The bearish reversal pattern from Texas Instruments (TXN) shown on the chart above is a Tri Star Doji. I have came across such pattern in candlestick textbook, but this is the first time I have seen one in “real life”. This pattern is quite rare. When a Doji is formed, basically it is telling us that there is an indecision. So, 3-days of Dojis simply illustrates more indecision.
It is very clear from the chart that the 50-day MA is acting as a resistance. The 2nd Doji CANNOT close above the 50-day MA. Stochastic is also in overbought region. The profit-taking target would be at about 2o-day MA. Volume is also getting lower during the past 4 days. This also shows that there are not enough buying demand to push the price higher.
Under normal circumstances, I would see this set-up as a high probability trade. But do take note that our dear Uncle Ben Bernanke will be opening his golden mouth in the FOMC meeting on 20-21 Sep. Most people are anticipating good news from him. So, IF he really deliver good news, the overall market will be in a bullish mode and price might rise. The reverse will happen if there is no measures to spur the economy. Personally, I won’t trade this counter now. I will just see what’s the outcome for the FOMC meeting first.
There’s a saying: There is a time to go long, a time to go short, and a time to go fishing. So, right now I will just stay out of the market for the time being.