#adp02
This is the first stock screen in the series: Japanese Candlestick Trading: Stock Screens for 15 Candlestick Patterns
Bias – Bearish
Type – Continuation
Inbound Trend – Bearish
Reliability – 7 of 10
Pattern Definition:
During a bearish trend, two long black candlesticks are formed with a bearish gap in between. On the third day, a white candle stick is formed that opens within the body of the second black candle, and closes within the gap between days 1 and 2.
Psychology
Continuing downward pressure causes the long candle stick and subsequent gap. The white candlestick is formed as investors feel the buying price is low. However, it is expected the the white candlestick is a better bearish entry point as the trend continues downward.
Criteria That Support
- The second and third candle should be relatively close in size
- Price gaps down or closes below the close of day 2
Running The Screen
This stock screen uses stockfetcher.com SF2.0. If you are unfamiliar with StockFetcher.com, please watch this video to learn how to execute the stock screen.
set{body_height, abs(open minus close)}
set{body_bottom,min(open,close)}
set{body_top,max(open,close)}
set{middle, body_height * .5}
set{body_mid, body_top minus middle}
set{long_bar, 1.5 * CMA(body_height,30)}
show stocks where ma(30) has been below ma(200) for at least 30 days
and close 3 days ago is below open 3 days ago
and body_height 3 days ago is greater than CMA(body_height,30)
and open 2 days ago is below close 3 days ago
and close 2 days ago is below open 2 days ago
and open 1 day ago is above close 2 days ago
and open 1 day ago is below the open 2 days ago
and close 1 day ago is below close 3 days ago
and close 1 day ago is above open 1 day ago
and close 1 day ago is above open 2 days ago
add column long_bar
add column body_top
add column body_bottom
add column body_mid
add column body_height
Options
There are several adjustments you can make to the screen based on your trading preference. Some suggestions would be:
- Volume that forms the gap on the second day of the Tasuki candlestick pattern should be higher than day 1
- There should be significant volume on the break out below the close of the white candlestick on day 3.
- You can adjust the size of the gap
- Adjust the duration of the bearish inbound trend
- Filter using technical indicators such as RSI
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