Accurate trend analysis is enhanced by knowing the actual candlestick signals. Although the indexes produced a joyous trading day on Monday, it was not a candlestick reversal signal. This is very important for accurate trend analysis. A bullish trading day does not necessarily mean the bulls are taking control. If Monday’s trading had been a bullish signal, logic tells us that the Japanese rice traders, with 400 years of observations, would have identified it and described why it was a reversal signal. Because it was not recognized as a reversal signal, the inference has to be that it is not a change of investor sentiment. Otherwise, the Japanese rice traders would have indicated the relevance of that type of formation. As the markets illustrated, the effects of Powells’ comments are now sinking in. He is trying to create a slowdown in the economy. This does not make for good bullish trade setups. Another strong indicator of investor sentiment is when simple candlestick scanning techniques reveal much better short trades than long trades, it can be implied that the bears have taken control. However, as illustrated in the CARG chart, a recognized candlestick pattern still has the prospects of producing good profits in a direction that might be opposite of what the overall market trend is performing. Join us Saturday, December 17 for a full day training on recognizing, understanding, and applying successful trading strategies utilizing candlestick patterns.
Chat session tonight at 8 PM ET. Click here to register.
Good Investing,
Stephen Bigalow
