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February 8th Market Wrap-up

Tuesday the markets had a strong bullish move, the NASDAQ produced a strong bullish piercing signal. What was required to show that the downtrend had stopped? Bullish confirmation of the potential reversal signals, which also involved closes above the T line and/or the 50 day moving average. Wednesdays trading initially started off strong but traded lower before the end of the day. The shooting star and Doji type day in the indexes provided a very easy trend analysis tool. The trend was going to move in the direction of how they opened after the indecisive trading day. Today's thousand point drop in the Dow clearly indicated the downtrend was remaining in progress, the trading could not get back up above the T line or the 50 day moving average. Why is this important? A price trend will usually continue until there has been a breach of the T line. Currently, the downtrend in the markets are showing blue ice failure's, indicating the next target could be the 200 day moving average.

The T line analysis works just as well on individual stock prices as they do for market trend analysis. Candlestick sell signals and closing below the T line has made for very profitable short positioning. Knowing the reoccurring aspects of human nature allows the candlestick investor to be positioned in the correct direction of a trend. You do not need to be a sophisticated technical investor to utilize the simple visual probabilities built into candlestick signals. The candlestick signals and patterns are created by investor sentiment working the same way time after time.

 

 

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Good Investing,

The Candlestick Forum Team


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