Classic Example of Swing Trading Using Candlestick Signal

I just did a trade and it’s a very classic textbook kind of example. I do swing trading. It is a style of trading that attempts to capture gains in a stock normally within a few days to a maximum 1-2 weeks.

I shorted DBS on 2nd Aug and covered my position on 3rd Aug. The trade lasted 2 days. The setup was kind of “perfect”. The opportunity came and I took it. I don’t trade for the sake of trading. I only followed a couple of stocks and wait for the right time to go in.

Here’s the chart of DBS:
(Click on it for a bigger view. Opens in a new window)

short dbs

After 3 days of continuous bullish white candlesticks previously, a bearish “shooting star” candlestick (circled in blue) appeared on 2nd Aug. It is a narrow body with long upper shadows.

1st signal: Bearish shooting star

2nd signal: Price is already above upper channel (green dotted line). It is way above the 22-day moving average.

3rd signal: Stochastic is in the overbought region; fast line starting to cut slow line

The three signals together gave me the confidence and offered a classic setup. Just one look at the chart and you will see it’s an opportunity.

I entered the trade at $15.50. Set my stop loss at $15.70 which is the shooting star upper shadow. My target exit price is at about $15.00 when it reverts back to the average price.

The trade was in my favor and DBS declined for 2 consecutive days. When it dropped to $14.98, I decided to cover my position and take profits since my initial target was $15.00.

As you can see on the extreme right hand side of the chart, the candlestick now showed a bullish southern drangonfly doji. DBS might rally soon after a decline in price. But I need to wait for further confirmation signal (candlesticks signal or positive market sentiment) before I go in for a long position.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *