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January 17th Market Wrap-Up

Today's trading showed some evidence of what the market is anticipating, a resolution of tariffs with other countries, namely China. That was evident when the rumor was out that the administration might back off tariffs with China. The bullish trend of this market is evident with no trading back below the T line. The Dow and S&P 500 finally hit their first perspective targets, the 50 day moving average. The NASDAQ has been showing better bullish sentiment with continued trading above the 50 day moving average. It will be important to see what the premarket futures are indicating on tomorrow's open. A lower open would obviously indicate profit-taking once the Dow and S&P reached the first major resistance level. Because there has not been any demonstration of bearish sentiment in this current uptrend, it is making candlestick patterns, especially the frypan bottom and the J-hook pattern, extremely profitable and creating good prospects for continued bullish profits.

Numerous charts are demonstrating J-hook patterns. This illustrates uptrends that have had profit-taking consolidation and new strength going into wave three. The benefit of a J-hook pattern is twofold. First it provides a high probability directional trade and secondly it allows for the calculation of the magnitude of that next wave. Wave one and wave three of a J-hook pattern is usually equivalent. Knowing what the price move was in wave one allows an investor to calculate what the price move will be in wave three. Utilizing candlestick signals and patterns produce much better profitability than merely uptrending stocks during an uptrend. The prerequisite of a J-hook pattern is that wave one was an extremely strong price move, making the expectation of wave three also an extremely strong price move.

 

 

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Good Investing,

The Candlestick Forum Team


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