The weekly EURUSD formed a perfect bullish reversal candle. Unfortunately, it’s the “good for nothing” kind of signal, because it appears against the broader context. Don’t be too eager to play this reversal on the buy side, because the setup has a terribly contradictory context.
Today’s bear bar seems very muscular without considering the context; large size with a failed breakout attempt on the top and a close near the low of the day. Bear reversals tend to succeed in bear trends when they reverse a weak bull leg against the resuming bear trend. This is absolutely not the case … Anti-Signal: Is There Any Juice Below Today’s S&P Bear Break?
It takes more than a single candlestick, or pattern, to enter a trade, even if it meets an optimum set of criteria. Candlestick patterns are just one signal that we utilize to alert us when the short term price action lines up with the long term context. As Jeffrey Kennedy from Elliott Wave International puts … Ideal Reversal and Continuation Signals