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July 23rd Market Direction

When the markets get in an indecisive trading mode many investors have a hard time anticipating the direction of the market, whether an existing uptrend is starting to lose steam and reversing. The current indecisive trading of the indexes could be blamed on waiting for trade war results but more probable, the summer doldrums. However, the visual graphics of candlestick charts allow investors to make a much more informed analysis of the overall market sentiment. Although the Dow traded slightly lower, it formed a Doji and was still trading above the T line. That in itself might not show what the overall bullish or bearish forces were indicating. The NASDAQ and the S&P 500 traded positive , albeit not really showing any excessive force one way or the other. Fortunately for the candlestick investor, there are some very simple indicators that would imply the markets merely moving sideways versus any reversal of the current trend.

First, the T line rule! As long as the indexes continue to trade above the T line, the uptrend has much greater probabilities of continuing. Secondly, the transportation index has been considered a good leading indicator. If the transportation index is trading positive, that adds more evidence that investors are not leaving the market. Simple rationale, if investors are buying the transportation stocks that are moving people around as well as products, the economy is considered to be fairly good. More conclusive, the transportation index has formed a bobble breakout at the 50 day moving average. A bobble breakout has high probability results. There should be more upside. Knowing this information allows for the assessment that the markets may be in a resting stage versus a selling stage. Candlestick analysis is merely common sense investment perspectives put into a graphic depiction.




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Good Investing,

The Candlestick Forum Team

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