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  Home > Education > Advantages of ProSticks > Integrating Candlestick Patterns

Advantages of Prosticks®
Integrating Candlestick Patterns

The theories of Japanese Candlestick charting can also be strengthened, by integrating ProSticks' time and volume elements with traditional Candlestick patterns and formations. ProSticks can serve as a confirmation for traditional formations such as the morning star and dark cloud cover.

Verizon Communication (VZ) Morning Star

The above example illustrates the morning star reversal pattern. After a down-trend, a morning star pattern was formed, indicating a possible reversal. When analyzing the ProSticks pattern, it also showed a morning star pattern, thus helped confirm the Candlestick reversal formation.

Gateway (GTW) Bearish Dark Cloud Cover

The above example also shows how ProSticks can help confirm a candlestick pattern and provide the trader with more confidence. In the midst of an up-trend, a dark cloud cover pattern reared its ugly head, indicating a possible reversal was in order. This was confirmed after analyzing a ProSticks bar. As shown above, the long white candlestick that formed the first bar of the dark cloud cover was actually not as bullish as it seemed as the Active Range, approximately 70 percent of the day's trading, was at the low end of the day's trading. This should alert the trader that the bullish close was maybe a little suspect.

Bea Systems (BEAS) Three White Soldiers

ProSticks can also be used with both candlesticks and traditional indicators. In the above example, a three white soldiers pattern formed after a consolidation period, indicating bullishness. The three white soldiers pattern was evident with the ProSticks bars as well, as the Active Range's appearance matched three long white candlesticks. Coincidentally, the third bar of the pattern pierced through the Parabolic Stop-and-Reversal, which is considered bullish as well. All of this coincided with a break of a previous significant Modal Point resistance. As can be seen, the price took off right after the break of resistance.

Conversely, ProSticks can help detect and warn of possible false signals.

Boeing (BA) Bullish Hammer

The above example illustrates the hammer reversal pattern. It is considered a bullish formation but as can be seen from above, it was a false signal. However, if one would analyze the ProSticks bar as well, it was evident that the formation was not bullish at all. The Active Range was situated at the middle of the range indicating that there was strong selling pressure throughout the trading day. One would, thus, be more suspicious of the bullish hammer formation.


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