Swing Trading Stocks - Big Profits With Candlestick Signals
Swing trading stocks has become more prevalent over the past few years. The instant trading capabilities provided by online trading services has made swing trading stocks a highly profitable trading program. Candlestick signals increase the profitability for swing trading stocks. The recent volatility, or lack of volatility, in the markets has made swing trading stock programs a much more viable profit producer for short term investors.Candlestick signals are the measure of investor sentiment during a certain time frame. This time frame could be a one-minute chart pattern or a monthly chart pattern. Whereas the day trader may use one-minute, five-minute, and fifteen- minute chart combinations, the investor that is swing trading stocks may be more inclined to use daily charts only. Normally swing trades last anywhere from two to ten trading days. The long-term investor, on the other hand, would use a daily, weekly, and monthly chart combination to best evaluate their positions. Utilizing candlestick charts makes this evaluation much easier
Using a daily chart for swing trading stocks can utilize Candlestick signals very profitably. When markets do not appear to have any directional force for more than a few days at any time, swing trading stocks becomes the most viable program. The normal reversal action usually involves a three day pattern. Building this into a choppy market scenario produces some high-profit trades.
Market Direction - Last week the Dow went through a very choppy period. Monday's big day to the upside indicated a Double Bottom. It formed a Bullish Engulfing signal while stochastics were still moving in an upward direction. This strong up-move provided valuable information coming out of the congestion area. This made the next logical target the 50 day and 200 day moving averages. The pullback on Wednesday was not an unexpected event after the 170 point move in the Dow.
The Dow
The NASDAQ just touched the 50 day moving average on Wednesday. With the Dow needing a couple of more days to get out into the moving average area, and the NASDAQ forming a Shooting Star signal indicates that the uptrend may be running out of steam. It is doing so at obvious descending trend lines that have formed through the recent tops. Another failure at those trend lines would indicate that it was time to take some profits and start watching for the downtrending markets to start again.
NASDAQ
Breakouts - Breakouts are the most powerful patterns. The initial breakout candle usually becomes an alert to investigate what has changed investor sentiment regarding that stock. A large candle, coming out of a stagnant trading range, is usually instigated by news or an event that is going to greatly affect the future of that company. The AVII chart illustrates a big candle formation accompanied with large volume. There was good news for the company that day. An important factor for profiting from a breakout situation is to be able to identify what investors are doing after a big percentage move. Severe selling conveys a much different message than profit-taking candles.
As seen in the AVII chart, the sellers did not have enough force to drive the price back down after the initial breakout. That has led to another big percentage move in the price of the stock over the next few weeks. A high probability scenario, after the initial breakout, will be that the price trend will continue up for a good amount of time. Whatever news that caused the breakout will continual