinion, it may not reflect reality. Stock market investing is risky - you can lose all, or potentially more than all of your money given certain market conditions. Not only can you lose a lot of money buying shares, you can also lose a lot of potential profits by selling shares at the wrong time. So please do not buy or sell shares because of information in this blog. Whether you buy or sell shares is your decision as is the decision when to buy and sell. Do not risk any money you cannot afford to lose. Do not risk any money if you do not fully know and understand what you are doing.

Thursday, April 7, 2011

Incomplete Dark Cloud Cover

The Incomplete Dark Cloud Cover is a Japanese Candlestick pattern warning of a potential bearish reversal. It is a pattern that requires confirmation, so if you were being conservative, you would only use this pattern as a warning - not necessarily a pattern to be acted upon. The pattern is formed when a white candle (i.e. price action where the close is higher than the open) is followed by a black candle (close lower than open) that opens higher than the white candle's close and the black candle closes above the mid-point of the white candle's body. This type of pattern is common in uptrends. This pattern occurred today on the All Ords. The last time it occurred was on February 15 near the top of the market - see chart below. A move below the mid-point of the white candle (yesterday's price range) - around 5000 - would be a further warning. A move below yesterday's low (4988) would be bearish. Any move down now should only be a short term correction - well, until it develops into something else that is.

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