Archives for October 2019

The markets continue to trade in the sideways wedge formation but with a current upward bias. Today’s positive trading in the Dow brought the hard selling of Friday backup above the T-line. But more bullish credibility was seen in the transportation index trading up strong while at the same time the NASDAQ and the S&P 500 were showing good strength after bouncing up off the T-line area. Trading in the middle of the wedge formation provides the prospects of some sideways, noncommittal trend direction. However, as long as the markets are not showing any dramatic selling, individual candlestick chart patterns will continue to demonstrate the direction of their movement based upon the bullish charts staying above the T-line and the bearish charts staying below the T-line. Currently, there are numerous J-hook patterns and frypan bottom patterns that are producing consistent trends.

Candlestick patterns are created by the build up of investor sentiment. The build up of investor sentiment in a particular stock price overrides the sentiment demonstrated by the general market indexes. That evaluation essentially produces a favorable trade for the candlestick investor. The lack of any major affect of the overall market indexes allows for investor sentiment to continue a price move in individual stock charts. This provides a much more accurate evaluation for each individual stock chart/sector. Simple candlestick scanning techniques reveals which sectors are gaining the most strength during an uptrend or the most bearish sentiment, allowing for both long and short positions to be profitable when the markets in a sideways trading mode. Currently, good profits are being made in shipping stocks. The weed stocks have produced good short positions. The graphics the candlestick charts allow investors to pinpoint the most profitable trade set ups.

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Good Investing,

The Candlestick Forum Team

The continued uptrend of the markets are still a result of the bullish flutter kicker of last week. The strength of that signal allows the candlestick investor to anticipate that the top of the wedge formation is still the likely target. That allows for the expectation of additional upside for at least the next day or two. The candlestick investor also has the advantage of being able to recognize what is occurring in investor sentiment once a major resistance level is hit. Indecisive trading at that level, such as Doji’s or shooting stars, indicate a much higher probability that it is time to take profits at those levels. A breakthrough of the resistance level with a good solid candle indicates the lack of any concern for that resistance level anymore, implying more upside. Because each candlestick signal and pattern produce expected results, a trend is much more easily analyzed knowing what the nature of each signal or pattern represents.

Utilizing the information built into a pattern produces much higher probabilities of participating in a breakout price move at the appropriate time. As illustrated in our recommendation on WLH, the gap up through the resistance level confirmed the frypan bottom breakout. Being able to visually recognize today’s trading was an indecisive/Doji type day produces an extremely high probability profitable trade entry based upon a positive open tomorrow. A positive open, utilizing the Doji rule, would produce a high probability of more upside. This would create a bullish Doji sandwich breakout. When analyzing where the breakout should occur and then seeing a strong candlestick signal that would confirm a bullish breakout, the candlestick investor will not only have high probabilities of a correct trade but the additional benefit of an extremely strong price move. Combining candlestick signals with candlestick patterns produces the opportunity to participate in huge price movements based upon the results of investor sentiment.

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Good Investing,

The Candlestick Forum Team

Last week, the bullish flutter kicker signal produced very strong evidence the Bulls were stepping back in with great force. This indicated the sideways wedge formation in the indexes was still intact. That evaluation provides a strong expectation for establishing or maintaining positions in the portfolio. Investor sentiment was revealing a lack of major bullish pressure as well as a lack of a major bearish pressure in the overall market trend. This makes the analysis of each individual stock chart the most predominant factor. The lack of any major trend movement reduces the prospects that uptrending bullish candlestick patterns will be reversed due to any strong market selling. Short positions have the same results, downtrending stock positions can be maintained with the lack of any significant bullish pressure in the markets. Simple candlestick scanning techniques reveal shipping stocks as a strong bullish sector and the weed stocks are still downtrending, good short positions.

When the market indexes are in a sideways mode, the candlestick investor has a great advantage of being able to analyze which stock charts are producing pattern setups for identifying the potential of big breakout price moves. A candlestick pattern, moving up to a observable resistance level, produces an extremely high probability of a correct trade result. But more so, this set up has the prospects of producing excessive profit movements. Because human nature works the same way time after time, it produces a great advantage for the candlestick investor that understands why eight pattern is being created. A frypan bottom pattern coming up to a resistance level, as illustrated in the NVDA chart, produces an expectation of a strong breakout if that resistance level is breached. Numerous candlestick patterns, in conjunction with a candlestick signal at a breakout level dramatically improves the probabilities of being in a very strong price move.

We will conduct a “Members Only” chat session tonight at 8:00 pm EST.

Good Investing,

The Candlestick Forum Team