A major advantage of the candlesticks is their ability to give early reversal signals well before traditional bar charting techniques.
A falling window is the same as a gap down in Western technicals. That is, a falling window means that the low of yesterday's session (i.e., the bottom of the lower shadow) is above the top of today's upper shadow. Windows are good visual clues because they clearly display that the price action and market sentiment are one-sided.
Windows are continuation patterns in which the market resumes the trend in motion before the pattern emerged. Thus, a falling window has bearish implications since it means the prior trend, in this case down, should resume. The main use of a falling window is as resistance. Thus, for a falling window, rebounds (i.e., rallies) should stop within the window.
Now that we have some background about the falling window let's compare that to a classic Western topping signal called an island top. As shown below, an island top unfolds during a rally when the market gaps higher and then, after trading either one or more sessions above that rising gap, gaps down (i.e. forms a falling window). The reason it is called an island top is because the top looks like an island surrounded by water(man...hehe).
cumps
Scuba
Fear blind us opportunity, greed blind us the danger
Falling Windows and Early Reversal Signals by Steve Nison
Scubawarrior
74
23-11-2004 16:37
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