Identifying breakouts is much more effective when utilizing the information built into candlestick charts. Identifying breakouts is utilizing the signals and patterns that illustrate a major move coming in investor sentiment. The first analysis each day is the direction of the overall markets. Gap ups in the overbought condition have been identified by Japanese rice traders over hundreds of years as being the alert to start watching for a sell reversal. Where do most people buy? They buy exuberantly at the top! Rule of thumb, witnessing a price gap up in the overbought condition, start looking for candlestick sell signals. There are very logical selling indicators built into candlestick graphics. A close below the previous day open in an overbought condition is a high probability indication of the sellers taking control. That was witnessed in the NASDAQ and the S&P 500 yesterday. The bearish Doji Harami that formed in the Dow produced the alert that if prices opened lower today, the Dow is likely to come back to at least the 200-day moving average.
Knowing the direction of the market allows the candlestick investor to identify the strongest sell signals.RH revealed a bearish best friend signal failure at the 50 days moving average. Utilizing the information built into candlestick signals allows the candlestick investor to gain a huge advantage of knowing not only the direction of a price move with a high degree of probability but also identifying the strongest down moves. Candlestick signals reveal strong breakouts of investor sentiment either in a strong individual candlestick signal or a buildup of a pattern. Join us this evening in our free Thursday night chat session to learn what price moves usually occur after a breakout signal. This is information that you will utilize for the rest of your investment career. Also, utilize our two-week free trial to our chat room that is open all day during trading hours, as well as our stock recommendations that produce a learning process of why specific candlestick signals and patterns work well. Click here to register.
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Good Investing,
Stephen Bigalow
