How do I scan for solid black candlesticks?

Dreamweaver

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?

markd

and [close > 1 day ago close]
and [close < open]

SCAlchemist

Do you attach any particular significance to the Solid Black Candle, such as a beware and warning signal, in an uptrend?

markd

Dreamweaver hasn't re-surfaced, so I'll take a shot at your question.

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.

SCAlchemist

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?

markd

Well, in general, in an uptrend, a higher volume bar should advance the trend - with a new close or a new high, and it should close in at least the upper half of the bar and its range should expand more or less commensurately with the degree of higher volume. By higher volume I mean higher than the previous bar and above the 21 day average. You also want to see what I call "good form", meaning very small or non-existent wicks and tails. Normally this means more higher prices ahead, unless it occurs late in an up leg, showing exceptional volume and follows several strong bars without any significant rest - then it's more likely a climax bar.

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.

SCAlchemist

Thanks, marcd. Very helpful and insightful.

We very much appreciate you being you.

You make a lot of us wiser and happy!

markd

Thanks for the kind words.