Weekly Wrapup with Stephen Bigalow
Candlestick signals are an important information source at highly visible technical levels. The Dow showed some indecisive trading when it ran into the upper resistance levels. The NASDAQ showed a failure at the 200 day moving average with a Spinning Top. Today the NASDAQ closed right back down at the 50 day moving average. It will be very important to see how the premarket futures indicate which direction the market will go from this level. A lower open should make the lows of November the next target, possibly setting up another sideways channel. A positive open would indicate support had been found on a short-term pullback, making the upper resistance level the next viable target. Utilizing candlestick analysis in this manner provides the candlestick investor with a high probability method of directing their portfolio.
Candlestick signals represent the many decades/centuries of observations provided by the Japanese Rice traders. There is an additional benefit of knowing what type of signals usually occur at a reversal area. The lack of a candlestick reversal signal in an area, where prices have reversed, provides different information. The lack of candlestick reversal signals at a reversal has the implication of merely a bounce versus a full-scale reversal. This becomes valuable information when prices move in the opposite direction when holding a position during a trend.
Chat session tonight at 7 PM ET, Everyone is welcome!
Good Investing,
The Candlestick Forum Team
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