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II. The Finger Finder (Attachment from stingray2

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rayrohn   Wednesday, 11/05/03 10:04:55 PM
Re: None
Post # of 2267 
II. The Finger Finder (Attachment from stingray2

A. General
1. As a review we have studied the major influences on the
charting landscape. Strong support and resistance lines tear
through the chart and affect everything in their path.
Characteristics of market cycles influence pattern and indicator
reliability. Trend channels constrain price movement to a dominate
trend, although only 20%-25% of the time.
2. The finger finder studies single-bar candlestick patterns to
identify markets that print important directional signals. When
these patterns present themselves there is hidden action that can
be witnessed in the time frame beneath.
3. Fingers will reach across well defined S/R levels to clear out
stops and then retrace their steps back. This cleaning out of stops
sets the stage for price movement in the opposite direction.




B. TRADE MECHANICS
1. Single-bar hammers and dojis provide the most powerful
immediate feedback of all candlestick patterns.
2. They signify an all out battle between bulls and bears ending in
a draw.
3
3. There are two specific requirements that help generate their
predictive power
a) The high/low range must be greater then the average
b) The closing tic must be equal to or real close to the
opening tic.
4. The candlestick’s real body must be near one extreme of the
bar or another.
5. The broader the distance between the high/low range as
compared to the average bar range, the greater the signal
6. There should be opposition. Opposition is when the body
closes on the opposite end of the bar as opposed to the last few
sessions. This may signify the change in direction. The color of
the body does not matter.
7. This means that opposition has mounted in the lower time
frame.
8. These candlesticks can also mark a continuation of the trend
rather then a reversal when the market gap opens and a finger is
drawn into the direction of the prevailing trend. It is said that a fish
hammer swims strongly and predicts the move to continue.





9. Spinning tops confuse the issue. These describe a pure
standoff between bulls and bears. However, they sometimes
couple with the previous bar to form the Harami. The criteria for
this is that the spinning top real body must fit totally within the openclose
range of the previous bar, and the previous bar must exceed
the high or low range of the bar that precedes it.
10. The body of a finger finder must be no more then 1/3 of the
total range of the bar, excluding the Harami. Simply use the visual
cue.
11. The Harami actually posts a gap in the next lower time frame.
Therefore, the hole in the wall strategy may be used to enter on a
Harami. (Sell or Buy the retracement)
C. FINGER STRATEGIES
1. These predict trend changes in the time frame of the candle and
the time frame below.
2. The significance of the finger relates directly to their location
within the overall charting landscape.
3. These major events either occur with large volume or near
significant S/R.
4. They lose significance when buried within congestion or near
larger candles.
5. Fingers are used to clear out stops at the edge of congestion.
This occurs for two reasons.
a) A slow market bores participants and quick price action
gathers attention which in turn will create more volatility.

b) Or, the floor wants to relieve demand on one side of the
market so that it can move in the other. Washing out those
stops would be too hard for the floor professionals to resist
before the market moves in the opposite direction.
6. The secret is revealed because prices should not jump back to
form a doji or a hammer if there were enough pressure to move the
market in the initial direction.
7. The length of the candle is very predictive of the move. Small
dojis and hammers get absorbed quickly and will end up showing a
congested market. Large ones can signal great trending moves.
8. Look for the Harami Cross which combines the inside day with
the doji as the second component. If you jump to the lower
timeframe you most likely will see a 2B top or bottom formation.
9. Stand aside from these signals in very thin markets like rice,
oats or pork bellies and only trade them when volume is high.
10. To trade these, sell a top or buy a bottom, place the stop just
outside the range. If it violates the range at all it negates the signal.
11. A safer, lower risk entry is to look for a double top or bottom
formation in the lower time frame. Often there is a test of the
formation prior to trend movement.
12. Look for any gaps before or after the finger occurrence, these
form islands and are very strong areas of support or resistance on
pullbacks. A very safe trade is to fade the pullback
13. Technical indicators will aid in the trade
a) Use stochastics to determine whether the market is at
overbought or oversold levels before initiating the trade
b) MACD’s will show a change in direction.
c) Bollinger Bands work the best with the finger extending
towards or even through an outer band, or touching the
central band.
D. APPLICATION
1. Hidden 2B


a) Buy on the open of the next day with a stop below the
range of the finger.
b) The greater the range the greater the target.
c) Notice the pattern in the underlying time frame
Gap and retracement
Entry at open the next day





Ray
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