Sell Indicators and Bearish Reversal Candlestick Patterns

In This Chapter

^ Using the relative strength index and candlestick patterns for your short trades ^ Shorting with combinations of the stochastic indicator and bearish candlestick patterns

Technical indicators are useful in many trading situations, and as I describe in the other chapters in Part IV, you can use them in tandem with candlestick patterns to conduct some outstanding trades. In this chapter, I fill you in on how to combine a couple of common technical indicators with bearish candlestick patterns to help you make wise decisions about short trades.

I focus much more on the prospects for shorting than the opportunities to use candlesticks and indicators to tell you when to exit a long trade, because realizing when to exit a long is relatively easy: If it looks like a trend is ready to tank, sell and get out!

I know some people are resistant to short selling, but it's part of the game, and not using the short side of trading puts you at a disadvantage. Risks are involved, but if you employ the methods I describe in this chapter, you can minimize those risks. With any luck, after reading my Chapter 13, you won't have to file Chapter 13!

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