≈ Context Matters. ≈
Traders,
Coach Tyler here.
As we venture into the world of candlesticks, it’s crucial to remember where they lie in the hierarchy of charting. There is a pecking order among technical signals where some matter far more than others. Here is my breakdown, listed in order of importance:
- Trend & Momentum
- Support & Resistance
- Moving Averages
- Candlesticks
- Volume
I don’t have as strong of an opinion on the order of three through five. If you want to place candlesticks above moving averages, or volume above candlesticks, then do so. The essential part is that trend, momentum, and support/resistance zones trump candlesticks.
Thus, when analyzing a chart, you must begin by identifying the trend, its momentum, and the next support and resistance levels. Then – and only then – should you analyze candlestick formations.
Otherwise, you’ll forget the forest and overemphasize a single tree.
Here’s a bad example: You find a bull hammer candle, so you buy the stock. Later, when your trade sours, you discover the price was in a downtrend at resistance. No wonder it didn’t work!
Here’s a good example: You find an uptrend with increasing momentum that just pulled back to a major support zone and formed a bullish hammer candle. Then, you buy and make a mint over the next week because you understood how the reversal candle played into the bigger picture.
🛑 Upcoming Webinar – Technical Analysis 101: The Basics of Candlesticks Analysis with Coach Tyler Craig | January 17th, 2022 at 8:30 PM EST on YouTube
You don’t want to miss this webinar. Set an alert, clear your calendar, and get ready for an insightful discussion on technical analysis that will help you take your chart reading and your trading skills to the next level.
In this webinar, you are going to learn:
✅ Why Candlesticks are our preferred form of charting.
✅ How to craft a candlestick
✅ The basics of bullish reversal candles
✅ The basics of bearish reversal candles
✅ Understanding candlesticks in the context of the trend
Click on the button below to go to YouTube and set a reminder so you won’t miss it when Coach Tyler goes LIVE.
Video of the Day: Trading Concept Check: Big Candles vs. Small Candles
In this video, Coach Noah talks about candle size and momentum using Valero ($VLO) as an example.
Chart of the Day: $ARKK Hammer Candle
The Ark Innovation ETF ($ARKK) formed a bullish hammer candle on Monday. If you bought it, then good luck. You’re going to need it. The trend is down and is increasing in momentum. What’s more, there is significant resistance overhead at $90, and the recent volume showed heavy distribution.
Today’s Line up
Traders Lounge 11 AM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
Cashflow Club 8:30 PM EST
Held every Thursday before Friday’s option contract expirations, this show helps you perfect your favorite cashflow strategies.
Halftime Report 12:30 PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.
Financial freedom is a journey
Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.
Legal Disclaimer
Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.
All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.
