Pattern breakouts, which are easily identified using candlestick analysis, provide two significant features. First, they produce high probability trend expectations. Secondly, the new price move is usually going to be inordinately strong. Another significant aspect is that candlestick patterns will continue to move in the direction of the pattern expectation in spite of the overall market direction. They are enhanced when moving in the same direction as the overall market. Currently, the market indexes are showing weakness/bearishness, with all the indexes trading below the T-line except for the transportation index. This continues to make the T-line the most critical trend indicator. Once you identify the strong candlestick signals and patterns, you gain a massive advantage of knowing what’s occurring in investor sentiment. The market indexes are revealing bearish sentiment making scanning for short positions a higher priority.
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Good Investing,
Stephen Bigalow
