March 15th Market Wrap-Up
Candlestick signals and patterns allow investors to analyze with much more clarity as to what a price trend is doing. This is clearly illustrated in the wedge formation that is forming in the Dow. Today's positive trading, forming a bullish Doji/Harami, better demonstrates the wedge formation continuing to compress. An evening star signal formed in the transportation index over the past few trading days right at an obvious resistance level, the 50 day moving average. The S&P 500 also formed an evening star signal at the same level a bearish engulfing signal showed the end of an uptrend about three weeks ago. Buy signals and sell signals at visible support and resistance levels illustrate much more clearly what investor sentiment is doing at important technical levels. The graphics of candlestick signals produce an immense amount of information that is not revealed in other charting techniques.
Combining candlestick signals with a potential candlestick pattern dramatically improves the probabilities of not only being in the right direction at the right time, but also in a price pattern that is more likely to produce much larger profits than a mere uptrending price move. Our recommendation on CATO was based upon witnessing a bobble breakout, a very defined J-hook pattern, with a high probability confirmation signal, the Doji sandwich. The more positive signals and patterns that can be applied to a visual analysis using candlestick's dramatically improves the probabilities of being in a correct trade at the exact time. Candlestick signals are the graphic depiction of human nature that works the same way time after time.
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The Candlestick Forum Team
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