iCharts Discussions

[riyan]

Hi all,

hindalco made 3 black identical crows, bullish engulfing and now a doji at top in weekly chart, is it safe to hold short at 220. what should be the stoploss.

Thanks
Riyan

[SID2060]

A Long White Candlestick was formed. This shows that the prices advanced significantly from open to close during the day under strong buying pressure.

The last two candlesticks formed a Bullish Harami Pattern . This is a bullish reversal pattern that marks a potential change in trend. However, its reliability is low and it definitely requires confirmation.

There are three possible cases of confirmation. You have to follow the next session carefully to check if these cases will hold or not:

The market opens with an upward gap, signaling a bullish sentiment in the first case. Your benchmark will be the opening price. If the prices stay over the benchmark, go long. Any white candlestick with an upward gap is a valid confirmation criterion.

In the second case, the market opens at a level, equal to or below the previous day’s close. The benchmark is that closing price. If prices during the session stay over the benchmark, go long. Any white candlestick closing above the previous day’s close is the second confirmation criterion.

If, however, in both cases, the prices during the session start coming below the benchmark, avoid buying. Sell if you feel a definite tendency in prices to close the day below the benchmark.

The third case of confirmation is rarely observed. The market opens with a big downward gap suggesting a very bearish day, and the day ends with a long white candlestick, but still closing below the previous day’s close. However, such a day satisfies the third confirmation criterion and in this case the closing price of the long white candlestick will be taken as the price of confirmation.

If one of the three confirmation criteria is not fulfilled, or in case of a black candlestick or a doji on the confirmation day, the BUY-IF alert remains valid, however without confirmation and the three confirmation criteria are then sought in the following day. The only exception is the long black candlestick. Any long black candlestick following a BUY-IF alert makes it (the signal) void and invalid.

I do not suggest any new short positions given the bullish alert. The short sellers should consider covering their positions if the market confirms the BUY-IF signal. Otherwise, existing short positions should be carried.

[riyan]

hi SID2060,

thanks for your reply, I will observe tomorrows movement and accordingly book profit

regards
riyan