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July 26th Market Wrap-Up

The market trends provide one consistent facet, they are all trading above the T line. Although the NASDAQ and S&P 500 traded lower today, they traded at or above the T line as well as above where they opened. Add the aspect of the Dow and transportation index trading up strong, the overall analysis using candlestick charts is relatively simple. Bullish sentiment continues the uptrend's. Analyzing the overall market direction becomes much more simple when witnessing the graphics of each individual formation during a trend. Identifying the strong sectors is easily applied when analyzing the sector charts as well as futures that can be applied to that sector. For example, the oil stock sector is showing good strength and the evaluation of crude oil can be easily assessed using candlestick charts.

Applying the analysis of individual candlestick signals to the direction and potential breakout of a candlestick pattern is dramatically improved by knowing simple rules. As illustrated in the ADMA chart, recognizing that a frypan bottom pattern was forming and a Doji had formed just above the 50 day moving average/beginning of the frypan bottom pattern, knowing the Doji rule allows candlestick investors to get into high profit trades. The gap up after the Doji created the potential of a best friend signal, confirming a frypan bottom breakout. Identifying high potential trade set ups is based upon the Japanese Rice traders identifying the reoccurring reactions that investors create based upon human emotions. Prices do not move based upon fundamentals, prices move based upon the perception of fundamentals. Candlestick signals are merely the graphic depiction of what is going on in investor sentiment. No matter what investment charting strategy is being utilized, applying candlestick charts to that strategy dramatically improves recognizing the probabilities of a successful trade.



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Good Investing,

The Candlestick Forum Team

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