MARKET CLOSURES
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Market Closures Effect on the Candlestick Pattern
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Normally market closures are the weekends, Xmas and New Year. This can cause disruption to the normal appearance of the strategies. While the mishaps caused are not the norm, they do occur regularly enough to warrant mention.
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The market closures do not have any effect on the candlestick pattern itself, however they do cause distortions and may have a major effect the appearance and order of the third and fourth candles which can lead to trader confusion.
Image 7, one instance of how the third candlestick can be effected after the markets have closed for a period of time is a change in colour. We see that due to the mssing information the normal routine is not followed.
So on the re-open of the market the candles have changed directions over the closure period. This means we end up with a candles that contain two days of trading information.
This results in a green up arrow for the third candle in the buy trade and a red candle for the third candle in the sell trade.
However, the colour of the candle is not important as long as any part of the third candle is in the box it is a setup.
Image:8
Image 8, shows another effect due to the markets closure. ​This time due to the closure the candles have opened and closed entirely within the Boxx. This has resulted in a gap between the second of the 'Level Candles' and the 'Third candle'.
This gap is simply ignored and as the third candle is in the Boxx it is a setup.