July 16th Market Direction
Candlestick analysis not only identifies when reversal and trend influence are in progress but they also illustrate when not to attempt executing trades. That was evident in today's market when most of the day the markets traded almost flat. This type of market condition allows for identifying which trade set ups are getting attention in spite of the lack of market movement as well as identifying the lack of movement in numerous individual stock prices that clearly indicated there was no reason to establish a trade. Candlestick signals and patterns are the accumulative decision-making process of both the Bulls and the Bears. Today's market trading produced a slightly positive day in the Dow and a slightly negative day in the NASDAQ. This would merely indicate shifting of funds versus any major change of the current trends. Although numerous individual stock prices did not show any major change in price movement, it also indicated there was no change of existing trends.
How do you trade a stock going into earnings? Simple! Because candlestick signals and patterns are the accumulative knowledge of everybody buying and selling during a specific time frame, it should be assumed that if investors that are fairly close to what is going on in a particular stock just before earnings, they will be buying or selling based upon their knowledge. On the other hand, as illustrated in the NFLX chart, there was no indication of whether the Bulls or the Bears had enough influence on the price based upon knowing earnings were being reported after the close. The whole purpose of analyzing candlestick charts is to gain an advantage by knowing what is occurring in investor sentiment. Without any indication of investor sentiment, maintaining or establishing a position becomes speculation versus utilizing the information built into candlestick signals. When utilizing the common sense built into candlestick signals and patterns, an investor can see much more clearly what is occurring in a price movement.
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The Candlestick Forum Team
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