The candlestick investor has a comforting benefit when putting on a trade, using candlestick signals. The probability of a profitable trade is greatly in their favor. Probabilities! That is an important definition. Candlestick signals and patterns produce high probability results based on hundreds of years of historical results. Not only are the probabilities of being in a correct direction, but the magnitude of the strong signals and patterns produce much greater profitability than merely up trending stocks during an up-trending market. Common sense logic produces a profitable trading strategy for candlestick investors. The signals and patterns show when a high probability trades set up is in progress and the signals and patterns also can be visually analyzed to see when that signal or pattern is not producing. This allows for the proverbial cutting your losses short and letting your profits run.
Convergence analysis is the accumulation of multiple buy formations, adding credibility to a buying decision. This is illustrated in today’s trading of MDT. A gap up through the 200 day moving average produced a message signal. The gap up through the 200 day moving average also produced a bobble breakout. Yesterday’s trading illustrated the previous day’s message, profit-taking was over. Today’s positive trading illustrated the strength created by the message signal was continuing. Add the fact that MDT broke out through the 200 day moving average also confirmed a breakout of a large fry pan bottom pattern. A steady market trend, not producing any sell indications, produces the environment that allows investor sentiment to enhance the bullish pattern breakouts.
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Good investing,
The Candlestick Forum team
