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Candlestick traders at action stations - nervous closes in CBA and BHP may interest Australia 200 traders
00:00, 14 August 2013
Candlestick traders will have been interested in patterns in Australia's largest 2 stocks at the close today. Commonwealth Bank completed a bearish engulfing pattern. Despite a very respectable profit announcement, traders took profit after a good rally before the result and following some disappointment that the bank did not pay a higher dividend. Yesterday's candle in BHP looks like a Doji while today's looks like a Hanging Man. Neither are text book examples but as they follow a strong gapping rally, many traders would see them as being close enough to text book to demonstrate indecision and loss of upward momentum. These signs of indecision in 2 large stocks with a big bearing on the index may be seen as a useful pointer by technical traders in the Australia 200. If international markets happen to be weaker, candlestick patterns are one pointer to the possibility that short term nervousness in these stocks could see selling momentum increase.