ADVANCED CANDLESTICK STRATEGIES

CANDLESTICK TERMINOLOGY AND MARKET

EMOTION
Technicals are the only way to measure the
emotional component of the : market. The
names of the Japanese candlestick charts
make this fact evi- : dent. These names are a
colorful mechanism used to describe the emo-
i tional health of the market at the time these
patterns are formed. After : hearing the
expressions "hanging man" or "dark-cloud
cover," would you i think the market is in an
emotionally healthy state-of course not! These
: are both bearish patterns and their names
clearly convey the unhealthy : state of the
market. While the emotional condition of the
market may not be healthy at the time these
patterns form, it does not preclude the
possibility that the mar- : ket will become
healthy again. The point is that at the
appearance of, say, i a dark-cloud cover, longs
should take defensive measures or,
depending : on the general trend and other
factors, new short sales could be initiated. i
There are many new patterns and ideas in this
book, but the descrip- tive names employed by
the Japanese not only make candlestick
charting : fun, but easier to remember if the
patterns are bullish or bearish. For i example,
in Chapter 5 you will learn about the "evening
star" and the : "morning star." Without
knowing what these patterns look like or
what : they imply for the market, just by
hearing their names which do you think i is
bullish and which is bearish? Of course, the
evening star which comes : out before
darkness sets in, sounds like the bearish
signal-and so it is! i The morning star, then, is
bullish since the morning star appears just :
before sunrise.