|
Step 1 -
Pull up a Weekly chart of the stock.
Step 2- Look
for a BEARISH HARAMI against MINOR PRICE RESISTANCE,
and/or a declining Major Moving Average (10 MA, 20 MA, or 50 MA)
on the Weekly chart.
Step 3 -
Pull up a Daily chart of the stock. Note that
the Harami pattern formed on the Weekly chart is made
up of 5 individual daily candlesticks.
Step 4 -
Look for consolidation of the last 3 or 4 daily
candlesticks at the low price of the
week. This consolidation line
represents an area where the stock takes a rest before
resuming it's downtrend. The objective is to
enter the stock just before the next big downward move.
Step 5 - Enter
the stock only if it breaks 1/8th below the area of
consolidation line. This will often correspond to the
low price of the week. If the stock does
not break through the area of consolidation, 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 resistance where the
stock began it's 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
| 