Can I get some help interpreting 2 charts with big volume and wicks?

BobS

I have been considering a couple of stocks and learning through studying their charts. I was looking at the black candle with big volume but also a tall wick and wondering whether that was a good sign or a bad sign. Then I looked at a similar formation (although the candle is hollow, not black) on MTW, which was followed with a sizable down move the next day. So, my first question is whether I should expect a down move from TRN tomorrow?

My second question (asked Sunday night) is whether anybody can give me an idea of what the huge move (volume and price) in MTW on Friday (big gap up with some follow through but still a wick at the top) might indicate. I am not invested in either one of these stocks, just trying to learn from them. Here are links to the charts. I hope the work well in this forum. I have them in portrait format to allow 4 charts on 2 monitors.

http://stockcharts.com/h-sc/ui?s=MTW&p=D&yr=0&mn=4&dy=0&id=p15468741476&a=355517737
http://stockcharts.com/h-sc/ui?s=TRN&p=D&yr=0&mn=4&dy=0&id=p89881098191&a=355616391

nejjjen

I've been learning TA and using candles some for past few months, so just a beginner's opinion. For TRN, it is called a shooting star and is a reversal signal. Says some buyers went nuts but retreated and closed low. Mostly buyer's remorse now. Makes sense also that the upper end of the body is at the upper bollinger band too. CCI just went overbought and CMF is negative. My guess is it drops for 2-3 days and then the trend of the lows will intersect at the same point as the resistance underneath (41.24). If it holds, it should be a good bullish bounce.

MTW: I don't know how to play gaps, but all indicators show extreme values. There is a wick of equal lengths on each side.

TK0920

Hi Nejjjen, I am commenting on MTW. When the opening and closing price are almost the same it is a day of indecision (doji candle), it could go either way, not very helpful I know,but... Since this stock is close to a 52 week high, it is trying to break through a Resistance level. Buying at resistance is not usually where you want to enter a position as the downside risk is higher there. A common play on a move like this is to wait and see if the price will pull back to the top of gap support which is 32.04-32.40, if the price pulls back to that area and the rising 20ema is also at that level at the same time, this is generally considered a much better risk to reward entry. You have two strong technical indicators meeting for support at the same time, so some technical traders will enter the trade there and place a tight stop close to a break below 32, and then you have a much better risk to reward trade.

There are quite a few other possibilities and stockcharts has a good article on gaps in their chart school that is worth reading, here is the link:

http://stockcharts.com/school/doku.php?st=gaps&id=chart_school:chart_analysis:gaps_and_gap_analysis

GL