Night and Day Chart Patterns

The price action on the daily chart of Family Dollar Stores (FDO) over the past three days has formed a morningstar candle pattern. This three-day reversal formation consists of a large dark candle followed by candle with a narrow opening and closing range (doji) and completed by a large white candle. It suggests a transition from bearishness to indecision to bullishness.

FDO Source: View Chart » View in New Window »

This morningstar is forming at the intersection of the 33.8% retracement level of the 2013 high/low, the 150-day moving average, and the target projection of the breakdown from the previous channel consolidation. The relative strength index has moved above its 21-period average and the money flow index, a volume-weighted relative strength measure, is nearing an oversold condition. The Bollinger bandwidth indicator at the bottom of the chart reflects tight band compression, and this suggests the potential for a volatile move. Family Dollar is a buy after a close in upper candle range with a position size that allows for a stop under the $67 support level....211 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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