Today we had a piercing line candlestick which is a bullish short term reversal signal:
This patterns signals a...
How to identify...
Reversal
1st day is a long black body.
2nd day is a white body which opens below the low of the 1st day.
2nd day closes within, but above the midpoint of the 1st day's body.
Pyschology...
The gap down on the 2nd day perpetuates the downtrend. However, the 2nd day's close is above the midpoint of the 1st day's body. This suggests to the bears that a bottom could be forming. This price action is not nearly as discernable using bar charts as it is with candlestick charts. The more penetration of the close on the 2nd day to the 1st day's body, the more probable the reversal signal will succeed.
The preceding day i.e. Friday we had a black marubozu which was a very bearish candle following the hanging man candle on Thursday. For the few days I have been holding AQR, the candles have been fairly reliable indicators of where AQR will open the following day. However candles go out of the window if an announcement is made.
AQR Price at posting:
43.0¢ Sentiment: Hold Disclosure: Held
