Archives for February 2023

When you understand candlestick psychology, you gain trading perspectives equivalent to somebody trading for 50 years. Candlestick psychology is merely common sense built into a graphic depiction. When do most people buy? They buy exuberantly at the top! When do most people sell? They panic sell at the bottom! This allows the candlestick investor to have common sense entry and exit strategies for maximizing profit potential. As illustrated in the CVNA chart today, a gap up in the overbought condition becomes an immediate alert to set profit-taking stocks at levels it should not come back down through, such as the open. If you have problems knowing when to enter a trade, exit a trade, or set your stops, everything built into a candlestick chart is pure common sense. It allows the candlestick investor to develop strategies to take profits or close out positions working on a common sense basis versus emotional trading decisions. Witnessing the NASDAQ and the S&P 500 gapping up in the overbought conditions today provided the alert to be prepared to start taking profits in individual stock charts that also gapped up in the overbought condition. Numerous stocks missed their earnings expectations today, adding to the probability the markets may be selling off after today’s gap up.

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Good Investing,

Stephen Bigalow