Can candlestick chart technical analysis determine bullish or bearish conditions when they cross moving averages? What time periods should short term traders use as moving averages? How it overall helps the investor?
Buy this book – Candlestick charts.
This is the first book I purchased on Amazon about Stock Market and I am glad I bought it!
I will tell you a story of candlestick chart and moving average.
Strangely this stock, Thirumalai Chemicals came out as a ‘sell’ call in the time of an article in 15th August. The article is now smartly deleted. There was a huge selling pressure. But I was influenced by a book I was reading that time. It’s with Candlestick charts. There is a hammer in 11th and the volume is not so huge. Book tells to ignore if their volume is not too high but observe for two confirmations.
So I waited till 16th. It made a perfect hammer; Though the selling pressure is high, bulls reigned the market at the end of the day.
I gave an AMO order and I bought the stock in the 17th at price of 355!
Then you can see the Doji by 25th. I became cautious. Was tensed for 3 days before the stock market opened in 29th and guess what it is a green bar.
However, RIP recommendation followers!
I am talking about the point A. Then I again become cautious at the point of 22/9 and after two red candles I sold them at 27/9 on the close of 26/9 – 586
Though the profit is staggering 65% the drawback is I bought only 10 shares. Meh! However, I didn’t touched that stock since then as I read another book by then written by Mahesh Kaushik – The Winning Theory in Stock Market which told me never to buy share where the promoter’s stakes are getting decreased.
Still now I took the consideration of candlesticks charts whenever I buy a stock but If you ask me if I would buy the same stock if I time travelled back with current knowledge, I would say no. I do look over dozens of others factors now. Promoter’s decrease of share is a huge point to me!
Ha, it’s being complex and hard the more I read.