Low Stock Market VolumeAmidst confusing news, stocks traded higher recently on low stock market volume. The world economy is ever so slowly coming out of the worst recession in three quarters of a century. Huge debt burdens plague both the USA and the EU, the two most powerful economies of the world. It seems that every day there is another pronouncement from Europe. One day we hear that Greece will likely default on its debts and cause a ripple effect throughout the EU. The next day we hear that Germany and France will come to the rescue, despite strong political opposition at home. It is not surprising with such confusion that investors and traders find fundamental analysis difficult and have taken to sitting on the sidelines resulting in low stock market volume. Thus it is also not surprising that many technical stock traders are feeling a little uncertain as well. One does well to remember in such times that there is a stock trading system with centuries of experience in trading when there are conditions of high market volatility, confusing market trends, high market volume, low market volume, and seemingly total market inefficiency. Japanese Candlestick charts have been helping make profits in day trading and long term investing for a long, long time.
After several days of a falling market, stocks rebounded recently. The herd mentality that all too often infects the market had everyone believing that a bear market was in the offing. Then, when the market turned upward, many traders and investors were uncertain of what to do and sat on the sidelines while stocks rallied. Traders using Candlestick analysis as a guide are able to avoid the distraction caused by the psychology of trading stocks. Candlestick traders commonly look for periods of apparent confusion in the market and use clear and easy to read Japanese Candlestick charting to profitably buy stock, sell stock, or trade options. Japanese Candlesticks have been guiding successful traders for generations.
Going forward those involved in long term buy and hold investing and those whose only interest is scalping profits in a moving market can both profit from the insight that Candlestick charts provide. A lasting value of using technical analysis tools is that it gives traders insight into market sentiment even in confusing markets. When there is low stock market volume due to general confusion about fundamentals Candlestick signals and Candlestick trading tactics help traders profit when all others seem to be lost. Low stock market volume or high stock market volume, Candlestick signals help traders and investors anticipate stock price movement. When fundamentals seem chaotic there is still tendency for the market to come to a consensus. Using Japanese Candlesticks, traders are commonly able to anticipate that consensus before those guided only by the stock market news and their sense of shifting fundamentals. Whether trading stocks, options, commodities, futures, or foreign currencies, traders do well to use Candlestick patterns as a guide in reading market sentiment. In the low stock trading volume of today there are profits to be made by those with the tools to see clearly where sentiment will take the market.
Market Direction: Candlestick analysis provides a unique feature of visually demonstrating signals that represent a change of investor sentiment. Most technical analysis utilizes support and resistance levels or Fibonacci numbers or trendlines. These technical factors are all created buying investor sentiment in one fashion or another.However, investors using those technical indicators require significant confirmation before executing a trade. Taking that same concept, investor sentiment creates individual daily signals that illustrate what is occurring between the Bulls and the Bears. Adding candlestick analysis on top of other technical evaluations dramatically improves the understanding of what is occurring in investor sentiment at specific support and resistance levels. You do not have to be a sophisticated technical analyst to understand and recognize candlestick reversal signals. Once an investor understands the thought process behind each signal, the combination of being able to see in and understand why a trend reversal is occurring is as powerful as 30 years of trading experience.
There are only 12 signals out of the candlestick universe of 50 to 60 signals that require learning. Do not let the unsophisticated name "candlesticks" influence your opinion on the viability of candlestick analysis. It is derived from common sense investment perspectives put into a graphic depiction. Candlestick Rice traders made huge fortunes based upon one simple premise. Investor sentiment is usually wrong! Where do most people sell? They panic sell at the bottom. Where do most people buy? They buy exuberantly at the top.This reoccurring investment pattern can be seen in the gold market.Japanese Rice traders clearly illustrated that prices do not move based upon fundamentals. Prices move based upon the perception of fundamentals. There is any man's amount of information built into each candlestick signal. Combining candlestick analysis with indicators such as moving averages, trend lines, Fibonacci numbers, etc. will dramatically improve your ability to be in correct trades at the correct time.