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Market Commodities

What are the market commodities that I can trade in? Market commodities, just in agricultural products, include corn, wheat, soybeans, rice, and oats. However, there is more to the commodities market in crops than just the grains listed. Corn includes mini-corn, corn swaps, and corn calendar spread options. Wheat also includes mini-wheat, wheat swaps, and wheat calendar spread options. Soybeans are the same but you add the same mix for soybean meal and then soybean crush. The commodities trader needs to keep commodity trading charts on each commodity that he or she is dealing in. Speaking of the use of charts for commodities trading, it brings us to the oldest recorded method of charting and predicting commodity prices which is still in use today, Candlestick trading.

Active traders in market commodities may wish to follow more than just one or two commodities. The advantage of Candlestick chart analysis over following columns of figures is that Candlestick pattern formations are easier to recognize than the same information hidden in dense groupings of text. Commodity trading in rice used Candlestick basics as long as three hundred years ago. Traders developed Candlestick charting techniques that are in use today, not just in trading commodities but in the stock market, options trading, and the futures market as well.

Fundamental analysis certainly applies to all market commodities. If industrial production is down in China, futures on steel products from Australia may suffer. The fact that the Asian economies seem to be leading the way out of the recession bodes well for raw goods that are imported for Chinese industry. News of the weather precedes crop reports and is a strong predictor of yield. However, it is rare that one person trading commodities is the only person with market news relative to the analysis of fundamentals. Because the trader does not have a head start on the market he or she needs to be aware of how the market is behaving or in order to be either bullish or bearish in the market.

What the use of Candlestick patterns tells the commodities trader is the sum of what all the other traders are thinking and, more importantly, how they are trading. Although we all are individuals and think that we act individually there is predictability to groups of people and groups of traders. It does not matter if market movement is the result of the psychology of trading or just that everyone sees the same opportunity and reacts accordingly. Those who get in early and buy when the price is low will be ready to sell when the last in to the market arrive. Everyone may have the same idea but slight differences in commodity pricing will bring about different reactions as the market progresses. This is the sort of thing that Candlestick trading tactics take advantage of.

Whether you are a newcomer to trading market commodities or an old hand with a successful trading system, the use of Candlestick basics is a valuable tool for profiting in the commodities market. Candlestick basics are trading tools that have stood the test of time and are just as valuable to day in trading things like random length wood or West Texas Crude Oil as they were in creating wealth for astute rice traders in Japan centuries ago.

Market Direction:

The analysis of a trend is made much easier when combining candlestick signals and the stochastics. Simple logic says that a candlestick buy signal in an overbought condition does not mean very much. Likewise, a candlestick sell signal in an oversold condition has very little relevance. This scenario works equally well during a price trend. An uptrend will always have selling days. A downtrend will always experience buying days. There are simple analytical indicator combinations that reveal whether a selling day in an uptrend is a reversal or merely a pull back. Where are the stochastics? If there is selling occurring in an uptrend while the stochastics are still in an upward trajectory, confirmation of the sell signal becomes much more important.

The Dow is a good example. The previous two trading days revealed Doji's. These days of indecision would have been much more important had the stochastics been well in the overbought condition. The fact that the stochastics were still in upward trajectory, not quite in the overbought condition, left room for more upside. Thursday's trading was relatively lethargic most of the day. Had it closed as a Doji today, that would have been three days in a row of indecisive trading as the markets were approaching the overbought area. The show of strength, going into the close, provided more evidence the Bulls were still in control of the trend. This changes the prognosis of the market trend toward a more positive stance.


The two indecisive trading days can now be considered consolidation days in an uptrend. This would also reflect in some of the stock positions taking a rest. The advantage candlestick signals provide is the visual evidence of what is occurring almost on a daily/timeframe basis. Each day can be evaluated as to what the overall trend is conveying. It also allows for better evaluation of what a price trend is doing after specific signals.SMSI was recommended based upon the kicker signal. Although the market was trading flat for the past few days, the uptrend could still be seen in SMSI. Although there were selling days, they did not indicate a change of investor sentiment. This makes for a much more comfortable decision-making process for when to continue to hold or when to sell.

Chat session tonight at 8 PM ET. Take advantage of the breakout points set up with candlestick signals.

Good Investing,

The Candlestick Forum Team


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