How do most people attempt to make money investing in stock? Buying a recommendation from somebody else and "hoping" that they make money. Unfortunately, to make money investing in stock requires a much more systematic program. Candlestick analysis provides that format. Japanese Rice traders, over the past few centuries, learned to identify patterns on charts that revealed a high probability of a reversal occurring. To make money investing in stock, an investor requires a trading plan that has validity.

Most investors try to make money investing in stock by using whatever popular investment program seems to be working at the time. The downfall of this approach is that when a program or trading method does not work, instead of trying to understand why, most investors move on to find the next trading program that seems to be working. Utilizing candlestick signals, while trying to make money investing in stock is one important common sense aspect. Investor psychology is built into the candlestick signals. Understanding the investor psychology allows an investor to fine-tune a high probability trading method. Being that candlestick signals is the oldest and most proven trading method in the world, the assumption can be that it works. If it doesn't seem to be working for you, then going back and analyzing what was wrong with your interpretation leads to better education of the trading program. This constant education builds knowledge that can be utilized for any trading market in the future.

Where do candlestick signals work most effectively? Candlestick signals work effectively on their own. However, the more confirming indicators an investor can apply to the analysis of a trend, the higher the probability of being in a correct trade. A candlestick buy signal, in an oversold condition, indicates a high probability that an uptrend is going to start. A candlestick buy signal in an oversold condition and forming at a major support level such as a moving average or a trend line gives that signal that much more credibility. Conversely, a candlestick sell signal in overbought condition forming right at a major moving average is a strong indication that a downtrend is going to occur. This is not rocket science! This is having the ability to analyze, through candlestick signals, what investor sentiment is doing at important support or resistance levels.

As illustrated in the Lear Corp. chart, Doji's forming at the 200 day moving average reveal that the uptrend is becoming indecisive at a major resistance level. If a trend fails a major resistance area such as a moving average, what becomes the next target? The next moving average below. Notice that a short position established as weakness appeared just below the 200 day moving average has already produced a relatively good profit. However, analyzing the stochastics and not seeing any candlestick buy signals should create the evaluation of the downtrend still in place, the 50 day moving average being a logical target.

LEA

The same scenario is illustrated in the SIFY chart. The Doji shows indecision at the 50 day moving average. When a moving average is failed, two levels became the obvious targets. The recent low at approximately the $11 area was the first target. If that level was breached, 200 day moving average becomes the next target. This is a common chart pattern.

SIFY

 This pattern is named the Blue Ice Failure by David Elliott of WallStreetteachers.com. Having the ability to identify chart patterns and utilizing candlestick signals as confirmation in the early stage of pattern formations, becomes a very valuable investment tool. Using any technical method that increases the ability to recognize high profit trades dramatically increases the probabilities of producing profitable returns for your account. Click here to see WallStreetteachers.com technical analysis training CDs.

Market Direction - The pullback in the Dow was clearly revealed with a Doji at the top. The confirmed selling the next day produced an evening star signal. The 50 day moving average became the obvious target for a pullback. Also, a trend line could be drawn up through the bottoms of this uptrend. The stochastics are starting to get into the oversold condition. The next few days need to be watched for some indecisive trading days. Currently the Dow has violated the upward trend channel. The short positions may stay weak for the next few days. Long positions can now start to be added on a very limited basis.

The NASDAQ is still heading lower.  The next logical target becomes a gap that needs to be filled from the early November area. A bullish candle at that time would be needed to reveal that the selling may have stopped.

Private training sessions - The next private training session is scheduled for June 24 and 25, 2006. These two-day events have produced some very strong trading insights for investors. If you would like to become fully acclimated to the profitable nuances found in candlestick analysis, do not miss this opportunity. The time and money spent sitting with Mr. Bigalow for two days will produce an investment capability that you will retain for the rest of your life. You will not be disappointed. The information received during a training session will completely alter your perspective on how to produce profits consistently in any trading market.

Wouldn't you like to have the ability to analyze trades that have a high probability of making you money? This is what you'll learn sitting with Mr. Bigalow! Are you going to learn Japanese candlestick "secrets?" The secrets that most trading programs want to teach you that will make you wealthy? Nope! What you will learn is how to use candlestick analysis correctly. You will learn how to apply the common sense investment practices that everybody tells you that you should do, but they never tell you how to do it. The candlestick signals provide valuable information on what investor sentiment is doing. Learning how to use candlestick signals effectively is nothing more than sitting down and learning how to use a system that has worked very well for centuries. No secret formulas, no hidden information, no intensive restructuring of your investment processes; just simple visual common sense interpretation of what Japanese Rice traders have used successfully for hundreds of years.

Stephen Bigalow is conducting 2-Day Workshop Seminars for training as a Candlestick Analysis Technician - Level 1. The level 1 coursework unravels the mystery of reading financial charts and propels your investment expertise to the next level. This 2-Day workshop takes the confusion out of tedious chart interpretation and replaces it with a quick visual snapshot within seconds!

Chat session tonight at 8 p.m. Eastern time

Good Investing,

The Candlestick Forum Staff