Mapping Your Voyage of Discovery - CQG.com

It is critical that Doji’s have some sort of qualification, if only on a basic level. The Nasdaqrally of the first quarter is a classic example where top pickers got punished. The rally had nofewer than 19 Doji’s before a top was made. However, apart from when the top is made,the Stochastic only comes out of overbought at Doji 12. The two yellow circles highlight acommon topping pattern in the traditional sense. A Tri Star Doji, which is three in a row.This encourages top pickers. Note that the day afterwards the market rallies strongly asonce again short-term players and long-term players are on the same side. I try to be activeand buy those days when the pattern fails in the same manner as the crude example earlier.When the top is made there is divergence in the Stochastic, and it occurs from below theoverbought zone. My Stochastic Step based divergence signal (red square), the day after thetop helps to confirm, but is not essential.