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Step 1 -
Pull up a Weekly chart of the stock after the market
closes for the week (Friday after close).
Step 2- Look
for THREE WHITE SOLDIERS against MINOR PRICE
RESISTANCE,
and/or against the declining Major Moving Average (10 MA, 20 MA, or 50 MA)
on the Weekly chart. Place the stock
on your watch list for the upcoming week.
Step 3 -
Allow the stock to trade one full day. Pull up a Daily chart of the
stock after the stock has formed the first daily
candlestick of the week (Monday after close).
Step 4 -
Look
for a BEARISH HARAMI candlestick against MINOR PRICE
RESISTANCE,
and/or a declining Major Moving Average (10 MA, 20 MA, or 50 MA)
on the Daily chart.
Step 5 - Sell
short only if the stock breaks 1/8th below the low of
the previous HARAMI candlestick. If the stock does
not break the previous day's low, DO NOT
ENTER THE TRADE.
Step 6 - Mark
off the 50% retracement line. This will be the halfway
point between the line of resistance where the stock
began it's decline, and the line of support where the
stock begain it last major rally.
Step 7 - After
entry, place
an initial protective stop 1/8th above the high price of the previous day's candlestick.
Cover the stock immediately if the stock breaks above this price.
Step 8 - On
each new day, adjust the trailing protective stop to 1/8th
above the previous day's candlestick's high price.
Continue to use a trailing stop as long as the stock
remains above the 50% retracement line.
Step 9 -
After the stock has broken below the 50% retracement
line, look for a reversal candlestick. This will
most likely be a bullish candlestick which closes near
it's high price of the day. Cover the stock for
profit either before the market close, or at the
market open the next day.
If you have any questions regarding this report or the CANDLESTICKSHOP.COM
website in general, please do not hesitate to contact the author at info@candlestickshop.com
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