Big candle setups - ideas?

[foed]

Hello,
I just started thinking about the system how to trade big candles.

How it looks: we have a trend or chop. Lets say last 4 candles were choppy, then obviously for no reason big candle UP appeared and closed. The situation I would like to trade is that this "gap" of big candle will be closed by few (2 or 3) DOWN candles. Does anyone know how to recognize when candles will go down after this big candle and when will not?
I have been backtesting it a little bit and it looks it has something familiar with volume. When it is "more" volume then atlest 50% of previous candle there is a big cahnge that it will go down. But ofcourse it doesnt go down all the time (yes, nothing is 100%). But my question is if anyone researched this situations and has some advices.

Thank you and I am sorry for my bad english.
Have a nice day.
Foed

 

[tomorton]

I think you'll appreciate this site by Thomas Bulkowski, a top researcher on candlestick patterns - http://thepatternsite.com/index.html

A quick check doesn't show exactly the pattern you describe but there are similar ones such as Three-Line Strikes etc.

 

[alexaherself]

How it looks: we have a trend or chop. Lets say last 4 candles were choppy, then obviously for no reason big candle UP appeared and closed.

I'm familiar with these situations under the name "thrust bars", as described in an old Joe Ross book (especially ones that close near their high - or near their low in the case of downward thrust bars), when they suddenly appear after a period of consolidation or congestion.

The situation I would like to trade is that this "gap" of big candle will be closed by few (2 or 3) DOWN candles.

Ross taught more or less the opposite approach, i.e. trading (by buy-stop) a breakout of the high of rising thrust bars and (by sell-stop) the low of falling ones.

Does anyone know how to recognize when candles will go down after this big candle and when will not?

I don't, and as I remember his chapter on the subject, he didn't either. Fortunately, one doesn't really need to.

my question is if anyone researched this situations and has some advices

If it helps, this link opens a small PDF in which you can read what Ross said about these situations (it's a safe and legitimate site, and the document is there with its author's consent: not a "pirate" site or anything suspicious): http://www.trading-naked.com/library/JoeRossTradingManual_C26_225-230.pdf

 

[tomorton]

I think you'll appreciate this site by Thomas Bulkowski, a top researcher on candlestick patterns - http://thepatternsite.com/index.html

A quick check doesn't show exactly the pattern you describe but there are similar ones such as Three-Line Strikes etc.

...though the completion of such a formation could potentially form an outside key reversal or a hikkake.