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JoshuaBrown
08-18-2014,
Friends,

Im currently learning from the book Japanese Candlestick Charting Techniques and once AGAIN it seems like Im having too detailed question to find the answer on my own via google. This is happening to me often that I cannot find in primary learning source or secondary ones (found/not found via google) answer due to potentially too exact info needed. So after searching on my own, the only option is to simply ask and both questions are related to Star Pattern:

http://www.onlinetradingconcepts.com/TechnicalAnalysis/Candlesticks/EveningStar.html

NOTE: I am referring in my questions to any and all kind of Star Patterns (I believe answers will be same for ALL), no matter if they are evening, shooting, morning and whatever other star exist. So im asking for all of so called Star Patterns.

NOTE2: In the book I am currently learning from says colors of candlesticks (red/green) are NOT important. Neither order of colors (e.g. first red then green then green once again OR first red then green then red OR first red then red then once again red, and so on). If your answers would having anything to do with colors, let me know please. Colors only define where trend is going to but for learning the method and strategy of Star Patterns they aren't so important.

So:

1. To be counted as Star Pattern I know heights (values/prices) of openings/closings are meant to *NOT* be on the same horizontal line: they can differ: some opening/closing (colors of candlesticks are irrelevant) is above or below the other opening/closing. But could you check the following photo and tell me if any situations from A to M (ignore second green in F, it is my accident sorry) are *NOT* defined as Star Pattern? Or they are all? :

http://www.onlinetradersforum.com/attachments/xigfxp-jpg.24435/

With answer on this first question I would actually get the answer on exactly the same question: Is it acceptable in order to be defined as Star Pattern if openings/closings are all OR only few (so both cases: all and only few) of them on the same horizontal lines (same height/same price).

REVERSE meaning for downtrend (on photo is showed uptrend only). Actually based on your answer I would get downtrend info too so no need to make another A to M situations for downtrend.

One of the reasons but not only is also that I used to read for the case of ''from uptrend to downtrend'' is that the low shadow (!) of middle candlestick needs to be above high shadow of first candlestick and for the case of ''from downtrend to uptrend'' is that high shadow of middle candlestick needs to be below low shadow of first candlestick. However based on your answer, even if not including shadows in photo, I would get also this confirmation.

To Clarify: All I am asking in this question is if any situation from A to M isn't defined as Star Pattern? If yes which and why? Thats all I want to know. No need to describe openings/closings.

2. Is there any rule how tall (max/min allowed area of candlestick excluding shadows!) does the candlestick in the middle (so second one) need to be so Star Pattern is valid (=so pattern is counted as Star one and not anyhow else)? In this question I am only asking about how tall so the area. Where are closings/openings has nothing to do with that question.

3. Is there any preferration how tall does middle candlestick must be in order to be counted as IDEAL one and to expect higher trading success (earnings) from only area point of view? I already know doji is counted as IDEAL one but Im asking if there is any secondary preferration about area of middle one which could also be meant as IDEAL.

4. Could you confirm whether or not the following two statements are correct (if not, please say what is wrong and what, instead of it, is correct):

Statement1: "If the third (in Star Pattern from left to right) candlestick is green one then this means downtrend of price has ended and now price is going up so its uptrend. Therefore closing of GREEN candlestick will *NEVER* be below closing of RED candlestick (the one in the middle). Closing of GREEN candlestick will always (in reality it can be different but I am asking for the case that pattern will be still defined as Star Pattern) be minimum in the same horizontal line (same price) as closing of middle (red) candlestick OR above."

Statement2: "If the third (from left to right) candlestick is red then this means uptrend of price has ended and now price is going down so its downtrend. Therefore opening of RED candlestick will *NEVER* be above closing of GREEN candlestick (the one in the middle). Closing of RED candlestick will always (to be defined as Star Pattern) be maximum in the same horizontal line as closing of middle (green) candlestick OR below.

NOTE: Please before saying whether or not statements are valid (and if no, why not) doublecheck them since I have noticed if not fully imaging the candlesticks or drawing them down those openings/closing and terms below/above can easily be misunderstood or confused.

5. Between middle and left candlestick and between middle and right candlestick is "empty air" (no candlesticks, no DOJIs, nothing) as shown on BLUE area on photo. Obviously everywhere on charts are those "empty airs". Such term can also be called "time period gaps". I don't like to call this "gaps" only because for my understanding "gaps" are differences in prices without candlesticks in such areas. Anyway, my question: For Star Pattern to be counted as IDEAL one from where we could get highest possible (or even unrealistic) success (earnings) is there any minimum or maximum IDEAL preferration about diameter (width) of empty air how much it should be? Or is there any ratio for IDEAL situation how much larger or how much shorter should be left/right one comparing to right/left one?

6. In book says the star candlestick in Star Pattern is the one which has opening/closing on the most top location (i purposely didn't type "highest" instead of "top" so you wouldn't confuse it with upper shadow) between all three of them. But im unsure or even not agreeing with this: I think the star candlestick should always be middle one, no matter on color or position. Could you clarify please?


Appreciated!
http://i.cubeupload.com/xiGFXP.jpg

JoshuaBrown
08-18-2014,
Ye I'm waiting for the answer to come out in paperback.

Street Authority
08-18-2014,
You wrote a book and expect a book response but I doubt many want to spend time on this.

Sometimes it just comes with experience. You can't learn everything in one sitting. It's not like math. Trading is an art. Besides specific candle patterns used by themselves are overrated in my opinion. While the patterns can help identify specific price action movements it should not be sole indicator to buy/sell.