The visual graphics of candlestick analysis allow investors to much more accurately assess where markets may be continuing an uptrend or getting ready to top out. This is evident in the Dow with the indecisive candlestick signals, a shooting star signal and a Doji occurring in the overbought area. Additionally, it merely takes visual analysis to recognize this indecisive trading, potentially a reversal in the trend, is occurring at the exact same levels the markets topped out about a month and a half ago. The nature of each candlestick signal allows for the analysis of what type of investor sentiment is occurring at observable potential reversal areas. Is the market ready to top out? The alert becomes much more apparent when recognizing where indecisive trading is occurring.
Having the visual ability to analyze whether the market is still capable of additional uptrend or if it’s about ready to pull back as a reversal or a profit-taking area, allows for the appropriate trade positioning in the portfolio. Any signs of weakness in the markets in this area creates a trading strategy that dramatically improves profit probabilities. If the market appears to be ready to back off, any new positions would be more oriented toward shorting. It would also create the analyzing of existing long positions with much more scrutiny, be in ready to take profits on signs of reversal signals. When these market conditions exist, the candlestick investor has a great advantage of being able to scan for the most profitable trades, whether bullish or bearish. Keep in mind, prices do not move based upon fundamentals, prices move based upon the perception of fundamentals. This is clearly identified using candlestick analysis.
We will conduct a “Members Only” chat session tonight at 8:00 pm EST.
Good Investing,
The Candlestick Forum Team
