Archives for April 2020

Profit-taking going into a three day weekend is not unexpected. However, the market indexes have not show anything that has currently changed the uptrend. Wave three of the J hook patterns make the 50 day moving average the likely target, but be aware of events over the weekend that might create either bullish or bearish implications for Monday morning.What allows you to be in the correct trades at the correct time? Recognizing candlestick reversal signals and patterns. If you listen to the news or analysts, you’re going to be wrong most of the time. If you look at candlestick charts and understand what the signals illustrate, you will be correct most of the time. This is what takes the emotions out of your investing. Currently the J Hook pattern remains in progress in the indexes. Assume the uptrend remains in progress as long as the indexes continue to trade above the T line. But also keep in mind, the market trends are still capable of whipsawing based upon news or events. Today’s trading illustrated a lack of movement from where the markets opened. Again, not unusual to see a Doji day before a three day weekend.

Specific sectors continue to act strong. The housing stocks as well as the mortgage stocks continue strong uptrends. Although the Russians and Saudi Arabians agreed on cutting production, crude oil prices eventually traded lower on the day. This is one of the major benefits of candlestick charts. They reflect what investor sentiment thinks about events or decisions. What would seem to be bullish for crude oil prices did not occur. That becomes a clear illustration that the level of cutback may not have been what the market was expecting. Candlestick analysis takes the responsibility of trying to analyze what might happen in the future based upon specific events and moves it over to analyzing what everybody else has decided about those events.

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The Candlestick Forum team.

The candlestick charts revealed another strong bullish signal today, the J Hook pattern. Two weeks ago the indexes produced a very powerful reversal signal on the candlestick charts, the McMuffin pattern. This pattern is created by a MorningStar signal, one of the 12 major candlestick reversal signals, followed by a Doji sandwich signal. Both of the signals imply investor sentiment has reversed and there’s going to be more upside. When you combine the two, it adds additional probabilities an uptrend is in progress. Today’s candlestick charts revealed the J Hook pattern. This adds credence to the McMuffin pattern. The combination of a McMuffin pattern followed by a J-hook pattern indicates that bullish sentiment is now taking control. Remember, the more talking head experts that predict a test of the lows, the higher the probability the uptrend has started.

Additional confirmation can be seen in some of the big stocks such as Apple, Amazon, Nvidia. When they are performing the same strong bullish candlestick charts, this indicates bullish sentiment. The underlying factor to identifying the bullish patterns is that it reveals that the fear factor that was causing the severe downtrend in the markets are dissipating. Today, there were dozens upon dozens of bullish reversals in individual candlestick charts. This allows the candlestick investor to cultivate the best trade potentials from a supply of strong chart patterns. This produces the prospect of placing investment funds in the best of the best reversals. Simple analysis applying confirming indicators, the strength of the signals and patterns, and the potential targets, provides the candlestick investor the opportunity to be participating in the most strongest price moves. These price patterns producing high probability results can be applied to all time frames. Join us in our training session for utilizing the patterns to produce high profit daytrading results. stephenbigalow.com/daytrading

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Good investing,

The Candlestick Forum team.

After a bearish Harami on Tuesday, and the markets gapping down below the T-line yesterday, produced higher probabilities that a downtrend was going to start again. However, today’s Bullish Engulfing Signal implied that the selling may not be as pronounced as expected. This makes tomorrow’s trend analysis relatively simple. With the indexes continuing to trade at or below the T-line, the probabilities remain that a downtrend is in progress. But with the bullish engulfing signal closing right at the T-line, a positive open in tomorrow’s trading would provide to relevant factors. The bullish engulfing signal was being confirmed and the trading was back up above the T-line, making a J-hook pattern set up. With the markets trading in an indecisive manner, the candlestick investor has a great advantage of being able to analyze much more accurately what is occurring in investor sentiment. Having the ability to anticipate the next trend movement allows for reorienting the bias/weight of the portfolio. A positive open would imply watching existing short positions to see if they need to be closed. A lower open would imply the T-line was still acting as a resistance level, long positions would need to be scrutinized more closely. When the markets are not moving in a definite direction, it is still feasible for having both long and short positions in the portfolio.

Identifying specific sectors becomes much easier when witnessing strong bullish or bearish signals. Today saw the oil companies picking up strength. The candlestick crude oil chart revealed a strong bounce to the upside. Witnessing numerous stocks having strong signals in the same sector is a better indication the sector is being bought across-the-board by many institutions. This makes individual stock charts in that sector a much higher probability trade. You are not witnessing a renegade bullish signal in a sector that is down trending. The probabilities are much greater that you may be buying a position in a sector that is picking up strength. This was evident in our recent recommendations in HAL and IMO. Bearish charts still revealed maintaining short positions in the cruise lines and numerous retail stocks. Having the ability to identify which sectors have the strongest bullish or bearish charts is enhanced with the use of the T line. Because candlestick analysis is the graphic depiction of human nature, the signals work very consistently. The probabilities are greatly improved when using the natural support and resistance level of the T line. Until there is a definite trend indication, maintain both long and short positions in the portfolio.

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Good investing,

The Candlestick Forum team.