May 13th Market Direction

Candlestick formations reveal what is occurring in investor sentiment. However, there will be trends that do not reveal whether the Bulls or the Bears are in control on a day to day/time frame to time frame basis. That is what is occurring in the markets over the past few weeks. Fortunately, candlestick analysis has indicators that let investors sleep well at night. The T-line! The indexes have had whipsaw all reactions to the news coming out of Washington, especially in regards to the China tariff negotiations. How do you trade in these type of market conditions? The final confirmation, the T line. Note that after the indexes formed sell signals and close below the T line a few weeks ago, there has been one obvious factor. There hasn’t been confirmed buying above the T line. Why is this important? A simple candlestick observation! When a trend is trading below the T line, the probabilities are greatly favor a downtrend until there is a candlestick buy signal and a close backup above the T line. An uptrend trading above the T line will continue to remain an uptrend until a candlestick sell signal and a close below the T line is witnessed. This is called the T line rule. It dramatically improves the probabilities for allocating the correct positions in a portfolio.

We will conduct a “Members Only” chat session tonight at 8:00 pm EST.

Good Investing,

The Candlestick Forum Team