Candlestick Reversal Pattern Ignited The Surge In Gold Prices
Having in mind the remarkable ascent of Gold prices over the past couple of months, one wonders now whether there were clues that either we missed at the time, or to which we did not pay sufficient attention.
Looking back, we see one Candlestick Reversal Pattern, in particular, that could have told us that the trend was changing from Down to Up and to prepare ourselves for a sizeable move.
Over the years, we have been accustomed to searching out and recognizing the "old standard" reversal patterns which have been printed in Japanese publications for generations and which have been painstakingly translated into English over the past twenty years or so.
Even more lately, we have come to understand that the variations on the standard patterns have received short shrift in the literature and that they can have the same predictive capacity as their "parents.
" Now, in addition, we have come to understand that even the variations should not be interpreted too literally - in other words, that oftentimes "close is good enough.
" Specifically, in the case of Gold we observe a variation of the "Tokyo Express" variation of the Morning Star classic Candlestick Reversal Pattern, which arose on July 30, 2010.
In this case, we see the expected tall black candle, the two small Stars next, and then the tall white candle, signifying a change in investor psychology from bearish to bullish.
In this case, however, the two small Stars are slightly skewed, the white candle begins higher on the price scale that we would like to see, and it wasn't particularly tall.
Even so, it was a legitimate variation, and we should have given it more credit than we did.
The proof is in the outcome: Gold prices have been on a nearly unrelenting rise since July 30.
In fact, the angle of the trend lines of the advance have sharpened twice, leading us to think that, at the end, prices may explode in a classic "blow-off.
" The moral of the story is that when the subject at hand is Variations of Classic Candlestick Reversal Patterns, we should give latitude to our eye's interpretation of what we see on the screen - not to be too parochial in our thinking - because sometimes "close is good enough.
" William Kurtz October 10, 2010
Looking back, we see one Candlestick Reversal Pattern, in particular, that could have told us that the trend was changing from Down to Up and to prepare ourselves for a sizeable move.
Over the years, we have been accustomed to searching out and recognizing the "old standard" reversal patterns which have been printed in Japanese publications for generations and which have been painstakingly translated into English over the past twenty years or so.
Even more lately, we have come to understand that the variations on the standard patterns have received short shrift in the literature and that they can have the same predictive capacity as their "parents.
" Now, in addition, we have come to understand that even the variations should not be interpreted too literally - in other words, that oftentimes "close is good enough.
" Specifically, in the case of Gold we observe a variation of the "Tokyo Express" variation of the Morning Star classic Candlestick Reversal Pattern, which arose on July 30, 2010.
In this case, we see the expected tall black candle, the two small Stars next, and then the tall white candle, signifying a change in investor psychology from bearish to bullish.
In this case, however, the two small Stars are slightly skewed, the white candle begins higher on the price scale that we would like to see, and it wasn't particularly tall.
Even so, it was a legitimate variation, and we should have given it more credit than we did.
The proof is in the outcome: Gold prices have been on a nearly unrelenting rise since July 30.
In fact, the angle of the trend lines of the advance have sharpened twice, leading us to think that, at the end, prices may explode in a classic "blow-off.
" The moral of the story is that when the subject at hand is Variations of Classic Candlestick Reversal Patterns, we should give latitude to our eye's interpretation of what we see on the screen - not to be too parochial in our thinking - because sometimes "close is good enough.
" William Kurtz October 10, 2010