The market indexes are approaching the all-time highs again. With the markets be able to breakout into new high territory? Candlestick charts reveal patterns that would imply a new high will be reached. The J-hook pattern is setting up in the Dow, supporting off the T-line. What does this imply? A J-hook pattern forming near the resistance levels of the past highs are just starting a potential wave three. If wave three is the same magnitude as wave one, wave three indicates investor sentiment will move into new high territory. This analysis becomes a great benefit to the candlestick investor. It indicates there will be likely a week or two or more of moving into the new high territory. Whereas other investors might be hesitant about buying until they see there is a breakout, the candlestick investor already has incentive to be buying knowing what the results of a J-hook pattern will produce. Simple logic dictates that if the market in general is going to continue higher, the candlestick investor has the ability to scan for the best bullish signals and/or patterns that are going to produce the best results when the market is in an uptrend.
If the J-hook pattern is a predominant pattern in the overall market, that implies that numerous J-hook patterns will be forming in individual stock charts. Because the magnitude of wave three can be estimated based upon the magnitude of wave one, identifying which price moves are going to produce the best percentage profits is very easy. Our recommendation on CDLX Today was based upon witnessing a J-hook pattern set up, knowing that if it traded positive it was going to be a J-hook pattern breakout. Because human nature works the same way time after time, simple candlestick scanning techniques allows for identifying which chart patterns are going to produce the most profitable results, based upon a high probability expectation. Why is this important? If the market is going to be in a strong uptrend, most investors will make moderate profits. Moderate profits versus tremendous profits because of the normal trading habits of most investors. An upward trending market will produce numerous uptrending stocks. However, many investors will also have losing trades during an uptrend. Candlestick analysis greatly reduces the offsetting results of having losing trades in the portfolio by allowing investors to have a dramatically improved trading results in a much larger percentage of their portfolio.
We will conduct a “Members Only” chat session tonight at 8:00 pm EST.
Good Investing,
The Candlestick Forum Team
July 1st Daily Market Comments
The positive open today is creating very strong J-hook pattern breakouts. The gap up in the market indexes after Friday’s Doji type day is producing a best friend breakout, making the J-hook pattern that much more credible. Because prices move based upon investor sentiment, there is one important backdrop in the overall market trend. The Bulls step in on any prospects of good news.