Single Stick Patterns That Depend on Market Context

In This Chapter

► Identifying market environments

► Digging into doji details

► Understanding spinning tops

► Encountering belt hold basics

► Taking a look at hanging men and hammers

■ n Chapter 5, I cover a few of the more basic and easily defined single-stick candlestick patterns, which are either bullish or bearish indicators regardless of their location on a chart. For those patterns, the price action that occurs during the previous few days just isn't that significant.

But not all single-stick patterns are that straightforward. Some extremely useful single-stick patterns rely heavily on their location on a chart. Making yourself familiar with these patterns and how to identify and trade based on them is another way that you can add a versatile weapon to your trading arsenal. That's what this chapter is all about. Also, context is essential to the single-stick patterns that are covered in this chapter. This isn't always the case, but for this chapter, you need to know the market environment before deciding if a signal or pattern is valid.

A variety of single-stick patterns can provide some terrific trading opportunities if you can spot them in the right market environment. I begin this chapter by quickly touching on how you can define a market environment, and then I cover some of the most significant single-stick patterns that you can exploit for profitable trading.

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