How to identify quality trade setups with supporting technical indicators.
Elliott Wave International analyst Jeffrey Kennedy was asked to name his 3 favorite technical tools (besides the Wave Principle). He said that Japanese candlesticks, RSI, and MACD Indicators are currently his top methods to support trade setups.
In this 3-part series, he will share examples of how to use these 3 tools to "build a case" in the markets you trade. These practical lessons allow you to preview how Jeffrey applies techniques with proven reliability to support his analysis.
He begins this first lesson with a basic candlestick-style price chart.
This is excerpted from Jeffrey Kennedy's teachings. Follow this link to learn more about Jeffrey Kennedy's educational trading service, Elliott Wave Junctures.
You may be familiar with an Open-High-Low-Close (OHLC) chart: comprised of vertical lines with small horizontal lines on each side. The top of each vertical line is the high and the bottom is the low. The small horizontal lines on either side represent the open and close for that period.
Here's an example of a Japanese Candlestick chart:
Japanese candlestick charts employ the same data that OHLC price charts do except that the data is expressed differently. The real body is the range between the open and close, and appears as a small block. Shadows are the lines that extend upward and downward from this block, and represent the highs and lows.
Next, take a look at the chart below.
Two bearish candlestick reversal patterns that Jeffrey finds highly reliable are the Evening Star and the Bearish Engulfing Patterns. This weekly continuation chart for the Canadian Dollar combines a 20-period moving average to show that the trend is down -- allowing you to focus on bearish reversal candlestick patterns to spot trading opportunities.
Jeffrey notes that "combining these reversal patterns with moving averages makes them even more dynamic because they focus your attention in the direction of the larger trend."
Japanese Candlesticks begin our spotlight on Kennedy's top 3 ancillary tools for trading with the Wave Principle. We'll share parts two and three via how Kennedy uses RSI and MACD indicators to support his Elliott wave interpretation in coming weeks.
To learn more about these tools now, access our FREE 10-Lesson Trading Series, "How to Apply Some of the Most Powerful Technical Methods to Your Trading."
You will gain access to an archive of lessons that includes a wealth of information: in-depth guidance and insight on the Elliott Wave Principle and other technical approaches. You'll learn some of the best technical indicators for analyzing chart patterns, anticipating price action, and spotting high-confidence trade setups.