When you understand candlestick psychology, you gain trading perspectives equivalent to somebody trading for 50 years. Candlestick psychology is merely common sense built into a graphic depiction. When do most people buy? They buy exuberantly at the top! When do most people sell? They panic sell at the bottom! This allows the candlestick investor to have common sense entry and exit strategies for maximizing profit potential. As illustrated in the CVNA chart today, a gap up in the overbought condition becomes an immediate alert to set profit-taking stocks at levels it should not come back down through, such as the open. If you have problems knowing when to enter a trade, exit a trade, or set your stops, everything built into a candlestick chart is pure common sense. It allows the candlestick investor to develop strategies to take profits or close out positions working on a common sense basis versus emotional trading decisions. Witnessing the NASDAQ and the S&P 500 gapping up in the overbought conditions today provided the alert to be prepared to start taking profits in individual stock charts that also gapped up in the overbought condition. Numerous stocks missed their earnings expectations today, adding to the probability the markets may be selling off after today’s gap up.

Chat session tonight at 8 PM ET. Click here to register.

Good Investing,

Stephen Bigalow

Candlestick reversal signals appeared in today’s market trading. This is not unexpected with the markets in the overbought area at technical levels everybody else was watching. The Dow formed an evening star signal, one of the 12 major candlestick reversal signals. The S&P 500 began a bearish kicker-type signal. Although the NASDAQ did not form a candlestick reversal signal, one of the changes identified in our Candlestick training is when prices gapped down and close back below the open of the previous candle of an uptrend. There will be a high probability of selling continuing. This allows for quicker closings of bullish positions that are starting to show potential weakness/sell signals. This information provides the candlestick investor with immediate information and allows for better profit-taking. Everything built into candlestick charts is merely common sense put into a graphic depiction. When do you enter a trade? When do you exit a trade? This is information that is much more identified, knowing what signals and patterns investor sentiment produce time after time.

Chat session tonight at 8 PM ET. Click here to register.

Good Investing,

Stephen Bigalow