Indicators work beautifully until they don't
When we first get into investing, we are confronted with charts. Charts that show how our particular asset of interest is performing. No matter what you're into, its price performance can be shown on a chart, and in a number of different ways. For the general public there's the good old line chart; easy to understand and what we were all taught at school. Something like that is all well and good for showing performance between two points in time, like a daily session in London or New York, but besides showing us that the price is now higher or lower than it was this morning at the open, its not much use for anything else. For that reason price performance is often shown on a candle chart, like this: For the untrained eye, this is a fearsome spectacle. Green and red blocks, some with tails and some without. Luckily it doesn't take very long to learn what these candles are telling us and help us build up a picture of what we are looking at. But, like ever...