Since last July, when uptrends end, I have found a great technical indicator that alerts me to get defensive.
That indicator is the Heikin Ashi Candle Sticks. When you look at a chart there are a couple ways to evaluate the action. First is a simple bar chart. Next is a candle stick. Third is the Heikin Ashi. Candle stick charts were developed by Japanes Rice Traders in the 18th Century.
The beauty of the Heikin Ashi over a normal candle stick is that the bar is color coded either green or red. Also, there is some pattern recognition built into the color coding. Therefore, you are getting more information than looking at a bar or candle stick chart.
Yesterday, Heikin Ashi Candle Sticks put up a nice red candle. Since the February 11th low, there have been a couple days that turned red but then resumed green. So currently, we now have the second day down. Once we get three or four in a row that are of size then the die is cast. You have been warned.
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Very interesting. So three or four of those days is bearish ? And what would invalidate such a setup ?