The
candlestick trade I’m about to describe made me enough money to pay for three months of living expenses. That’s not bad for an hour’s work! In a moment, I’ll outline the trading setup so you can tailor it to your liking.
That
candle pattern ended the day that price closed above the top of the descending triangle. My research said that the morning doji star is a highly reliable candle formation. Combined with additional analysis I did on the company, both fundamental and technical, the stock was a buy only if it gapped open higher. Why? Because the next day the company was holding a conference call before the market opened to discuss earnings. A higher open would mean the market liked its story.
The news reports the night before the meeting said that net profit was 53 cents versus 61 cents during the year-ago quarter even as revenue climbed by 30%. Just 1% of the revenue gain was from higher internal sales, though.
Most was from acquisitions or currency translation. Analyst estimates ranged from $0.52 to $0.58, so earnings came in at the low end. All of this sounded bearish to me, but the technicals were shouting, “
Buy!”
