Candlestick analysis provides a high probability trading platform when utilizing the information built into each signal and pattern with confirming indicators. Friday, after a potential reversal signal in the indexes, the uptrend was in the process of confirming but for one final indicator, the T-line. After trading above the T-line most of the day, the closing levels of Friday brought the indexes back down below the T-line. This caused a major question about the uptrend, due to the T line rule. The T-line rule merely states that a downtrend has reversed based upon a candlestick buy signal and a close above the T-line. When the indexes did not close above the T line on Friday, a very simple assumption was created. The uptrend was still in question. The probabilities of the indexes closing below the T-line provides a logical strategy for the candlestick investor. Short positions should not be closed out until the final confirmation, the market indexes closing above the T-line.
The indexes forming a Doji going into the close of Friday, prepared candlestick investors to be ready to short positions on a lower open Monday. A lower open would also indicate the uptrend was not in progress, failing at the T line area. Knowing the direction of the overall market based upon how the premarket futures indicate the market will open after a candlestick signal keeps investors from entering positions that will not be confirming, such as long positions in today’s trading, and directing them to short positions that are confirming. This provides a constant common sense strategy to allow investors to enter appropriate trades and keep them from getting into trades that are not confirming.
We will conduct a “Members Only” chat session tonight at 8:00 pm EST.
May 20th Market Direction
Candlestick analysis provides a high probability trading platform when utilizing the information built into each signal and pattern with confirming indicators. Friday, after a potential reversal signal in the indexes, the uptrend was in the process of confirming but for one final indicator, the T-line. After trading above the T-line most of the day, the closing levels of Friday brought the indexes back down below the T-line. This caused a major question about the uptrend, due to the T line rule. The T-line rule merely states that a downtrend has reversed based upon a candlestick buy signal and a close above the T-line. When the indexes did not close above the T line on Friday, a very simple assumption was created. The uptrend was still in question. The probabilities of the indexes closing below the T-line provides a logical strategy for the candlestick investor. Short positions should not be closed out until the final confirmation, the market indexes closing above the T-line.
The indexes forming a Doji going into the close of Friday, prepared candlestick investors to be ready to short positions on a lower open Monday. A lower open would also indicate the uptrend was not in progress, failing at the T line area. Knowing the direction of the overall market based upon how the premarket futures indicate the market will open after a candlestick signal keeps investors from entering positions that will not be confirming, such as long positions in today’s trading, and directing them to short positions that are confirming. This provides a constant common sense strategy to allow investors to enter appropriate trades and keep them from getting into trades that are not confirming.
We will conduct a “Members Only” chat session tonight at 8:00 pm EST.
Good Investing,
The Candlestick Forum Team