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How do I scan for solid black candlesticks?
I would like to scan for solid black candlesticks along with [Slow Stoch %D(14,3) > 80.0] and other parameters. How do I code for solid black candlesticks?
and [close < open]
You would have to do a study to know for sure, but anecdotally, I do take it as sign of possible trouble ahead, although not necessarily right away.
It's probably more meaningful if the volume is large and the candle made a new trend high, and especially a breakout. Retail traders don't normally sell when prices are rising or breaking out, so it's probably professional selling. If they are selling higher prices, then the outlook is probably not good. Any rallies to come are likely for the purpose of distribution, and you should probably look for and believe signs of weakness, if they appear.
So position-wise, if you are in, it's probably wise to lighten up on future strength; If you are out, don't get in unless you keep the position small and watch it closely. If you get significant weakness, it might be time to consider shorts after strength that doesn't make it to a new high. HD is a recent example. But V is a counter-example where it only slowed things down, but no reversal. Sellers never followed through and strong buying continued when the selling didn't show up.
In the HD example, it seems that the Solid Black Candles with the tall wicks are often a sign of possible trouble ahead more often than the Solid Black Bodies with long tails. Any thoughts?
So, as you note, assuming an up trend and higher and above average volume, a black body with tall wick shows the most weakness, while a black body with a long tail show sellers are present but buyers are still attracted to lower prices. You would want to see continued support if prices return to the low of the tail.
Thanks, marcd. Very helpful and insightful.
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