Reversal Candles …

When flipping through charts at the end of the day or in the evening when you are looking for trading ideas, one of the best candle formations that I like to take note of is when I encounter a possible reversal candle.  You can do this on any time frame chart, but I will generally stick to daily or weekly charts when looking for positional or possible swing trade candidates.

When I look at possible weekly reversal candles, I like to see the stock act strongly in the opposite direction in the first couple of days of the subsequent week … basically, I’m looking for a type of a short-squeeze in that particular stock. Continue reading