The graphics of candlestick’s reveal much more powerful information about investor sentiment than any other technical charting. Today, the indexes traded positive again. The uptrend started with a very strong buy signal in the Dow, the best friend signal. Although today’s trading continued positive, the shooting star signal after gapping up on today’s open reveals the potential of a reversal/profit-taking level. Additionally, it is not unusual to see price movement, after breaching a potential resistance level, come back and test it to see if it will act as support. A lower open in the markets tomorrow would provide a high probability pullback to the 50 day moving average in both the Dow and the S&P 500. This would not necessarily indicate any major change of the current market uptrend but would be a high probability set up for some profit-taking to occur.
As the market continues higher, individual candlestick signal and patterns produce consistent profitable results. Not only are the results profitable, but the magnitude of the profits identified in candlestick patterns produce much stronger profit results. This is greatly beneficial to candlestick investors that recognize the reoccurring pattern setups that occur in human nature. Because candlestick signals and patterns create high probability trades set ups, it is not unusual to have a vast majority of a portfolio positioning working in the correct direction. This is not based upon any great stock picking ability, it is merely identifying how prices move based upon human nature.
We will conduct a “Members Only” chat session tonight at 8:00 pm EST.
Good Investing,
The Candlestick Forum Team
