Technical stock trading has become dramatically refined over the past 10 years. The capabilities produced by computer generated graphics and live information feeds have produced a valuable trading tool. This trading tool was not available to the average investor just over a decade ago.

Technical stock trading can now be analyzed by the online trader with an extremely good availability of quality services. This capability has not only allowed investors to utilize the same tools that were available only to the professionals years back, but it has exploded the number of trading systems being utilized. With millions of investors able to perform their own research and testing, technical stock trading methods have been dramatically refined. One of the major benefits for technical stock trading has been the application of Candlestick signals to many new tested techniques. The multitude of investment parameters that now can be tested and found to have statistical credibility can further be enhanced when applying the Candlestick signals.

Understanding the psychology that creates the Candlestick signals produces a huge mental advantage for investors. Techniques, such as the moving averages, that were a tedious indicator to calculate prior to computers, now can be dramatically improved for projecting reversals. The moving averages provide important information for the technical trader. Some technical stock trading methods watch for the moving averages to cross. This becomes an important buy or sell indicator. Other technical investors use the moving averages for support and resistance levels.

Using the moving averages as support and resistance levels becomes more accurate when seeing what the Candlestick signals are revealing at those important levels. Candlestick signals and Candlestick formations provide a tremendous amount of information at those critical levels. A technical stock trading technique, when using Candlestick signals, is to look for a Candlestick buy signal when a trend is oversold, when the stochastics are below 20. This technique provides a framework for a high probability profitable trade.

However, a Candlestick buy signal, when the stochastics are oversold, occurring right on a major moving average, puts the favorable probabilities that much greater in the favor of an investor. Technical stock trading involves recognizing the indicators that produce a high probability of certain events occurring. Utilizing high probability indicators in conjunction with each other increases the probabilities of being in a correct trade. Having the ability to see what is actually happening at important technical levels produces the ability to better analyze a reversal situation as well as taking advantage of it prior to the rest of the investors who are waiting for confirmation.

The Candlestick signals produce information immediately at those levels. Recognizing and understanding the twelve major signals in Candlestick analysis provides the insight to be able to analyze, with a high degree of accuracy, where and when a trend reversal will occur. This analysis is a very simple visual process. Learn the major signals and learn how to use them at the major moving averages. This knowledge will provide you with the capability of being in the correct direction of a trend an extremely high percentage of the time. That is the basis for technical stock trading in a nutshell, being able to analyze indicators that put the probabilities in your favor. The Candlestick signals are the cornerstone for successful trading. They can be applied to any other trading technique and greatly enhance the results.

The chart graphic illustrates that the 50-day moving average could be the pullback target. Important criteria in that observation is the words "could be". That is the potential support level but nothing is set in stone. Why continue to own a position where the probabilities indicate that it is going to go back down? Take profits and be ready to buy it back if the 50-day moving average becomes the support.

As illustrated in the chart, the 50-day moving average acted as support, the evidence being that the Hammer-type signal and a couple Doji's. The bullish trading off of the 50-day moving average after those indecisive days reveals that the buyers were stepping in. Buying back in at that level creates a low risk trade. A move back down through the 50-day moving average becomes the stop. The upside potential becomes a breach of the $14 area, then the $17 area. The gap-up through the first resistance level, with stochastics starting to turn back up, provides a graphic picture that the buyers are starting to come into the stock with force.

Market Direction - The NASDAQ formed a Bearish Harami at a very critical technical level on Tuesday. As can be seen in the NASDAQ chart, the Bearish Harami formed right on the 50-day moving average. Although the stochastics were not able to get up to the overbought area, the selling that confirmed the Bearish Harami on Wednesday started turning the stochastics back in a downward direction. Also note that there could be a trend line drawn across the recent tops. It is strongly recommended that you view the 58 minute CD training video on how to use the major moving averages in conjunction with Candlestick signals. Once you set up your charts using the major moving averages, you will experience a much higher degree of accuracy for pinpointing reversals. This is not rocket science. This is information that you can immediately apply to produce profitable trades.

The Shooting Star that formed in the NASDAQ in mid-February just touched the 50-day moving average. Once the index came back up to the moving average the second time, the Bearish Harami indicated that the sellers had stepped in once again. Failing the moving averages the second time should reveal that the sellers have taken over at this level. Where could it have moved back to from here? The first level could possibly be the trend line forming at the bottom of the lows or a test of the 200-day moving average.

NASDAQ

The Dow also revealed weakness this week with a Doji at the top. A Doji was confirmed with selling on Tuesday and big-time on Wednesday. This would give rise to expecting that the target could now be a test of the 50-day moving average. Whether it does it quickly or in a few days, it still reveals the time to be taking profits on the longs and adding a few shorts.

DOW

Houston Seminar - A full two-day Candlestick training seminar is scheduled for April 16th and 17th in Houston, Texas. These training sessions are an excellent way to learn all the nuances of Candlestick analysis. The easy-to-understand methods, provided by Mr. Bigalow, make learning and understanding Candlesticks very simple. This is also a time to learn the faces of other Candlestick investors that you may be conversing with on the forum or in the chat rooms. We will choose a venue for the seminar later this week. Pricing will be posted later this week also. For more information, click here

The Major Signals Educational Package - NOW ON DVD!

The response to the 12 major signals CD training program has been astounding. There has been strong feedback that the in-depth analysis of each major signal is done in a clear and concise manner. The learning process becomes very easy when all the elements of what makes for a strong successful reversal signal to work correctly is explained by Stephen W. Bigalow. Each 45-minute training session not only explains what indicators confirm the effectiveness of each of the major signals, but it goes into the investor psychology that was present that made each signal occur. Understanding the psychology of investors when a reversal is occurring is a tremendous insight into what makes prices move.

A New Twist to an Old Favorite!

DVDs of the 12 Major Candlestick Signals - For those of you that would like to thoroughly analyze the 12 major signals, the signals that will perform more reversal patterns prospects than most investors will be able to utilize, the eight hours of concise analysis for each signal is now on DVD's. For the investor who likes to get comfortable in front of their TV screen, this DVD set will provide the opportunity to relax and learn at the same time.

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Do not delay, gain the understanding of how prices move. This is information that you will be able to use for the rest of your life. The profits that this information provides can be made in your account month after month after month.

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You should never be put in a position where you do not understand why trades are being made for your account. Whether those positions are being put on in your managed account, or a hedge fund, or your own personal trading, you should have a full understanding of whether those funds are being put in the right positions at the right time. The Candlestick signals applied with Candlestick analysis will become the education process for understanding how to maximize your potential returns in your own trading or being able to analyze whether a money manager has any concept of correctly timing the markets.

Good Investing!

- The Candlestick Forum Staff

www. candlestickforum.com