Is there a new dynamic in this market? Investors have many perceptions about what to do when a trend/price makes new highs. Many investors will decide to take profits. Why? Because prices are a new highs! Candlestick analysis makes a more logical evaluation. Over the past couple weeks of trading, when the markets finally broke out into new high territory, candlestick patterns provided a much different perspective. The movement of the markets into new high territory was based upon a J-hook pattern breaking up through the resistance level of the past 18 months. The J-hook pattern revealed a much more logical assessment of what was occurring in investor sentiment. The results of a J-hook pattern wave three can be easily calculated. It is going to be approximately the same magnitude as wave one of a J-hook pattern. The fact that the markets broke out into new territory based upon a recognizable pattern was more solid evidence that the buying was not a spike breakout but more calculated buying. This provides much stronger evidence that trading in new high territory was calculated, not emotional. The market uptrend, illustrated with candlestick patterns, may be showing a long-term trend, wave three, starting for an extensive bullish move.
The current trend of the market continues to utilize the T-line as a support level. Although the markets have broken out into new high territory, candlestick trend evaluations can be applied to the daily trading of the markets. The T-line, acting as a support level, reveals bullish sentiment is still in progress. Although the trend of the market itself is not aggressively bullish, the lack of any selling pressure allows strong individual candlestick stock charts to continue profitable trading. Bobble breakout’s are producing excellent profits as seen in the Micron trade. A bobble breakout is easily entered upon simple visual confirmation. WDC is in the process of forming the same bobble breakout potential. The advantage of utilizing candlestick patterns is twofold. First it shows the exact entry points and secondly, the results of a pattern breakout usually produces much greater profitability than merely uptrending stocks during a market uptrend.
We will conduct a “Members Only” chat session tonight at 8:00 pm EST.
Good Investing,
The Candlestick Forum Team
