Stocks & Commodities V. 22:12 (102-103): Websites For Traders: CandlestickShop.com by David Penn
It must be entertaining to technical analysts who have used candlestick charts for years to learn of the almost mystical regard that some technicians have for them. Part of this is probably the packaging. For all the colorful descriptions of technical price action — from deadcat bounces to breakouts — you really have to take off your hat to some of the emotive phraseology embedded in Japanese candlesticks. From the hanging man pattern — which sounds like the title of some early Clint Eastwood spaghetti western — to bullish engulfing and piercing patterns, the vocabulary of candlestick charting alone is enough to make the average technical analyst feel as if his or her powers of perception (on the wings of mere metaphors, no less) have increased tenfold.
Admittedly, few of those who practice and preach candlesticks are notable for dispelling such dreams of analytic potency. Some less reputable (or, at least, less responsible) candlestick advocates seem to hint that candlestick signals are all you need to construct a
sound trading strategy, system, or methodology. Still, putting aside the notion that, with good money management, systems built on random entries have done surprisingly well, it is hard to deny that candlesticks do make many aspects of trading or chart reading far easier compared to other methods of displaying price action. I have often repeated the quote by trader, educator, and Pristine.com founder Oliver Velez Jr., who insisted in a seminar that he wouldn’t even consider looking at a chart unless it was in candlestick form.