Question: What is the proper strategy when Long Black Body pattern appears in Candlestick chart?
Here is an example of strategy when you see the appearance of a Long Black Body filtered by RSI at the overbought area, at the top of an uptrend.
Consider selling when the next candle falls below the low of the Long Black Body.
Consider placing a protective stop loss at the top of the Long Black Body.
Take-Profit strategy is heavily dependent on the trading profile of each individual:
- Close 60% of the position when price travels 100% the length of the Long Black Body.
- Close the remaining 40% when price reaches 200% the length of the Long Black Body or prices reach the LWMA(50) or at the presence of a reversal candlestick, whichever happens first.
- Other combinations may be applied.