Why You Wait for Confirmation: Spanish Case Study
- Posted by Greg Harmon
- on February 5th, 2013
The Spanish market ($IBEX, $EWP) had a hard week last week. After making a new higher high on Monday it sold off the rest of the week, ending with a Spinning Top Doji (blue circle). Either a Spinning Top or a Doji or the combination are often quoted as reversal candles. This is because after a large move in one direction, in this case lower, the price action continued lower and then rebounded, to an equilibrium of buyers and sellers. That thinking is only partly correct. In fact these candles can be reversals, but they can also be continuation candles. A better interpretation is that
the balance between buyers and sellers signals indecision about the next direction and that confirmation is needed to determine continuation or reversal. Clearly in this case it was just a pause before continuing lower with a strong Marubozu candle. That is a candle that shows meaning. Starting at the high of the day and finishing at the low, there is no mistaking who was in charge in the Spanish market Monday.
Join the Dragonfly Capital Views Premium Membership
Sign up here to get deeper analysis and nearly 50 trade ideas every week.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Top Trade Ideas for the Week of September 22, 2014: The Rest
- Top Trade Ideas for the Week of September 22, 2014: The Rest Premium
- Top Trade Ideas for the Week of September 22, 2014: The Best
- SPY Trends and Influencers September 20, 2014
- Macro Week in Review/Preview September 19, 2014
- Dragonfly Capital Views Performance Through September 2014 Expiry
- Recent Webinar: Technical Analysis For Options Trading
- Premium Earnings 9-19-14
- Some Perspective on Breadth
- Buy a Pint and Handle of Brew