The market indexes continuing to trade above the T line allow for identifying some very powerful candlestick patterns. The bobble breakout is producing excellent trade set ups. The bobble breakout is merely a J-hook pattern with a much more defined price move, a failure initially at a resistance level, such as the 50 day moving average or the 200 day moving average, followed by a pullback usually to the T line, then coming back up through the resistance level. If you took the resistance level off the chart, you would still have a J-hook pattern. Our recommendation last week on NUAN bobble breakout resulted in good profits today. Did we know they were going to be bought out by Microsoft? Definitely not, but the bobble breakout revealed investors were buying the stock. Always the rhetorical question! Do all candlestick patterns result in big price moves? No, but the probabilities of being in a big price move is dramatically improved by knowing what investor sentiment does as far as creating reoccurring patterns.
The current market trend is not demonstrating any major change of investor sentiment, implying the uptrend remains in progress. This market environment makes candlestick pattern breakouts much more prevalent. The T line is the ultimate trend indicator when used in conjunction with candlestick signals and patterns. This combination dramatically improves the probabilities of being in and maintaining profitable trades
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Good investing,
The Candlestick Forum team
