Click on the Chart to Enlarge
This chart is of XLE. XLE is an exchange traded fund that tracks energy stocks. It shows a morning star pattern which is a high reliability bottoming candlestick pattern.
There should be a large down day (dark candle) followed by a gap down and a candle that has a small fat part (called the "real body"). Then the next day should gap up and the white candle should close at least half way up the real body of the prior large dark candle.
The higher the volume and more technically oversold, the more significant this pattern. Also notice that the small "star" candle (the second to last one from the right) formed well outside the bollinger bands that overlay the chart. Those bands should contain 95% of all data in them, so whenever you see a classic reversal pattern happen at an extreme outlying point, that should add confidence as well.
I bought a call option on this yesterday.
Pete
No comments:
Post a Comment