A major advantage of candlestick analysis is that it allows the top-ranked signals and patterns to illustrate which price moves are likely to have the highest probability of moving in the right direction and produce an extremely profitable price move. Although all boats will likely rise in a rising tide, the top-ranked signals and patterns identify the boats that are going to arise much faster. The most powerful and frequent top-ranked signal is the best friend signal, a Doji followed by a gap up. Today’s trading revealed a number of good trade setups based upon the best friend signal. Identifying the signals allows investors to participate in the strongest trades when an up-trending market is in progress.
Additionally, the identification of a top-ranked signal can also reveal the strong candlestick patterns that are confirming. This is what we call the 2+2 analysis. The more aspects we can put into our visual analysis, the higher the probability were going to be in a strong profitable trade. Currently, the market trend does not indicate any reversal signals. However, the overbought conditions continue to make it imperative to keep safety stops in place.
Chat session tonight at 8 PM ET.
Good investing,
The Candlestick Forum team
