Using candlesticks to trade reversals

We love to play reversal candles in the form of hammers and stars. A hammer is a candlestick that starts off low and forms a panic selloff and recovers back most of the selloff. The tail should be at least twice as long as the body. Hammers in conjunction with stochastics crosses back up make up very nice reversal patterns. We like to confirm the reversals utilizing multiple time frames.

This was the case when we played (SNDK | Quote | Chart | News | PowerRating) LONG. The 13 min chart showed a solid hammer bottom. The 1 minute stochastics gave us a nice low band entry trigger at 54 at 10:25am as the 3 minute stochastics also crossed up. We rode the longs into the 3 minute upper bollinger band overshoots to lock the 54.65 exit into the final 1 minute hi band mini pups, out + .65.

The markets are setting up weekly mini pup breakouts to the upside. The DIA weekly support sit at 113.20 with upside to 116.20. Expect a choppy ride.

Good trading gang!

Jea Yu has been involved with the equities markets for over 10-years. He specializes with intraday trading in the U.S. equities and futures markets. To receive a free 7 day trial to Jea Yu's Underground Trading Pit, click here or call 888.484.8220, ext. 1.