THE RESPONSIBLE TRADER – TRADING LESSONS – BLENDING CANDLESTICKS – PART 1
THE RESPONSIBLE TRADER – TRADING LESSONS – BLENDING CANDLESTICKS – PART 1
One advanced candlestick charting technique is called Blending of Candlesticks. This is the term used by Steve Nison in his books. Other authors, perhaps, trying to deviate from the term used by Steve Nison in his books have called this Candlestick Addition.
In this technique, two or more candlesticks are blended to form one single candlestick using the following procedure:
- For the open, use the opening price of the first candlestick to be blended.
- For the close, use the closing price of the last candlestick to be blended.
- For the high and low, use the high and low of all the candles to be blended.
Let us apply this to some candlestick patterns we have already studied. Figure 33 shows Blending of the Piercing Line Pattern.
In accordance with our procedure we take the Open of the first candle and the Close of the second candle. For the High and and Low we use the High and Low of the trading period.
Since the Close of the trading period is higher than the Open we have a white candlestick. To this candlestick we attach the Upper Wick representing the distance price moved from Close to High and the Lower Wick representing the distance price moved from Open to Low. The result is a White Spinning Top.
Using the same procedure let us blend a Triple Candlestick Pattern – the Morning Star and see what will be the result.
Since the Close of the trading period is higher than the Open we have a white candlestick. The candlestick does not have an Upper Wick since the High is the same as the Close. To this candlestick we attach the Lower Wick representing the distance price moved from Open to Low.
The result is a Bullish Marubozu with a short Lower Wick as indicated in Figure 34.
We will continue our discussion in Part 2 of my Blog on the same topic and apply the same technique to our Index for the years 2017 and 2018.
Good luck on all your trades.
NOTE: No change in numbering of Figure is made so that those who have my book, “The Responsible Trader – a Thinking Person’s Guide for Trading the Philippine Stock Market”, can refer to them easily.
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In line with our VISION, A RESPONSIBLE TRADER IN EVERY FILIPINOS HOME, we aim to continue promoting financial literacy on the area of stock market trading and investing to our countrymen both here and abroad through the following:
1. We have successfully launched “Swing Trading with TRT – a Definitive Guide for Swing Trading the Philippine Stock Market” last September 2, 2019. This book is the second in our Responsible Trader Education Series.
You can download Chapter 1 and see the Table of Contents here: https://drive.google.com/file/d/1NZEABnQMiQ_zenEMs0lPFWweX4WBxBHg/view?usp=sharing
The first book, “The Responsible Trader – a Thinking Person’s Guide for Trading the Philippine Stock Market” provided all the basic knowledge that a trader needs to know in order to trade the Philippine Stock Market effectively and efficiently. The first book is about the basics. This second book is about the specifics.
2. The Book: “The Responsible Trader – a Thinking Person’s Guide for Trading the Philippine Stock Market” now earned the name “The Bible of Philippine Trading.” You can download Chapter 1, Section 1 of the book here: http://theresponsibletrader.com/the-responsible-trader-hope-for-trading-knowledge-test/. For those interested in the hard copy, please send email to: ninjatrader919@gmail.com Subject: The Responsible Trader – Hard Copy.
As requested by those abroad and those who want the book in digital form, we have produced an eBook version. For those interested please send email to: ninjatrader19@gmail.com Subject: The Responsible Trader – eBook Version.
The book can also be ordered online through our publisher, Central Book Supply. Just go to: http://central.com.ph/bookstoreplus then click Search – The Responsible Trader.
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Good luck on all your TRADES today.
DISCLAIMER There is a very high degree of risk involved in TRADING. Past results are not indicative of future returns. Nothing contained in this newsletter constitutes a solicitation, recommendation, PROMOTION or endorsement of any security. In accordance with the Responsible TRADER’s Creed: I will never tell and you take full responsibility for all your TRADING results
NOTES: Please take note of the following changes. Effective August 6, 2015: 1. Caption Market Breadth has been changed to Total Traded Value to simplify the presentation. 2. Market Breadth is expressed in terms of Number of Advances and Declines. Expressing this as a Ratio by using the larger number as Numerator we derive the Market Sentiment whether Bullish or Bearish. 3. Based on Past three-year data of Average Total Traded Values, following classifications will be used to make the presentation more relevant to present times. a. Low – Total Traded Value less than PhP 8 Billion b. Medium – Total Traded Value Php 8 Billion but not more than P15 Billion c. High – Total Traded Value more than Php 15 Billion.
Starting with August 11, 2017 data we are including the Top Ten Gainers and Losers for a more comprehensive coverage of significant stock movements during the day.