Candlestick weirdness

crouzilles · May 28, 2012

Hi all,

Although I have been a member for a while, I haven't participated much at all as I have been busy reading, learning and paper trading, so sorry about that.

I came across a weird looking candlestick the other day, weird to me anyway, this is how it looked.

The open value was between the open and close value of the previous day. It was on "light sweet crude oil index". On April 19th 2012 it opened at 103.21, closed at 103.08, but the previous day it opened at 104.22 and closed at 102.78, which makes the 19th April stick start somewhere in the middle of the previous stick, and not at the close of the previous stick.

After having observed this, I realised that a lot of days show the same pattern, so my questions are as follow:

- How does it happen?
- Why does it happen?

Sorry if this is basic knowledge, but I never observed this before, maybe because I usually look at hourly or lower charts.

Thank you
Crouz

counter_violent · May 28, 2012

crouzilles said:
Hi all,

Although I have been a member for a while, I haven't participated much at all as I have been busy reading, learning and paper trading, so sorry about that.

I came across a weird looking candlestick the other day, weird to me anyway, this is how it looked.

The open value was between the open and close value of the previous day. It was on "light sweet crude oil index". On April 19th 2012 it opened at 103.21, closed at 103.08, but the previous day it opened at 104.22 and closed at 102.78, which makes the 19th April stick start somewhere in the middle of the previous stick, and not at the close of the previous stick.

After having observed this, I realised that a lot of days show the same pattern, so my questions are as follow:

- How does it happen?
- Why does it happen?

Sorry if this is basic knowledge, but I never observed this before, maybe because I usually look at hourly or lower charts.

Thank you
Crouz

Sounds like your charting providor stops recording data at xxxxx then restarts at xxxxx Could this be the reason ?

crouzilles · May 28, 2012

I don't think this is the case because on this website describing candlestick patterns you can clearly see that this seems to be a normal occurrence.

I just don't know why it happens.

Albert Carey · May 28, 2012

Candlesticks alone cannot cover slippage and commission because amongst other things they are very common patterns and in the longer-term the expectancy goes to zero before expenses. You have to either use them with other indicators or find more complicated formations than the simple ones on that website.

Google "Price Action Lab" for a program that searches for candlestick-like patterns with desired risk/reward parameters that may under some cases provide an edge. In their forum they have several examples of how to do that and I think it will be good eduction for you. Especially, look at the post "A very rare pattern in SPY" under popular posts and other related posts.

Shakone · May 28, 2012

crouzilles said:
I don't think this is the case because on this website describing candlestick patterns you can clearly see that this seems to be a normal occurrence.

I just don't know why it happens.

There's nothing weird about it. If there is a gap, the open of the next bar is not the close of the previous bar, then you ask why the difference, and the answer is likely as you were told, the charting (or the market) stops recording the data. There are gaps on daily candles every Sunday night, because the market closed at one price on friday and can easily open on another on Sunday. If your charting shows Regular trading hours on the Dow for example, it is showing from 2:30 pm (UK time) until 9pm. The next time it might show is 2:30pm the next day. No reason why this has to be equal to the price at 9pm.

crouzilles · May 28, 2012

Thank you all for the answers. It does make sense and I hope it helps others understand too.

Cheers
Crouz

Dominator4fx · Jun 3, 2012

Albert Carey said:
Candlesticks alone cannot cover slippage and commission because amongst other things they are very common patterns and in the longer-term the expectancy goes to zero before expenses. You have to either use them with other indicators or find more complicated formations than the simple ones on that website.

Google "Price Action Lab" for a program that searches for candlestick-like patterns with desired risk/reward parameters that may under some cases provide an edge. In their forum they have several examples of how to do that and I think it will be good eduction for you. Especially, look at the post "A very rare pattern in SPY" under popular posts and other related posts.

Most of the times the candle sticks will give fake signals. This usually happens when we get a High Impacted news into the markets and the liquidity present in the markets increases.

Candlestick weirdness

crouzilles

Newbie

counter_violent

Legendary member

crouzilles

Newbie

Albert Carey

Member

Shakone

Senior member

crouzilles

Newbie

Dominator4fx

Member

Similar threads