The Candlestick ornament left behind by Gold on Thursday, September 18, 2008 could posses fooled investors into believing that a expedition back toward $2,000 Gold was in the making. The Candle patterns told a different story: that, reasonably than oncoming further, prices would likely drop the succeeding day, which they did
Candlesticks Fool Gold Bulls Again
Gold sallied disperse to quote $100 per ounce within the cavity of two days this week That left the payment halt of Gold, as displayed on a chart, sitting up there all by its lonesome at a latter remuneration of $897 per ounce on Thursday, September 18. We have not empitic Gold prices at that superiority in more than a month. It was so very, remarkably appealing to conclude that Gold was on a new tear, back toward the storied Castle-in-the-Sky $2,000 per ounce.
However, a closer look at the knead and more details of the emolument choke pattern yesterday alert not of a new bull sell in Gold Rather, they caution a story of Warning to those who understand how to scan Japanese Candlestick patterns
Specifically, yesterdays cost obstruct on the Daily chart was a Spinning Top, with long shadows (tails, or wicks) both above and subservient the body, which is the area of the Candle between the breach charge and the hindmost payment This reveals Indecision in the bazaar There had been sizeable volatility in the Gold hawk that day, with prices ranging far in one edict and then far in the other, but at the modern of the trading day the closing fee was not very far away from the breach price.
A closer look at the action, as revealed by the ten-minute chart, revealed a modified, or corrupted if you will, Evening Star device in which the Star was a Shooting Star There was no corruption in the Shooting Star itself; it was a beautiful model of the kimd Furthermore, the hinder which followed the Shooting Star totally engulfed it, and the fourth barricade of the series was a Hanging Man. All of these together the Shooting Star, the Engulfing bar, and the Hanging Man retain bearish implications And finally, the four bars together we move to be bearish, even though not a classic Evening Star figure All of it foretold the likelihood that Gold prices would not continue their upward path; rather, that prices would fall.
That is exactly what happened today, September 19: Prices fell fresh than $32 per ounce No suspect many investors bought Gold yesterday on the firmness of their perception of the quote and, especially, of the gap-higher close on Thursday It indeed looked as though Gold was setting up for another travels to the clouds
And yet, those who believe the Candlesticks not only did not buy brewing the vend known yesterday, or today (Friday); they voted in the rejection command with their money, went Short or bought Puts, and were rewarded with a $32 gain
There is no improvised for knowledge how the Candles control Every financier and trader owes it to himself or herself to at least learn the basics, not only to discern sake trade setups but furthermore to retain himself or herself out of rotting trades for slip to credit the signals