Candlestick charts not only reveal the immediate price movements based upon investor sentiment but candlestick charts also allow for a much more accurate evaluation of what investor sentiment is going to do in the near future. This is extremely valuable for these market conditions. The market indexes have moved into new high territory, all-time high territory. Will the markets go higher? A large percentage of investors rationalize that if the markets are at all-time highs, it is time to take profits. Candlestick charts reveal a completely different evaluation. A J-hook pattern was formed in the Dow right at the breakout area of new highs. Understanding the results of a J-hook pattern made it very clear that there was buying expectations based upon the J-hook pattern that indicated the recent highs were still going to have more upside. Analyzing investor sentiment based upon candlestick charts allows for logical analysis of a price trend, eliminating the ill rational emotional expectations. If a J-hook pattern reveals more upside through the breakout area, the longer-term charts can then be analyzed with much more accuracy. The Dow has moved sideways for the past 18 months. The current breakout of that resistance level indicates a high probability the next wave may be in progress, producing the potential of another strong upside market on the basis of the first wave prior to the 18 month consolidation.
Having a strong probability analysis of the overall markets allows for aggressively participating in the strong candlestick chart patterns. This allows for taking advantage of pattern breakouts such as frypan bottoms and J-hook patterns. Individual stocks can produce extremely strong profits with pattern breakouts that do not have the dampening a fact of selling indications in the general market. Adding all these elements together allows an investor to put positions together that have high probabilities of producing high profit trades. Remember, this is based upon one simple factor. Human emotions produce the most reliable chart pattern indicators in the world.
We will conduct a “Members Only” chat session tonight at 8:00 pm EST.
Good Investing,
The Candlestick Forum Team
