Archive for August, 2010

• A three line pattern with the first candle moving bullishly in the direction of the predominant trend.
• The stock gaps up in the second session and trades in a very tight range at the top of the trend with no overlapping of wicks from the prior session.
• The final candle gaps down and trades well into the real body of the first candle, ideally on increase volume as the bears begin to push the stock down.
• This pattern is very similar to an evening star; however the difference is the magnitude of the gaps between the first and second session and the second and third session.  The “Abandoned Baby” depicts the separation of the second candle from the first and third candles and in fact appears to be “Abandoned”.
• This is an extremely powerful and infrequent formation that rarely fails to produce results.

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We will likely get a short term relief rally and then fade as we encounter numerous fundamental headwinds.  The market could channel for a bit at this level and then begin to drift lower. For more information, please visit Options Revolution.

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• The pattern begins with a gap to the downside in the direction of the existing trend.
• The stock immediately trades up and the low of the day is the opening gap.
• The candle is white with no wick to the downside.
• The longer the real body, the more likely a reversal is to occur.

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We could slow the recent descent at this level.  The market could really go either way right now so we just need to follow and profit. For more information, please visit Options Revolution.

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• The pattern begins with a gap to the upside in the direction on the existing trend.
• The stock immediately trades down and the high of the day is the opening gap.
• The candle is dark with no wick to the upside.
• The longer the real body the more likely a reversal is to occur.

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We are beginning to form a Bear Flag and I would expect a brief respite and then a continuing fall to the downside. For more information, please visit Options Revolution.

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• Bearish Meeting Lines is similar to a Dark Cloud Cover in that the stock gaps in the direction of the prevailing bullish trend and then reverses.
• The Dark Cloud is more bearish because it closes at least half way into the prior session’s bullish candle after gapping up; while the bearish Meeting Lines candle merely closes at or near to the close of the bullish candle.
• The Meeting Lines pattern is considered stronger if both the bullish and bearish candles are relatively long real bodies.
• There should be little or no wicks at the point where the two candles meet.
• This pattern needs confirmation with a bearish follow through candle the next session.
• As always, increased volume will confirm that the bears have stepped in at this level and that higher price levels have been rejected.
• The Bearish Meeting Lines pattern is not seen that frequently.

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