And this video, how to trade long and short candles, so candlesticks, as you can see, change shape
and come in all different sizes, have Tyson Foods daily in front of you.
But this could be any charter really doesn't matter.
There's a couple different things that you should think about.
The length of the candlestick does, in fact, matter.
So on this daily chart.
You can see that we had been trending lower.
But think about what these candlesticks mean that are longer than many of the other ones.
And in this case, negative.
There are three, for example, there are three days here which only make up about half of this distance.
So what does that tell you?
It shows that there's real conviction that day to the downside, because not only did we form a lone
candlestick, but we closed towards the bottom of the candlestick.
Generally, the the bottom quarter is pretty negative sign, just as the top quarter of a green candlestick
is generally positive.
But you also want length and there is no hard and fast rule for this, it's just common sense.
So, for example.
I just said that closing at the top three quarters of a candlestick is a bullish sign.
It doesn't mean that it works every time that the buyers are going to continue to take over, but.
So after this candlestick, we had a gap and gaps tend to represent a lot of either buying or selling,
in this case selling.
And we had a couple green candlesticks formed after this massive one that closed towards the top.
Now that could be thought of as somewhat bullish.
But think of it this way.
It took two of them just to get back all of the losses from this one candlestick.
And that's the point.
Just like over here, this candlestick was very negative.
And even though we popped above it, you can see that we saw more selling later.
So with these long candlesticks, it shows that something.
Either has fundamentally changed or has been in this case confirmed as we were following.
So let me pop up another random chart to city here, you can see that we have several negative candlesticks
followed by declines, but we also have several positive candlesticks like that, followed by markets
accelerating to the upside.
For example, this candlestick here wiped out three or four days of trading and we shot higher from
there, just as we had a couple of really negative ones, and then it started to decline.
Go to JPMorgan.
And you can see that this really bullish candlestick here wiped out three or four days of negativity
ahead of it and one.
Massive move in what would have been a slightly positive trend anyway, so that makes sense that we
would go higher.
When you see.
A cluster here and then a sudden flush.
That's a very negative sign.
Look at how negative this candlestick is in comparison to this range.
I mean, we wiped out that entire range in one candlestick.
So to keep that in mind, that really shows conviction.
That shows a lot of money coming into the market now.
On the other end, you have short body candlesticks.
And they generally mean in decision.
What you want to see is.
Short candlesticks followed by some type of massive negative candlestick like that, so it's not the
short candlesticks that are the signal themselves, but it tells you that you want to see momentum pick
up in one direction, that maybe the market is trying to wind up a little bit.
The.
Long wicks can mean things, so, for example.
Think about what this candlestick here means, that long wig suggests that the buyers came in but gave
up quite a bit of the gains.
Well, that's not a good sign.
That means we could not keep up the momentum to the upside.
And that, in fact, is a bit of a reversal signal in this case, a shooting star.
Just as this is a hammer, so when this candlestick here on this day, we were at extreme lows, we
had fallen.
And did that, so this shows that everybody who had shorted this candlestick down below 107 dollars
was now underwater, and then once you got this very positive and bullish large candlestick after it,
more people started to lose money.
And you can see we just took off to the upside.
These are things that you need to think about when you're looking at these candlesticks.
You need to think about who's in trouble.
There are people trapped when you get a huge move like that.
The sellers here were trapped, and in order to get out of a negative situation, you need to buy that
stock back.
So not only are they losing money, they have to push the market higher to close out all of those short
positions as well.