January 16th Market Wrap-Up

Where to most people buy? The Japanese rice traders profess that most investors buy exuberantly at the top. Fortunately, this can be illustrated using candlestick charts. It can be seen that during the steady uptrend, the indexes continuing to stay above the T-line, profit-taking is likely to occur when the indexes move a little bit too far from the T-line. Today’s bullish trading provided an alert. The indexes gapped up in traded higher today. The gap up of a price move in the overbought condition alerts investors of the possibility of exuberance starting to come into the trend. This does not necessarily mean a major reversal of the trend, merely the possibility of profit-taking that might move the trading back down to the bottom of the trend channel, a few days of profit-taking. After a very strong bullish week in the market, profit-taking can be anticipated before a three day weekend. Is this time to close out long positions? Candlestick analysis provides the benefit of witnessing reversal signals, producing the prospects of specific stock moves getting ready to reverse, or the lack of sell signals even during a market pullback implies specific stock trends are still in progress. The candlestick investor gains a huge advantage of knowing when a price move has reversed versus merely a pullback during an uptrend.

The J-Hook pattern has provided some very profitable trades set ups over the past few trading days. The J-Hook pattern produces a high probability entry into a stock price that has been moving up over the past few weeks or months. The probabilities are greatly enhanced when witnessing a J-Hook pattern, created by profit-taking, followed by new buying, that it becomes a good time to be entering an up trending stock price. The common sense built into candlestick analysis provides investors with much better entry strategies than merely buying up trending stocks during an uptrend. Maintaining up trending positions is much more comfortable when using the T-line as your trend indicator. This keeps investors from being whipsawed out of profitable positions.

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January 13th Market Direction

Friday, the market indexes created sell signals that could have potentially seen follow-through Today. The sell signals occurred at the top of the trend channel implying at least a selloff back to the bottom of the trend channel. This would have been an opportunity to take profits had the sell signals been confirmed with the market indexes opening lower Today. However, not only did the market indexes open positive but the NASDAQ in the S&P 500 closed above the open of Friday’s trading. That strength indicated there was no selling pressure on the markets. Knowing what should occur after a candlestick signal allows the candlestick investor to move or not move in regards to closing positions and/or taking profits. The accuracy for analyzing a price trend is dramatically improved by understanding what should occur after candlestick signals. The lack of bearish confirmation in Today’s trading allowed for maintaining bullish positions that had not demonstrated sell signals and a close below the T-line. Having the ability to accurately assess the general market trend allows investors to maintain and/or establish high probability trades set ups in the portfolio. Stocks such as AAPL, AMZN , TSLA, NVDA, the ones that everybody is watching, continuing to move in bullish directions is also additional confirmation that the bullish sentiment continues to control the market trends.

The candlestick patterns continue to provide high profit trades set ups, producing much stronger bullish or bearish trend movement versus merely up trending stocks during an uptrend. The fry pan bottom pattern is creating very strong price moves. Understanding the results expected from a pattern produces better probabilities of being in the correct direction of a trade as well as being exposed to price movements that are going to move with much greater magnitude. The expected results of candlestick signals and patterns create a trading platform that puts investors into high probability results a vast majority of the time.

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January 6th Market Direction

Iranian retaliation! Impeachment! Crude oil spike! Wouldn’t we think each one of these situations could devastate the market uptrend? The major advantage of utilizing the graphics of candlestick charts allows in investor to immediately analyze what everybody thinks the results of outside influences would do to the overall market trend. Friday the Dow was down 230 points, bearish? Candlestick analysis provided two analytical factors that revealed very sentiment may not be taking control. Buying could be detected when witnessing the candlestick formation was showing bullish sentiment, buying occurring after prices opened. Although the Dow closed lower, it was trading above where it opened, indicating the bulls had not left the market. Adding the additional factor that the indexes closed above the T line also provided the statistical probabilities that the bullish trend was still in progress. The same scenario can be applied to today’s trading. The indexes opened much lower but showed buying after the open, to the point where the indexes actually closed above the close of Friday. Once again, today’s close above the T line continues to produce the high probability expectation the uptrend is still in progress. The visual development of individual candlestick formations during an uptrend dramatically improves the prospects of not getting whipsawed out of positions.

The lower open in the indexes also produce the same results in numerous stock prices. Any time prices can be seen to have supported at the T line and then started moving higher creates much greater probabilities the bulls are still in control of the trend. When the big stocks such as AAPL, NFLX, AMZN, NVDA all reveal bullish candlestick formations, this is an additional factor to confirm bullish sentiment is still the overriding market direction. Although the overall market started out much lower today, pattern set ups such as the J Hook pattern provided very easy entry strategies. Our recommendation on NINE was based upon a J Hook pattern set up in an oil sector stock. NINE finished up 22% for the day. Do all pattern set ups produce huge gains? Definitely not, but a major attribute of candlestick analysis is that identifying the patterns that have been created by human nature for centuries allows investors to be in situations where the probabilities of being in a big price move is greatly in their favor.

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January 2nd Market Direction

The first days of trading in a new year usually reflect the investor sentiment of the big-money. Sometimes you see specific sectors that come out strong in the first few days/weeks of a new year because that was the evaluation over the holidays that was going to be the sectors most beneficial in the current economic environment. This is usually indicated by strong chart patterns in those stocks of those sectors. This year, the candlestick charts indicated a different criteria. The T-line had been acting as an effective uptrend support level over the past four weeks. The last few days of training of 2019 showed some selling but without one major candlestick technical factor, the markets cannot close below the T-line. That allowed for the anticipation of what investor sentiment was going to indicate as far as buying/selling going into the new year. Obviously, a negative open would have indicated the selling was still in progress because of the trading below the T-line. As a candlestick investor, the logic is very simple. A positive open would indicate the T-line was still acting as a support level. The magnitude of the positive trading in the premarket futures indicated very quickly the bulls were still in control. This allowed for adding long positions immediately and continuing to hold long positions in the portfolio that were continuing to trade above the T-line. Putting these simple candlestick analytical factors together allows investors to know what to do with portfolio positioning with a high degree of accuracy.

The strength of the premarket futures created high probability entry strategies using candlestick patterns. FTCH had been recommended early in the week based upon a fry pan bottom breakout potential. Charts demonstrating fry pan bottom breakouts such as MAVR and AAPL provide huge investment advantages. The results are usually very predictable as far as direction, even though on any given day the overall market direction may be negative, a fry pan bottom pattern is the buildup of investor sentiment which does not consider the overall market trend has a relevant factor. Additionally, the result of the investor sentiment buildup produces extremely large profits when the pattern breaks out as investor sentiment becomes very confident. Exploiting the information built into candlestick patterns is merely identifying price movements that have resulted in high probability/high profit trade results for hundreds of years. Prices do not move based upon fundamentals, prices move based upon the perception of fundamentals. This is exactly how candlestick signals and patterns are created. Nobody knows what this coming year will produce as far as market results. However, utilizing the information built into candlestick charts allows an investor to much more accurately analyze the overall market trend and then extrapolating that into analyzing the price movement of each individual stock chart.

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December 30th Market Direction

Today’s selling did not indicate any major change of investor sentiment. The indexes closed at or above the T-line, not reflecting any major change of investor sentiment. This is probably profit-taking and shifting of portfolios before the end of the year. Bullish trending stocks remained an uptrend. The stocks that showed sell signals and closes below the T-line should have been closed out, for two reasons. First, a close below the T-line dramatically improves the probabilities of prices heading lower. Secondly, any stock positions that were showing indecisive trading provided opportunities to convert those positions back to cash. A major advantage of candlestick analysis is recognizing what the big money evaluations were being made as far as anticipating which sectors were being analyzed as the strongest sectors going into the first quarter of the new year. This is easily identified utilizing the stocks signals and patterns that are showing the best strength in specific sectors the first few trading days of the new year. This allows the candlestick investor to immediately produce good profits going into 2020.. Although the markets traded relatively sideways for the past two years, the clearly defined tops and bottoms of interim trends allowed for consistent profitability.

The results of patterns produce not only high probability results but extremely profitable returns. This was illustrated today in our recent recommendation on MAXR, producing a fry pan bottom that broke out today. The major advantage of utilizing candlestick patterns is based upon the expected results of what investor sentiment buildup will produce on a breakout of a specific pattern. LK is also in the process of a fry pan bottom breakout potential. Because investor sentiment reacts the same way time after time, century after century, utilizing the expected results of a pattern puts in investor in high probability trades. The patterns also allow for entering trades right at the optimal time for a breakout to occur. This produces a very simple trading strategy. The expected results of a breakout should produce big profits immediately. The lack of a breakout allows for closing out a trade very quickly and moving on to the next high probability trades set up

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December 26th Market Wrap-Up

Although the volume at holiday time is usually much lower than normal, the underlying factor of the existing volume is that it will still show what investor sentiment is revealing from investors that are participating in the slow volume markets. Currently, it is evident that there is not any change of investor sentiment, slow bullish buying continues the uptrend. Obviously the week of the holiday will not have the full gamut of investors. The candlestick investor can dramatically improve profitability by accurately evaluating what the overall market trend is going to do. We saw the breakout into new territory after consolidation for the last two years. This would imply wave three was in progress. The continuation of wave three can be refined by using the T line. The whole aspect of candlestick analysis is merely common sense applications of what investor sentiment has done over and over in the past. The signals, the patterns, the T line, and the other major moving averages provide a trading platform that results in extremely high probability/high profit trades.

This is usually a good week to not do anything aggressive, maintain positions that have not shown reversals and most importantly assess your results of this past year. What did you do correctly, what seem to be the most comfortable type of trading for you, what did you do that consistently produced negative results for your trading? Analyze which candlestick signals and patterns that were the most profitable results for you this past year. Trading is like any other activity. You have to constantly evaluate what you are doing right and what you have been doing wrong. Candlestick signals and patterns produce high probability results. That is why they are still in effect today. Human nature works the same way time after time. Successful investing is utilizing information that will be applied to trades that have high probability results. When you learn to identify the patterns and understand why those patterns are created, you gain control of your own investment future.
got it

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December 23rd Market Direction

Although holiday weeks usually see trading with much lower volume, the candlestick charts are still relevant for demonstrating investor sentiment of the trading that is being executed. Today’s positive trading continues to illustrate bullish sentiment is in control. This becomes much more clearly illustrated based upon the uptrend remaining above the T line. Currently there is no signs of exuberance in in the market trend. The overall trend analysis illustrates a wave three coming out of the sideways consolidation stage of the markets over the past few months. Wave three should have an up trending bias going into the end of the year based upon the magnitude of wave one prior to the consolidation. Investor sentiment will usually continue in existing trend until there is a definite candlestick reversal signal or exuberance starts coming into the market. The exuberance illustrates everybody is confident that the markets are going higher. That becomes the time to watch for the smart money starting to take profits.

The current study uptrend of the market continues to produce high profit candlestick breakout trades. When the market is in a steady uptrend, the bigger profit trades will result from candlestick pattern breakouts. The fry pan bottom pattern and the J hook patterns continue
to produce high probability trades. Fry pan bottom patterns at breakout levels such as a major moving average as illustrated in the TWTR chart produces a high probability result as well as a high profit result. The buildup of investor sentiment, the pattern, allows the candlestick investor to be prepared to buy at the ultimate entry point with a high degree of expected results. The utilization of candlestick signals, which is the graphic depiction of human nature, has been demonstrated over hundreds of years as being the most reliable indication of price movements.

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December 19th Market Wrap-Up

Impeachment! Political squabbling! What does this do to the markets? With candlestick analysis, you do not have to be concerned. Candlestick signals and patterns are the direct result of investor sentiment decisions. They are the actual results of investors buying and selling decisions. Candlestick charts cut through all the rhetoric and concentrates on what investors are actually doing, whether buying or selling. The wave pattern of the markets is much more clearly evident when using candlestick formations. After two months of consolidation, the Dow is now currently in the next wave to the upside. How long can this move be anticipated. A logical measurement can be based upon the up move that started in early October. Does this mean the next wave will be the same magnitude? That is a viable expectation but what is the most important indicators to show when an up trend has come to an end? A candlestick sell signal and a close below the T-line. Until that combination occurs, investors can be aggressive and confident that up trending candlestick price patterns will still produce inordinate profits.

There are numerous signals and patterns that amplify the profitability as well as the probability of being incorrect trades at the correct time. The results of these pattern breakouts produce much greater profitability than merely up trending stocks during an up trend. Witnessing the results of price patterns, especially in the new big-name stocks such as TSLA, NVDA, and NFLX not only produces strong profit trades but it adds additional credibility to the fact that the bullish sentiment of the markets are still in progress. Candlestick charts are merely the common sense reoccurring investment decision-making put into graphic depictions. Candlestick charts allow for the exact timing of getting in strong price moves.

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December 16th Market Direction

The Dow was attempting to form a bullish Doji sandwich breakout today. It closed at the lower end of its trading range but still up 100 points on the day, this might cause a little bit of consternation but the NASDAQ in the S&P 500 after opening much higher continued to trade toward the top and of there trading range. The true definition of a bullish market is one that continues to move higher no matter what the bad news might be i.e. impeachment. The strength of today’s trading provides the prospects of another wave to the upside after the recent consolidation in the markets. This is allowing for very strong price moves at breakout levels. Breakout patterns such as AAPL and NVDA not only reveal more upside potential in each individual stock chart, but confirms the overall investor sentiment in the markets remain strong. When the market analysis reveals an up trending bias, the candlestick investor has a huge advantage by being able to identify which chart patterns are going to produce strong breakout moves. Continuing to cultivate the strongest chart patterns into the portfolio dramatically improves the overall profitability of the whole portfolio. When most investors have both profitable positions and losing positions in a portfolio, hoping the losing positions will eventually start moving up, the candlestick investor has a huge advantage by being able to constantly position funds into high profit expectation positions.



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December 12th Market Wrap-Up

The evidence of bullish sentiment was reinforced by the positive trading today that did not let the indexes trade back below the T-line. If you do your own research, you will find the extremely accurate results of a trend upon seeing a candlestick buy signal and a close above the T-line producing excellent probabilities of an uptrend remaining in progress until you see a candlestick sell signal and a close back below the T-line. Last week, the indexes gapped up above the T-line. The Dow consolidated back to the T line over the next few days. Today’s positive trading revealed the Dow could not close below the T-line. Candlestick signals are the graphic depiction of investor sentiment. The T line is a natural/Fibonacci support and resistance level of human nature. When you combine the two, you have an extremely high probability trend indicator. A simple assessment can be made when the indexes are trading above the T line, the uptrend is still in progress.The strength of today’s trading is compounded by the fact that profit-taking occurred during the middle part of the day followed by buying coming back into the close. The uptrend remains in progress, the T line is verified that fact. Continue to stay predominantly long. Note that there are numerous highs of the day occurring in individual stocks going into the close. Investor sentiment is not hard to evaluate based upon the candlestick formations.

PACB can still be bought on positive trading tomorrow, Doji sandwich.

SFIX did not execute today but can still be bought on positive trading tomorrow, frypan bottom breakout confirmation.

DAN stay long, good frypan bottom breakout.

The frypan bottom patterns and the J-hook patterns, two of the most recognizable candlestick patterns, are producing extremely good profits.TSLA has been moving up steadily confirming a frypan bottom pattern, even though the overall market trend has been choppy during that timeframe. Numerous candlestick charts have been producing strong profits during this slow uptrending market coming back up above the T line. The major advantage of utilizing candlestick patterns is twofold. First it produces high probabilities of being in the correct direction and secondly, the magnitude of the move is usually extremely strong profit trades, much stronger than merely uptrending stocks during an uptrend. Will trade talks with China get confirmed? It doesn’t matter! The investor sentiment perceives the future looking better for investments based upon anticipated results as well as all the other factors investors make when making buying or selling decisions. Chat session tonight at 8 PM ET.

Chat session tonight at 8 PM ET. Click here to register.

Good Investing,

The Candlestick Forum Team

 

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