List of Guidelines for Their Market Conditions
Candles that form on days where neither the sellers nor the buyers take total control of price, and move it strongly in one direction are called Indecision Day Candlestick Patterns. Indecision days are mostly very small bodied candles with small wicks and tails that are longer than the body.
They often form in consolidations, or during periods of sideways action. However they also occur as a severe anomaly during extreme sell-offs that rebound in the same day, due to the new circuit breakers the Securities and Exchange Commission has installed in the automated marketplace that slow down selling during a fast-paced selling spree.
The circuit breakers replaced the Uptick Rule a decade ago but still are under adjustments and modifications because severe one day sell-offs are a rare event in the market.
Extraordinary large Indecision Day Candlestick Patterns can be problematic for Technical Traders to know how price will behave next. These create extreme patterns in Price and Time indicators such as MACD, Stochastic, and Bollinger Bands® as well as other highly popular indicators making the interpretation skewed in reaction to the severe price pattern.
The stock chart below is marked with a red arrow to show an example of an extraordinary large Indecision Day Candle.
Martha Stokes CMT
TechniTrader technical analysis using a MetaStock chart, courtesy of Innovative Market Analysis, LLC dba MetaStock
Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses
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