Learn to Identify Candlestick Patterns in Charts
The main challenges Individual Investors and Retail Traders face today are figuring out when High Frequency Traders HFT are going to suddenly appear and when Buy Side Institutions using Dark Pools are quietly buying or selling. There are distinct candlestick and indicator patterns for tracking the Large Lot Institutions that use Dark Pools which repeat over time.
See chart example below.
The first candlestick indicated by the red arrows on the far right is High Frequency Traders HFT which is evident in Price, stock Volume, and the indicator TechniTrader Quiet Accumulation TTQA.
The green vertical rectangle is Dark Pools and Professional Traders buying. Dark Pools are accumulating, while Professional Traders are trading short-term. The small green horizontal rectangle is the high price range or top level price for the Dark Pool Quiet Accumulation buyers. They will not buy any higher than this, which means Professional Traders are going to take profits.
That brings the price down to the support low, which is the trigger level for more Dark Pool Quiet Accumulation. Meanwhile, Dark Pool Quiet Accumulation is still going on, while uninformed Retail Traders are trying to sell this stock short. They struggle to push price down, but due to lack of numbers, they are unable to control price.
As Dark Pool Quiet Accumulation ceases, High Frequency Traders HFT gap down price at market open, then drive it down on an inconsequential retail news item, and Dark Pool Quiet Accumulation drives it right back up.
But Smaller Funds chase High Frequency Traders HFT trying to sell or Sell Short. It goes deeper this time as giant Buy Side Institutions wait to begin Dark Pool Quiet Accumulation, then start buying again. This is discovered by High Frequency Traders HFT who gap price up with high stock Volume.
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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