Piercing Candle - A Reversal ?

Piercing Candle - kennynah May 2010

you will see such a piercing candle formed last Fri, 21May2010, on SPX daily chart...

it is important to understand that not all candles formations will pan out exactly the way textbooks state them... just like any other technical indicators, some formations will fail at times ... nothing is guaranteed... but they serve as a guide to be complimented along with other TA indicators for better decision making...

particularly, even if this piercing candle reverses prices, we must still consider the macro picture...we should not read candles in isolation without putting that in context to the overall daily/weekly and monthly price actions.. that said, it means, that price could reverse, but for how far up is not addressed by candle studies... so, it could go up and shortly afterwards, revert back down again...yet, that reversal did take place and will be applauded by candle technicians that it has done its job..

but for the candle rookie reader, he might not take profits as the candle hit higher and see it turn back down later.. and then say candles didn't work for him...

so, in other words, once the candle signal gets into play, keep that earlier signal in mind, dont get all too hung up on it because you want to start looking for the next candle signal/formation, that either augment or negate the earlier candle signal...

in this sense, candle reading is a post mortem technical study..

your thoughts? thanks.