Bearish Candle Scan

[esiotrot]

Hi all

As a result of another Thread I thought it might be interesting to post the results of some Metastock scans that I do on a regular basis. This particular one concerns Candlestick patterns.

The scan looks for particular Candles, in this case:

Evening Doji Star
Evening Star
Bearish Harami Cross
Engulfing Bear

These all signify a bearish pattern on the chart. When I scanned FTSE350 the following stocks came up (All Engulfing Bears):

ABP - horrible chart
HNS - already in short term down trend
NGG - another horrible chart
AMEC - near recent high with bar 2 days ago outside top Bollinger Band
SVI - at highest since March 2001
UBM - near recent high with bar 2 days ago outside top Bollinger Band
Of these the ones with the Engulfing Bears where the price is near highs are AMEC, SVI and UBM and look the most likely to reverse. an Engulfing bear in a down trend is likely to go upwards again so is not that useful.


What's your thoughts?

I will post other scans if you find it useful (interesting)

 

[barjon]

Hi - a couple of comments

HNS - may be in process of making a swing low before next up-leg. 'tho resistance @ 400

UBM - 260 level is 50% Fib retracement (4/02 - 2/03) so weakness and bear engulf indicate reverse

AMEC - has retreated almost smack on 50% Fib retracement (8/02 - 12/02) so seems best bet with 180 possible

Mind you, don't like trading against the general trend which is still up for the moment. Have you scanned for bullish candles for those who have suffered recent setbacks?

My first post - hope it makes sense

 

[Helenqu]

Hi Peter,

My quick glance says:
ABP - Fallen quite a way already, no trade
HNS - Looks ready for a bounce no trade
NGT - Too flat, uninteresting chart
AMEC - Nice steep fall on CCI, looks good apart from close support 236 level.
SVI - Nice divergence on CCI, looks good
UBM - Looks OK support quite close at 256 though.

So I think we all agree

Welcome to T2W barjon too

 

[barjon]

Peter,

A further thought since you're scanning for bearish candles.

Have you looked at BSY with a couple of nice hanging men at 680 level which has represented very strong resistance over the past six months. Got to be 40-50 points (to maybe 100 - 130 max) if history means anything.

(Helen - thanks for the welcome)

Jon

 

[ivor31]

Hi
Also have a look at JRVS. This has met a prior high value from January and just past through it on light volume over the last 3 days.There is also a Macd osc divergence. I expect a pull back to the 10 or 20 esa. Placed stop at 341. Thats where i`ll be wrong.

Fingers crossed.

John.

 

[Skimbleshanks]

hi ivor31

What type of stop have you placed at 341 on JRVS? According to my charts the price hasn't got as far as that yet.

 

[ivor31]

Hi Skimbleshanks
I shorted JRVS on friday at 333p. As these stocks tend to have erratic price movements at the open i placed a buy stop at 431p, 4pts away from Thursday's high.If this price is broken then i'm out of the trade.Just a small trade. £8 calculated loss.

John.

 

[esiotrot]

Hi all

Thanks for your responses. The original post was about picking potential reversal trades by looking for Candle patterns but seeing as we are in TA mode then here are my thoughts:

AMEC - apart from the difficulty in finding a target, this is the best bet for a reversal. Bearish RSI with negative divergence also ND on CCI(14). MACD and CMO crosses. My fibonacci fit is not great using April 02 to Dec 02 as the base to put it between levels but I guess a target at support of 205 would be good. Bollingers are narrow suggesting volatilty to come. SHORT

ABP - range bound 360-425 probably going to 385 short term ??

HNS - Small ND on CCI(14) but I see the 20ma as support and this will revert to the uptrend with an initial target of 365 then 400 Go with the trend. LONG

NGG - a Utility which bears little relation to the rest of the market. The daily range can be greater than the width of the Bollinger bands! Could you trade this Intraday? UGH

SVI - Very light volume, but the Engulfing Bear could be indicative of a move down with the Bollinger Lower Band as a target say 420 - but go with the trend as Investment? SHORT

UBM - Seems to be in a Symmetrical Triangle and with an Engulfing Bear and at the top of the Bollinger AND at a Fibonacci level (April 02 - March 03) I reckon a target of 240 would be worth a shot. SHORT

Overall the Engulfing Bear has picked AMEC, SVI and UBM as potential shorts. NGG is a non event and ABP is in a range. The interesting stock is HNS, and although the candle shows an Engulfing Bear my view is that this is a Long - if the next candle closes above the body of Friday's candle then it's going up.

Barjon - my scan on Metastock didn't pick up BSY because i didn't ask it to look for Hanging Men. Is this a Reversal pattern? I can always add this in or create a new exploration. As it happens I had noticed, using the Mark ! eyeball the strong resistance at 690.

I will post the Bullish patterns in a mo

 

[esiotrot]

Hi all

OK, here are my stocks came up as Bullish Candles on my Metastock exploration, looking for:

Engulfing Bulls
Morning Star
Morning Doji Star
Bullish Harami Cross

ANL - Engulfing Bull - stock at Upper Bollinger
BG - Engulfing Bull
BT - Engulfing Bull
CBG - Engulfing Bull - stock at Upper Bollinger
ETI - Engulfing Bull - stock at Upper Bollinger
EMG - Engulfing Bull
PHY - Engulfing Bull
SHB - Engulfing Bull - stock at Upper Bollinger

Plus TFG - Bullish Harami Cross - a very odd chart
and SXC - Bullish Harami Cross - also a little odd but an interesting pick.

Any of these any interest?

Any one care to explain exactly what a Bullish Harami Cross means to them?? As I understand it; this is a Doji within the body of a preceding black body and should be a bottom reversal signal.

I should have pointed out that I am NOT a Candlestick expert but was interested in the possibilities of scanning for bottom and top reversal signals using Metastock and Candlesticks.

 

[barjon]

Peter,

The Mark1 eyeball is often the best!!

I have found the best bearish reversal indicators to be shooting star and hanging man (both need confirmation via next day opening and/or close). At the other end the best bullish reversal indicators seem to be hammer and inverted hammer.

Looking forward to your bullish post.

Jon

 

[Helenqu]

Hi Peter,

I agree with your definition of a bullish harami cross.

I don't get so hung up about specific patterns with candles, it's the general context that interests me. So "ish" candles qualify as well as far as I am concerned

Of the ones you highlighted I don't think there are any I would trade. The best one to watch I think is EMG. It's had the strength not to topple over as I thought it would. If it goes above the 1080 high looks to be a good up bet to me.