Japan Has More to Offer Than Cars and Electronics
By Rick Pendergraft
Many people think that Japan's two biggest contributions to the world are cars and electronics. But there's a Japanese export that can be very useful to investors: candlestick charts. Candlestick patterns (which resemble the shape of candles) have colorful names like "Gravestone Doji," "Shooting Star," and "Abandoned Baby Top," but the logic behind them usually makes more sense than the name.
This form of technical analysis has been used in Japan for well over 100 years. It gives you a quick, easy picture of price action, which - according to the system's guiding principles - is more important than why the price fluctuates.
One of the things to be on the lookout for when analyzing candlestick charts is certain "reversal patterns." The "doji" pattern, for example, occurs when a stock's opening price and closing price are the same or within a few cents, yet the stock's price was both significantly higher and significantly lower during the day.
A long white candle pattern indicates an uptrend, and a long black candle indicates a downtrend. [Ed. Note: To see an example of a "Long White Candle + Doji," click here, or a "Long Black Candle + Doji," click here.] The doji is a neutral pattern by itself - but if it comes at the end of a trend and is followed by a day that is counter to the trend, it is a very reliable indicator that buying pressure (in the case of an uptrend) or selling pressure (in the case of a downtrend) may be diminishing and a reversal is imminent.
Why is this?
When a stock has moved higher for an extended period and then a doji occurs, it is a sign that the bulls have lost their momentum and buyers and sellers are more balanced. A down day would provide confirmation of this. Likewise, if a stock experiences an extended decline followed by a doji and an up day, you could infer that the bears have lost momentum and the bulls are looking to take control.
Dojis are just one of the many useful patterns in candlestick charts that you can use to improve your trading results. For more information, you might consider reading Japanese Candlestick Charting Techniques, a book by Steve Nison that is highly regarded in the trading world.
[Ed. Note: Rick Pendergraft is a market expert and two-time winner of the "Top Trader" award at Schaeffer's Investment Research.]
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It's Good to Know: Security in England
Every day in London, people are captured on camera hundreds of thousands of times - on buses and subways, in stores and office buildings, and simply walking down the street. In fact, one person is likely to be photographed 300 times within 24 hours.
Britain is home to 4.2 million closed-circuit cameras, which is 20 percent of the world's total, according to a report issued last year by the Information Commissioner's Office.
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Word to the Wise: Doyen/Doyenne
"Doyen" (DOY-en) - a French word derived from the Latin for "leader of 10 people" - is (1) the senior member of a group or (2) someone who is knowledgeable or uniquely skilled as the result of experience. The word is spelled "doyenne" when it refers to a woman.
Example (as used by Howard Kurtz in Spin Cycle): "Two dozen reporters, led by Helen Thomas of United Press International, the seventy-six-year-old doyenne of the press corps, filed into the room."
Michael Masterson
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These articles appear courtesy of Early to Rise [Issue #2123, 08-17-07], the Internet's most popular health, wealth, and success e-zine. For a complimentary subscription, visit http://www.earlytorise.com/.
Many people think that Japan's two biggest contributions to the world are cars and electronics. But there's a Japanese export that can be very useful to investors: candlestick charts. Candlestick patterns (which resemble the shape of candles) have colorful names like "Gravestone Doji," "Shooting Star," and "Abandoned Baby Top," but the logic behind them usually makes more sense than the name.
This form of technical analysis has been used in Japan for well over 100 years. It gives you a quick, easy picture of price action, which - according to the system's guiding principles - is more important than why the price fluctuates.
One of the things to be on the lookout for when analyzing candlestick charts is certain "reversal patterns." The "doji" pattern, for example, occurs when a stock's opening price and closing price are the same or within a few cents, yet the stock's price was both significantly higher and significantly lower during the day.
A long white candle pattern indicates an uptrend, and a long black candle indicates a downtrend. [Ed. Note: To see an example of a "Long White Candle + Doji," click here, or a "Long Black Candle + Doji," click here.] The doji is a neutral pattern by itself - but if it comes at the end of a trend and is followed by a day that is counter to the trend, it is a very reliable indicator that buying pressure (in the case of an uptrend) or selling pressure (in the case of a downtrend) may be diminishing and a reversal is imminent.
Why is this?
When a stock has moved higher for an extended period and then a doji occurs, it is a sign that the bulls have lost their momentum and buyers and sellers are more balanced. A down day would provide confirmation of this. Likewise, if a stock experiences an extended decline followed by a doji and an up day, you could infer that the bears have lost momentum and the bulls are looking to take control.
Dojis are just one of the many useful patterns in candlestick charts that you can use to improve your trading results. For more information, you might consider reading Japanese Candlestick Charting Techniques, a book by Steve Nison that is highly regarded in the trading world.
[Ed. Note: Rick Pendergraft is a market expert and two-time winner of the "Top Trader" award at Schaeffer's Investment Research.]
______________________________
It's Good to Know: Security in England
Every day in London, people are captured on camera hundreds of thousands of times - on buses and subways, in stores and office buildings, and simply walking down the street. In fact, one person is likely to be photographed 300 times within 24 hours.
Britain is home to 4.2 million closed-circuit cameras, which is 20 percent of the world's total, according to a report issued last year by the Information Commissioner's Office.
______________________________
Word to the Wise: Doyen/Doyenne
"Doyen" (DOY-en) - a French word derived from the Latin for "leader of 10 people" - is (1) the senior member of a group or (2) someone who is knowledgeable or uniquely skilled as the result of experience. The word is spelled "doyenne" when it refers to a woman.
Example (as used by Howard Kurtz in Spin Cycle): "Two dozen reporters, led by Helen Thomas of United Press International, the seventy-six-year-old doyenne of the press corps, filed into the room."
Michael Masterson
__________________________________________________
These articles appear courtesy of Early to Rise [Issue #2123, 08-17-07], the Internet's most popular health, wealth, and success e-zine. For a complimentary subscription, visit http://www.earlytorise.com/.
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