I use "What's Familiar?" as a way to remind me of the common behaviors of stocks and how I hope to someday use them to trade many of the movements profitably, perhaps even in succession.
Two charts of AIG from yesterday, the one on the left is unmarked for comparison:
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The yellow lines indicate dojis, near dojis, or candles where the open to close price range is tight in comparison to the high to low price range. Each is a precursor to a move in the opposite direction. Are all playable? Perhaps, if you are very sharp with entries and exits. The smallest of the moves off this indicator is 25 cents (measured from the close price of the indicator candle to the far point of the move it telegraphs). Some are small moves as part of the larger overall trend and may not be candidates for trading; the 9:50 and 9:55 am candles, for example.
The one magenta line at 3:10 pm is a false signal, of sorts. It did predict a move to the upside but it was a fake-out and likely would have resulted in a stop-out.
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The white "triangle" lines indicate the high and low points of a playable move where one end of the candle met the 17 EMA and retreated. Only one, the 2:20pm to 2:30 pm, did so on the top side of the moving average, reflecting the overall bearishness of AIG on the day.
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The short horizontal white lines and the thin vertical line below it indicate reversals off high volume spikes relative to the time of day in which they happen. Note that many of these correspond to the doji areas (yellow lines). I now notice one which I didn't mark on the chart: see the 11:05 am candle and the volume below it. It is immediately followed by a reversal doji-like candle marked by the yellow line.
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Patterns, patterns patterns...
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