October 3rd Market Wrap-Up

Candlestick charts reveal much more clearly what is occurring at technical levels, such as the support level at the 200 day moving average, whether there has been a true reversal once that level was it or whether it was merely a bounce. The fact that the indexes created bullish hammer signals today after touching the 200 day moving average area provided significant information. The hammer signal, one of the 12 major candlestick signals, was a good indication the Bulls started stepping in today. Even more refined was the fact that the 200 day moving average was the obvious level that might act as support, with that assumption, when prices reached those levels, moving to the 10 minute chart revealed more immediately what was occurring in investor sentiment at that support level. Witnessing a candlestick reversal signal at that level on the 10 minute chart allows the candlestick investor to close short positions and add long positions to the portfolio at the exact appropriate trading levels. The 10 minute chart works very effectively in conjunction with the daily chart when prices/trends start moving dramatically into the overbought or oversold conditions.

Numerous bullish reversal signals were created in charts such as NVDA and ROKU. The recognition of those signals pinpoint which trades are going to be most effective based upon the strong candlestick reversal signals. Just because the market had a major reversal today does not necessarily mean all stocks showed strong prospects of an uptrend. AAPL, AMZN, NFLX created charts that showed the selling may have stopped but not any indication any strong buying had occurred. Understanding which candlestick signals provide the strongest reversal patterns allows investors to be in the appropriate trades that are going to produce the best profitability. A positive open tomorrow would create a high probability bounce at least back up to the 50 day moving average/T-line area. The best profitable trading technique is executing the trades in the strongest candlestick charts. This is what constantly allows for the cultivation of being in the best trades at the appropriate times.

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Good Investing,

The Candlestick Forum Team