February 5th Market Direction
Is this a bad market? Not if you're short! Why would you be short? Because the candlestick charts indicated a change of investor sentiment last week. It produced a strong signal to the downside that had not been illustrated for over 15 months. A candlestick sell signal followed by a gap down and a close below the T-line. The gap provided immediate and valuable information. Consider the logic behind candlestick signals. They indicate a probability of a change of investor sentiment. Over the past 15 months, there have been numerous candlestick sell signals but without one major confirming factor. The bearish Harami followed by a gap down through the T-line showed excessive selling perspectives. This was a different and more powerful sell signal that had been exhibited during the past 15 months of uptrend. The candlestick investor was immediately alerted that there had been a change of investor sentiment. Once the indexes close below the T-line, there was no bullish strength to bring the indexes backup above the T-line. There is an extremely high probability trend analysis tool using candlestick signals and the T-line. Very simply stated, a candlestick sell signal followed by a close below the T-line provides extremely strong probabilities a downtrend will remain in progress until a candlestick buy signal and a close above the T-line is witnessed. This is nothing more than the analysis of human nature.
Is this a bad market? Not if you are short! Numerous charts illustrated strong selling sentiment. Utilizing the five-minute and 10 minute charts made it very clear that a flash crash was in progress. At one point, the Dow traded down over 400 points in less than five minutes. This is not a bad trading market if you follow what the candlestick charts reveal. These are the type of market conditions that allow investors to make huge profits.
We will conduct a "Members Only" chat session tonight at 8:00 pm EST.
The Candlestick Forum Team
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