Today’s reversal in the market was expected. Candlestick analysis has a very simple indicator based upon the Japanese rice traders. If you see a gap up in the overbought conditions, start watching for selling. Today the NASDAQ gapped up and traded higher. The logical stop for candlestick investors is the open. Logic dictates that if the prices come back down through the gap up open, profit-taking is in progress. This was also illustrated in the big stocks, AMZN, NFLX, AAPL, TSLA, gapping up in the overbought conditions illustrated the enthusiastic buyers at the top. Today’s gap up in the market indexes was a good alert to take profits in positions that were showing excessive strength in the overbought area.
However, big profits can still be made by identifying the strong signals and patterns. The Biotech’s have been producing excellent profits over the past week. ALT has moved up nicely and showed a profit-taking sell signal in today’s trading. VXRT was identified early in today’s trading based upon the best friend gap up off the T-line, creating a methods rising signal as well as setting up a J-Hook pattern. Knowing what human nature does time after time allows the candlestick investor to take advantage of the potential big-price moves.
Chat session tonight at 8 PM ET.
Good investing,
The Candlestick Forum team.
