Using Technical Indicators Alongside Bullish Trending Candlestick Patterns

In This Chapter

^ Combining trendlines with bullish-trending candlestick patterns

^ Making profitable trades with moving averages and bullish-trending candlestick patterns ou can combine candlestick patterns effectively with a variety of technical indicators to produce information that helps you decide when to put on and get out of trades. Like candlestick patterns, many technical indicators tell you when a trend is about to reverse, but several others can let you know that a prevailing trend continues. These indicators are powerful weapons that can add to the versatility of your trading arsenal.

If you understand how to use technical indicators in tandem with bullish-trending candlestick patterns, it's easier for you to spot situations where buying to enter a long position is a wise move. And you can also use technical indicators to confirm market or individual security predictions that you've made based on candlestick patterns.

I cover all that and more in this chapter, and I focus my discussion on two of the most common technical indicators: trendlines and moving averages. If you need a refresher on those two indicators, flip back to Chapter 11. If you have a basic understanding of how they're created and how they work, read on and get trading!

Using Trendlines and Bullish-Trending Candlestick Patterns for Buying and Confirmation

The trendline is one of the oldest and easiest to understand of all the technical indicators. You'd be hard pressed to find any current charting software that won't draw a trendline automatically for you, but you can also hark back to the good ol' days and draw a trendline yourself with nothing more than a chart, a ruler, and a pencil. If you need to get familiar with trendlines or brush up on what you already know, flip back to Chapter 11.

Trendlines have a positive slope during an uptrend or a negative slope during a downtrend, and those simple signals can be very useful when you're trying to confirm your opinion of the market trend.

In this section, I show you how to use the trend confirmation that trendlines provide in combination with bullish-trending candlestick patterns, which signal that a trend in place will continue. You can use the combinations to decide when it's time to buy to enter a long position or when you should stick with a trade to realize additional profits.

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