February 10th Market Direction

Analyzing the overall market trend becomes much more accurate utilizing the combination of candlestick signals and the T-line. Profit-taking became much more probable after the Dow hit another all-time high on Thursday. Profit-taking was not anticipated because the markets hit all-time highs. Profit-taking was anticipated based upon witnessing a potential candlestick signal, a hanging man/dragonfly Doji in Thursday’s trading. The potential reversal signal had additional indication profit-taking was likely to occur. After the Dow had moved up over 1000 points in four days of trading, the trading had moved the Dow well away from the T-line. This made the anticipation of Friday’s trading very simple. The Doji rule indicates prices will move in the direction of how prices open after a Doji. The bearish candle formed on Friday indicated the probabilities of the Dow eventually testing the T-line to see if it was going to continue as support. As illustrated in today’s trading, the Dow basically opened at the T-line and moved positive. The bullish sentiment of the markets were also illustrated in the positive trading above the T-line in both the NASDAQ and S&P 500. The market trend analysis remain simple, as long as the indexes continue to trade above the T-line, the uptrend remains in progress.

Profit-taking during an uptrend makes the trend much more solid. It indicates the lack of exuberance in the markets. Having the ability to project continued strength in the market due to the lack of exuberance allows candlestick investors to take advantage of the high profit pattern breakouts. Numerous fry pan bottom patterns have produced consistent profits during this uptrend. More importantly, the profits created from candlestick patterns are usually much more excessive than mere up trending price moves during an uptrend.


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

Good Investing,

The Candlestick Forum Team