V.17:12 (548-551): Candlestick Filtering by Rudy Teseo

Candlestick Filtering by Rudy Teseo

Using candlestick patterns alone to generate buy and sell signals may be risky. Combining them with confirming indicators can greatly increase reliability. Take a look.

Few candlestick patterns can stand alone without confirmation of some kind. It is extremely risky to trust buy and sell signals based solely on these patterns. You can diminish some of the uncertainty, though, by filtering the candlesticks’ signals, using other indicators to confirm buy or sell signals.

In the case of candlesticks, the question arises: What to use for confirmation? For an answer, consider this: candlestick patterns are merely a different form of chart pattern. Candlesticks and standard price bars display exactly the same information — open, high, low, and close. Therefore, any indicators you are currently using on bar charts can be used to confirm the candlestick pattern. This is the essence of my filtering process.