August 19th Market Direction

The visual results of candlestick charts produce beneficial trade executions. This is due to to the expectation of what a price move should do with a high degree of probability after the appearance of a candlestick signal. The indexes produced MorningStar signals on Friday, positive trading after a Doji in the oversold areas. The Dow produce greater expectations when the MorningStar signal occurred right off the 200 day moving average. Knowing what to expect, based upon a candlestick reversal signal and its location in the oversold area, allows candlestick investors to move aggressively when the signals confirm. This produces the ability to move quickly based upon knowing what to expect as far as confirmation of a reversal signal. Witnessing the premarket futures showing a positive open today after the MorningStar signals in the indexes on Friday had the candlestick investor prepared to buy individual stock positions that were showing strong bullish confirmation immediately on the open.

Expecting confirmation of the indexes allows for taking advantage of chart patterns that are going to be confirming based upon the lack of any major change in the overall market indexes. Today ,NVDA gapped up on the open. Most investors are usually hesitant about buying into excessive price moves. However, knowing that a positive open would have created a bullish flutter kicker allows for very profitable trades by moving immediately on the confirmation of that signal set up. The same high probability analysis was applied to MU. When it opened positive, it not only was confirming the MorningStar signal off the T line, it was also demonstrating a J-hook pattern set up potential. This is what is considered 2 plus 2 analysis, witnessing what the individual signals are doing that are going to confirm a high profit pattern. This is not rocket science, this is merely identifying the same patterns that human nature provides century after century. Candlestick analysis is merely learning to identify what same human nature patterns will be forming. Because human nature works the same way time after time, candlestick analysis constantly puts investors in high probability trades set ups.

We will conduct a “Members Only” chat session tonight at 8:00 pm EST.

Good Investing,

The Candlestick Forum Team