Today the market indexes produced Doji’s, showing some indecision as the markets approach the recent all-time highs. With the indexes in the overbought condition, the tweets about China trade talks make the investor sentiment that much more sensitive. Today’s Doji makes tomorrow’s analysis relatively simple. The market will likely move in the direction of how they open after today’s Doji, the simple Doji rule. The distance away from the T line is also an alert there may be a better possibility of at least a profit-taking pullback in the markets. Numerous stock charts have indicated potential reversal signals, implying it is time to be prepared to take profits. Being able to identify what the overall market sentiment is revealing allows the candlestick investor to be more prepared for watching for a change of market direction/closing long positions. If the premarket futures show a lower open in Friday’s trading, anticipate the potential pullback to the T line. A positive open would imply bullish sentiment testing the recent highs.
The visual aspects of candlestick charts make it much easier to identify when profit-taking/selling is about to occur in price trends when sell signals are occurring at obvious resistance levels. WB is an example of a sell signal occurring when the price moved up to the level where it filled a previous gap. Witnessing potential reversal signals, at levels that everybody else is watching, gives the candlestick investor much faster evidence that it is time to close out positions. Because candlestick signals provide an immense amount of investor sentiment information, an investor does not need to be a sophisticated technical analyst. They merely need to recognize the signals that are showing a change of investor sentiment that have been highly accurate reversal signals based upon the Japanese Rice traders identifying the strong reversal signals over the past few hundred years. You gain greater precision in identifying price movements knowing the reoccurring aspects of human nature that make candlestick signals very accurate.
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Good Investing,
The Candlestick Forum Team
