Commodity trading info optimized with candlestick signals
Commodity trading info is optimized with candlestick signals. The signals provide valuable information for commodity trading; probably even more valuable information than stock trading info. Keep in mind; candlesticks were developed in the most basic of commodities, Rice. Commodity trading info is much more simplistic than stock trading information. Commodity trading info usually is just limited to supply and demand, or the weather. This makes commodity trading info much easier to clarify using candlestick signals. Stock trading prices are usually influenced by many other factors other than just indicators that influence that particular stock. Market indexes in general, interest rates, crude oil prices, political environment, and many more factors can affect a stock price. Commodity trading info is very limited. That makes the utilization of candlestick signals very functional.
The 12 major candlestick signals have just as much credence for trading commodities as they do stocks. Probably even more so! The bullish signals work just as effectively as the bearish signals. Demonstrating when to get into a position is very important. However, what is more important is being able to analyze when to get out of a position. Commodity trading info, as well as stock trading info, comes to investors in different forms and different times. The analysis of that information can be interpreted dramatically different by investors. When the news starts creating euphoric buying at the top, it is hard for many investors to take profits. What if!!!! What if this is the position that is going to make the big money? "I need to be buying or I don't want to be selling with all this great news around." That is what keeps most investors from selling at the appropriate times.
A major sell signal at the appropriate time should convey one simple message. It is time to sell. Most investors invest with the emotions of fear and greed. Fear comes back into an investor's decision-making process even when they have large profits. "What if I sold at this level and prices went higher, boy would I look stupid?" Simple profit taking and stop loss techniques eliminate that fear. Click here for the Candlestick Stop-loss e-book. Utilizing the 12 major signals, half bullish signals, half bearish signals, allows investors to make sell decisions without involving the emotional factors. One of the important 12 major signals is the Bearish Engulfing signal. It clearly demonstrates when stock and commodity investors should be taking profits or going short. This is important commodity trading info. Profits can be eaten up very quickly when prices reverse. Being able to recognize a major reversal signal and knowing how to put appropriate stop loss orders in place will greatly improve the profitability of trading. Click here for the major signals CD training package
As can be seen in the ERS chart, the Bearish Engulfing signal clearly illustrated when the extended uptrend had come to an end. Using some very simple techniques would allow investors to take profits at the most appropriate places. It also provides a clear signal for the short seller to start placing trades.
ERS
The June Oats contract also demonstrates how the Bearish Engulfing signal makes it easy to find the correct levels to start shorting. The Bearish Engulfing signal, followed by a Shooting Star signal occurring in the overbought conditions illustrates where investor sentiment has started to go in the other-direction. This now becomes a high probability short trade.
June Oats
Description
The Bearish Engulfing pattern is a major reversal pattern comprised of two opposite colored bodies. The Bearish Engulfing Pattern (Figure 24) is formed after an up trend. It opens higher that the previous day’s close and closes lower than the previous day’s open. Thus, the black candle completely engulfs the previous day’s white candle. Engulfing can include either the open or the close to be equal to the open or close of the previous day but not both.
Criteria
1. The body of the second day completely engulfs the body of the first day. Shadows are not a consideration.
2. Prices have been in a definable down trend, even if it has been short term.
3. The body of the second candle is opposite color of the first candle, the first candle being the color of the previous trend. The exception to this rule is when the engulfed body is a Doji or an extremely small body.
Signal Enhancements
1. A large body engulfing a small body. The previous day was showing the trend was running out of steam. The large body shows that the new direction has started with good force.
2. When the engulfing pattern occurs after a fast spike up, there will less supply of stock to slow down the reversal move. A fast move makes a stock price over-extended and increases the potential for profit taking and a meaningful pullback.
3. Large volume on the engulfing day increases the chances that a blow-off day has occurred.
4. The engulfing body engulfing more than one previous body demonstrates power in the reversal.
5. If the engulfing body engulfs the body and the shadows of the previous day, the reversal has a greater probability of working.
6. The greater the open gaps up from the previous close, the greater the probability of a strong reversal.
Pattern Psychology
After an uptrend has been in effect, the price opens higher than where it closed the previous day. Before the end of the day, the sellers have taken over and moved the price below where it opened the day before. The emotional psychology of the trend has now been reversed.
Market direction - The Dow has broken through an upper trend line. However, it did so with a large bullish candle. Monday's trading created a doji. There is a potential for some profit taking to occur in the Dow. The NASDAQ is still moving up in the middle of its trend channel. This indicates that there is more of sector rotation going on in the markets than any major selling. The trends of all the indexes appear to still be in a slow uptrend. Continue to hold long positions in the strong sectors.
Chat session tonight for members at 8 p.m. Eastern time- A very high profit breakout pattern will be demonstrated. This pattern formed today in the market. This stock price will have a big upside potential. Open chat session Thursday night 8 p.m. Eastern time.
Private Sessions - The private training session this past weekend went exhilaratingly well. Another private training session is scheduled for June 24 and 25th. If you need information or would like to talk with the people that took the past session to see if it was worth their while, please contact us at 866- 251- 4015.
Good investing,
The Candlestick Forum Staff
Newsletter - Commodity trading info optimized with candlestick signals - May 8, 2006