Power pattern trades are the result of the information incorporated into candlestick charts. Power pattern trades are created by the accumulation of candlestick signals and patterns working in conjunction to illustrate high probability results based upon human nature. The current downtrend of the market remains in progress as long as the indexes continue to trade below the T line. However, the distance away from the T line is also an alert that a trend/price is getting overextended. The market indexes are showing potential reversals, not necessarily a major trend reversal, but a possible bounce back up to the T line. The T line rule has the caveat that the further away you move from the T line, the higher the probability it will move back to test it. Note how the market indexes gapped down on Friday. Remember what the Japanese rice traders profess. Where do most people sell? They panic sell at the bottom. That panic selling is illustrated with gaps at the bottom of a trend. The trading strategy remains simple, stay predominately short but be more attentive to the possibility of a short-term bounce.
