Real life example about Japanese Candlesticks. How they often are leading indicators but require additional tools

1. Candlesticks, but
don’t stick to candles
ANOTHER REAL LIFE EXAMPLE ON HOW THESE SIMPLE PATTERNS
WARN FOR REVERSALS, BUT REQUIRE OTHER TOOLS TO BE TRADED

2. Oct4th, 05:12 AM UTC, Spot NZD/JPY 74.50 AUD/JPY 78.40
A mention on my daily comment that the Yen rally is about to reverse,
why:

3. NZD/JPY 4Oct16, 74.50
The last quarterly candlestick is a doji, and the last pair of candles
complete a harami too, both bullish reversal patterns in a down trend

4. Look what followed the next 2 months
From 74.50 Oct4th, + 9.4 % onto 81.51 Dec5th. Before doing so however it lost 2.4 % to 72.74
Oct11th. This is why we also need different techniques on different time horizons.

5. After Oct4th, the 1st drop to take place a week later
allowed drawing the 3rd point to confirm the up trend line. Although it went slightly below the
trend line (72.74 vs 72.83 = 0.12 %), it left the previous low (72.65) and hence the up trend itself
intact. The next drop on Nov9th (US election volatility) did not even threaten the up trend line.
NZD/JPY Daily chart

6. AUD/JPY 4Oct16, 78.40
The last quarterly candlestick is a doji, bullish reversal pattern in a down
trend

7. Look what followed the next 2 months
From 78.40 Oct4th, + 9.1 % onto 85.54 Dec5th. Before doing so however it lost 2 % to
76.80 Nov9th. This is why we also need different techniques on different time horizons.

8. After Oct4th, the 1st drop took place on Nov9th
Here the up trend line had already been confirmed with a 3rd low when it was challenged with
the volatility the day following US presidential election. Even if the low took place below the
trend line (76.80 vs 77.05 = 0.32 % away) the previous low (76.19) was not broken, and
consequently neither the up trend.
AUD/JPY Daily chart

9. What we learn from this :
To profit from such moves:
1) Take the global picture, then zoom in (quarterly to daily here)
2) Combine different techniques (candles and basics here)
3) The basic tenets are always valid (definition of an up trend here:
higher highs + higher lows)