The information built into candlestick charts provide a very clear assessment of whether there is a bullish trend or a bearish trend. But just as effective is the analysis, from the graphic candlestick information, of when investor sentiment is not demonstrating a consensus of a trend. As illustrated in the markets over the past few trading days, the whipsaw action demonstrates the lack of bullish or bearish consensus. The T-line also remains an effective trend indicator. The basic T-line rule is effective for identifying a bullish trend as well as a bearish trend. A bullish trend remains in progress after a candlestick buy signal and a close above the T-line until there is a candlestick there is a candlestick sell signal and a close below the T-line. A bearish trend is evident after a candlestick sell signal and a close below the T-line. The downtrend remains in progress until a candlestick buy signal appears followed by a close above the T-line. What if the trend keeps waffling above and below the T-line? This is an often asked question. The answer is simple. The trend/investor sentiment does not know which way it wants to go. How is that effective for an investor? It indicates the probabilities cannot be put in one’s favor, stay in cash for a while.
Knowing that the major indexes are still closing below the T-line, the prospects for short positions are much better. Simple candlestick scanning techniques reveal the sectors that are likely to have the best short position profits. Currently due to the virus scare, cruise line stocks as well as casino stocks continue their downtrend, enhanced by bearish J-hook pattern set ups. Any long positions remaining in the portfolio still require the final confirmation of remaining above the T-line. Maintaining positions merely requires utilizing the simple rules that apply to human nature, with the T-line confirming the graphics of human nature. For most investors are showing great anxiety about these market conditions, the candlestick investor enjoys profitability by being in the right positions at the correct time of a trend. The short positions obviously have created very strong profits. The Japanese rice traders have a very simple philosophy. Let the market tell you what the market is doing. You do not have to be a sophisticated technical analyst to understand the information built into the candlestick signals.
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Good Investing,
The Candlestick Forum Team
