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The larger the white and black candle, and the higher the white candle moves in relation to the black candle, the larger the potential reversal. The chart below illustrates. The Morning Star pattern is circled. Note the high trading volumes on the third day. The opposite occurring at the top of an uptrend is called an evening star. [3]
In stock and commodity markets trading, chart pattern studies play a large role during technical analysis. When data is plotted there is usually a pattern which naturally occurs and repeats over a period. Chart patterns are used as either reversal or continuation signals.
It has compact trading activity that is separated from the subsequent move, which is in the opposite direction. It is an extremely good indicator of a reversal of a primary or intermediate trend. As soon as it appears, it indicates that an extreme change in sentiment has occurred. High volume is expected in that compact trading area.
Monday's rip-your-face-off rally following the morning's gut-wrenching plunge — when the Nasdaq Composite cratered 5% — was one for the history books.
Opposite to that are Put options, simply known as Puts, which give the buyer the right to sell a particular stock at the option's strike price. This is often done to gain exposure to a specific type of opportunity or risk while eliminating other risks as part of a trading strategy. A very straightforward strategy might simply be the buying or ...
Some, like “Trading Places,” comically depict the mayhem of the trading floor. Others, like “The Wizard of Lies,” are sobering representations of real events.
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A risk-reversal is an option position that consists of selling (that is, being short) an out of the money put and buying (i.e. being long) an out of the money call, both options expiring on the same expiration date. In this strategy, the investor will first form their market view on a stock or an index; if that view is bullish they will want to ...