Archives for October 2020

Why should you have safety stops in place? Simple, when the market indexes are not showing any decisive trend, strength in one direction or the other, a simple Washington tweet or statement can dramatically move investor sentiment. The stimulus package still producing indecision. As you have seen in the morning and afternoon comments over the past couple of weeks, the analysis was that the uptrend was in progress as long as the market indexes continue to close above the T line. However, it was pointing out that the nature of the market trend showed a lot of indecisive trading, even though it was in a slow uptrend. Knowing what the nature of investor sentiment is during a trend is important. It illustrates the lack of any decisive bullish or bearish force. This leads to the possibility of dramatic changes of investor sentiment upon bullish or bearish influences. These market conditions make having safety stops in place more important. Getting stopped out of positions allows for reanalysis of the overall market trend as well as evaluating whether reentering a position, that was stopped out, is the best place to be reestablishing trades.

Candlestick patterns provide a safety factor. Patterns are set up due to a buildup of investor sentiment. This diminishes the importance of the overall market trend pertaining to that pattern price move. Investor sentiment is more in control. The J-hook patterns continue to show better probabilities of price moves continuing in the expected directions.LAKE, DOYU, EXAS, AVYA and ENPH
are all reviewing good J-hook patterns. But the bearish close below the T line in the market indexes also provide better opportunities in short positions, OSTK, FB, APD , and NVAX can be shorted on further weakness tomorrow. The weeds stocks, TLRY and CGC, can be bought on positive trading. That sector is showing good strength. These market conditions warrant having both long and short positions in the portfolio.

Chat session tonight at 8 PM ET.

Good investing,

The Candlestick Forum team.

Market consolidation or trend reversal? That question is much more easily assess using candlestick analysis charts. Today’s gap down open was further consolidation that had been expected from the analysis of the market indexes over the past few days. Monday demonstrated a gap up in the overbought condition, especially in the NASDAQ. This produces a high probability of exuberance. The Japanese rice traders advise getting ready for profit-taking when you see a gap up in the overbought area. What was the expected pullback? The T line becomes a logical area to watch to see whether prices would support at that level. Today’s trading, gapping down below the T line in the indexes, was either a major reversal or the end of the current consolidation. Candlestick charts provide a much more clear indication of whether it was merely the end of the consolidation. Note how the NASDAQ immediately started trading higher after the open. Additionally, flipping to the 10-minute chart would reveal bullish patterns be in created. Join us this weekend for a full two-day comprehensive training on how to apply the T-line to the analysis of candlestick signals and patterns to dramatically improve your profitability. This is information that will greatly improve your trend analysis for the rest of your life. Click here to join.

Knowing, with a high degree of probability, the direction of the overall market trend allows the candlestick investor to take advantage of high-profit candlestick patterns. There are numerous J-hook patterns setting up. Not only does this allow investors to be in the right direction at the right time, it also allows for the projection of the next price move, wave one and wave three being equivalent. FRTA, CVET, ALSN, ENPH, and DY are all strong examples of high probability J-hook pattern trades setups. Note how the T line greatly enhances the probabilities of recognizing the pattern set up. Take advantage of the information that has worked effectively for centuries. The most consistent price indicator is human nature.

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

Good investing,

The Candlestick Forum team.