Dollar Yen
We watched for several days as the dollar yen was supported by the kumo and saw the relevance of monitoring such support. Four days the trend entered the kumo, a sign of weakness along with the additional resistance at 95 yen per dollar. The candles ranged within the kumo for three days the kumo and closed inside. However, yesterday saw the end to this as the candle closed below and fell rapidly.
Kumo Support in Dollar Yen: We start our Ichimoku Watchtower with the Dollar Yen. Movement last Friday drew long lower shadows in many assets and the Dollar Yen was no exception, scoring lows of 88. Now, look at the first arrow: a close just inside the kumo. The next day price action was looking for new lows, and again the kumo generated the necessary support (second arrow). Today, prices advance again, and again rely on the kumo for support.
Let’s keep an eye on the top (more volatile) and bottom (91.50 yen) of the kumo.
Above the Stomach (Inverted Piercing) : This pattern is exceptional for two reasons. On the one hand, its origin is not Japanese. On the other, it is probably the most powerful candlestick pattern in our watchtower observations. Notice how it opens above the mid-zone , holds steady despite a minimal expansion, and breaks out upwards.
It usually occurs under extreme situations with the market closed, gaining enough strength to reach former highs and, if the market context is not too negative, break them.
Gravestone Doji (Dow Jones)
We must not confuse the type of candle (marubozu, doji, etc.) with candlestick patterns, which are formations involving one or more candles (sessions, if they are daily charts). The Gravestone Doji is not a pattern, but a type of candle which, when occuring during resistance , preferably with an upside gap and then another downside, has similar implications to those of a shooting star.
The “Gravestone ” is not perfect, at the base, but relevant, and the absence of both upside and downside gaps can be offset by the negative session on April 27.
Hanging man (continuation scenario)
Our Candlestick Watchtower starts with with a hanging man. Notice how often it acts as a continuation pattern, even more times than a reversal pattern. This is a pattern, therefore, to be treated with special caution, since the case we see here, the failed case - followed by price continuation, occurs frequently.
In this case, on a daily chart of the Dow Jones industrials, see how the price breakout was upwards in just one day. So, there is no need to use the low of 11016.4 as support for the monitoring of the pattern.
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