Archives for September 2020

The T-line is a very accurate trend indicator when used in conjunction with candlestick analysis. A close below the T-line after a candlestick sell signal produces extremely strong probabilities the downtrend will remain in progress, until you see a candlestick buy signal and a close back up above the T-line. This rule kept candlestick investors from investing heavily to the long side yesterday when the buying came back into the market indexes, demonstrating good strength. The strength did not close the indexes above the T-line. The combination of candlestick signals and patterns in conjunction with the use of the T-line dramatically improves the probabilities of remaining in a trend, keeping investors from getting whipsawed out of a profitable position too early. The fact that candlestick signals and patterns are the graphic depiction of investor sentiment and the T-line acts as a natural support and resistance level of human nature, combining these two visual aspects produces extremely high probability trade results.

Our recommendations in TUP and ANF continue to act well because of the fry pan bottom expectations. Candlestick patterns will continue to produce good profits when the market in general turns the opposite direction because of the buildup of investor sentiment that was creating that pattern. The J-hook pattern has the same characteristics as illustrated in our recent recommendation of HIBB. These trades illustrate the fact that bullish profits can still be made when the markets are trading lower. However, going with the flow is enhanced with the visual ability to analyze the overall direction of the market. Identifying the strong sell signals when the market is heading lower dramatically improves the probabilities of making good profits in short positions. This is merely simple candlestick analysis logic.

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

Good investing,

The Candlestick Forum team

Candlestick investors have a distinct advantage. The graphics of candlesticks allows an investor to take profits at the appropriate time, not always having a sell signal occur. As illustrated in the market indexes last week, the gap up in the overbought condition was an alert to start taking profits. Where do most people buy? Exuberantly at the top! This is constantly professed by the Japanese rice traders that had studied the graphics of human nature for hundreds of years. Join us tonight with a demonstration of the indicators that human nature produces for when it’s time to take profits.

Another major benefit of candlestick patterns is not only the direction and magnitude of a price trend, but also the residue strength that continues to keep that pattern from selling off if/when there is a strong market reversal. This is illustrated in our recommendation on TUP and SHLL, fry pan bottom continuation patterns. Our recommendation on ANF was based upon a bobble breakout/J Hook pattern which also will continue to show strength in spite of the overall market trend. The underlying factor of candlestick analysis is that it puts investment funds in the appropriate trades at the appropriate time. This dramatically improves the probabilities of producing profits in spite of the overall market direction

Chat session tonight at 8 PM ET.

Good investing,

The Candlestick Forum team.