The candlestick charts would have put you in good short trades over the past few weeks. Yesterday’s bullish trading in the Dow, breaking out into new high territory, acted as an alert. It had the possibility of being the last gasp buying in an uptrend. Although the Dow was trading above the T line, the NASDAQ and the S&P 500 had been trading below the T line. Our chat room morning comment warning was to be careful of strong selling in the Dow, after yesterday’s strong breakout buying at the top. Today’s selling gave back all of yesterday’s bullish trading and then some in all the indexes. This is a very powerful candlestick reversal indication. The NASDAQ and the S&P 500 implemented the strategy of having both long and short positions in the portfolio. It was evident there were as many more good short trades developing than long trades. This allows for a very simple trading strategy for the past few weeks. Add short positions to the portfolio and start closing out long positions that were showing sell signals and/or weakness in overbought areas.https://youtu.be/x7oSqYFpRN8
Candlestick analysis alerts an investor of changes of investor sentiment. Analyzing what the candlestick signals and patterns are revealing in the market indexes overcomes most investors bullish enthusiasm. Do what the charts are telling you is occurring in investor sentiment and you’ll have your trade positions in the correct direction an extremely high percentage of the time. This is based upon a very simple premise. The Japanese rice traders have identified when investor sentiment is changing. Use this to your advantage. Join us tonight in our chat session identifying the common sense applications of stop losses utilizing candlestick analysis.
Chat session tonight at 8 PM ET. Click here to register.
Good investing,
The Candlestick Forum team
