QQQQ Hammer Candlestick
There is some discussion on this board and elsewhere about the hammer candlestick on the QQQQs and $NDX that formed today, which is a bullish signal. However, Steve Nison, who is the recognized expert in candlestick charting has said, repeatedly, that candlestick formations require confirmation by western charting indicators, (e.g., stochastic, MACD) or by subsequent candlestick formations (e.g., "dark cloud cover") before a trading system is made. It is best to see today's formation as a cautionary sign, only.
In a workshop I attended at the Chicago Traders Expo he made a point to say that this is how people misuse candlesticks; by interpreting the market on the basis of one formation, alone. To go bullish now, without confirmation, is to risk betting against the trend. On the recent uptrend in late June, bearish candlestick signals began to appear such as "shooting stars", which did not predict accurately the top, but simply showed a weakening trend.
Incidentally, his book, Candlestick Course is excellent and I recommend it.
Chico
