and The Candlestick Forum
The strong bullish day Wednesday in the markets, especially the gap up in the NASDAQ, provided a very clear picture in which way bullish sentiment wants to move the market. Continue to stay predominantly long as long as the indexes remain above the T-line.
On Tuesday, the markets revealed that they did not know which direction they wanted to go. There were no candlestick signals or patterns to provide any favorable directional analysis. Yesterday, the trading clearly indicated it was still in a bullish mode. The NASDAQ was the most revealing, forming an island reversal when it gapped up through the T line. Stay predominantly long as long as the indexes remain above the T line.
Tuesday’s trading created a corundum. The markets did not know which way it wanted to go. Wednesday’s trading solve that problem. The tremendous Up in the NASDAQ provided a strong trend scenario. It formed an island reversal. At the same time, the DOW confirmed a bullish Harami and closed significantly above the T-line. Use the simple trend analysis, as long as the indexes close above the T-line, and uptrend is in progress.
The Inverted Hammer produces very important attributes when analyzing a potential reversal. It is considered one of the 12 major candlestick patterns and it is comprised on one candle. The inverted hammer is easily identified by a small body with a shadow at least two times greater than the body. It is found at the bottom of a downtrend and it indicates that the bulls are stepping in however selling is still occurring. The color of the small body is not important but a white or green body has more bullish implications than a black or red body. The following day requires a positive day in order to confirm that the inverted hammer signal has occurred.
Criteria
Signal Enhancements
Pattern Psychology
After a downtrend has been in effect the atmosphere is bearish but the price opens and begins to trade higher. The bulls have stepped in however they cannot maintain their strength and the existing sellers know the price back down to the lower end of the trading range. The bears are still in control but on the following day the bulls step in and take the price back up without any major resistance from the bears. If the price stays strong after the inverted hammer day then the signal is confirmed.
Utilizing just the major Japanese Candlesticks trading signals will provide more than enough trade situations for most investors. They are the signals that investors should contribute most of their time and effort. However, this does not mean that the remaining patterns should not be considered. Those signals are extremely effective for producing profits.
Continue your education and read about the secondary signals beginning with the tri-star pattern.
Do you know which direction the market is moving? It sure doesn’t! No compelling direction, a sideways movement, longs and shorts in the portfolio is the correct strategy. Fortunately candlestick scans alow for good longs and good shorts at the same time.
A hard sell off , like todays trading, is hard to make a good judgement call. The best is to hold off until the market settles out. Be ready to short more if the markets don’t close near the high end of their range today.
The direction of the market is illustrated by bullish signals forming at the bottom of this current trend channel. The magnitude of the market move is demonstrated by reoccurring selling days during the uptrend. The uptrend will continue as long as there is inklings of worry about the uptrend. The slow uptrending market is still providing opportunities both on the long side and the short side.
Thursday’s trading is showing there is not any bearish sentiment, not any major bullish sentiment, but enough buying to indicate the T-line still remains a factor. The slow uptrend is still in progress. This continues to allow for long positions and short positions to be in the portfolio.
The shooting star candlestick is one of the 12 major candlestick patterns and the Japanese named it the shooting star because it looks like a shooting star falling from the sky with the tail trailing behind it. It is comprised of one candle and it is easily identified by the presence of one small body with a shadow at least two times greater than this body.
Criteria
Signal Enhancements
Pattern Psychology
After a strong up-trend has been in effect the atmosphere is bullish. The price open and trades higher and the bulls are in control. Before the end of the day however, the bears step in and take the price back down to the lower end of the trading range. This creates a small body for the day and could indicate that the bulls still have control. The long upper shadow however, represents that sellers started to step in at these levels even though the bulls may have been able to keep the price positive by the end of the day. A lower open or a black or red candle the following day will reinforce the face that selling is occurring.
Japanese Candlestick trading signals consist of approximately 40 reversal and continuation patterns. All candlestick patterns have credible probabilities of indicating correct future direction of a price move. The shooting star candlestick is one of the 12 major patterns. The definition of “major” has two functions. Major in the sense that they occur in price movements often enough to be beneficial in producing a ready supply of profitable trades. They also clearly indicate price reversals with strength enough to warrant placing trades.
Continue to learn more about the major candlestick signals and read about the Inverted Hammer signal.
April 30 Daily Market Comments
After a relatively strong week last week, it is not unusual to see some profit taking on a Monday morning. Monday’s profit-taking does not reveal any major change of investor sentiment, so far. Maintain a bullish bias in the portfolio.