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April 2nd Market Direction

Candlestick chart analysis relies on very simple trend analysis indicators. What might have been a potential reversal in investor sentiment on Thursday had one remaining confirming indicator that did not confirm, the T line. This made today's trading very easy as far as projecting the overall market trend. The failure of the indexes to close above the T line on Thursday provided an alert to see which direction the premarket futures were indicating today. The lower premarket futures confirmed that the T line had acted as resistance once again. The lower trading took the Dow down to the 200 day moving average, a major potential support level. Having the ability to analyze what is occurring in investor sentiment at major support and resistance levels allows an investor to be prepared to position appropriately. What would a close below the 200 day moving average indicate? Two things, obviously a failure to support and an indication of a bearish J-hook pattern, providing more evidence that the downtrend could now be in a wave three to the downside.

There are times when the candlestick charts indicate a lack of change in investor sentiment. That remains a strong benefit for the candlestick investor who is already positioned in the correct direction. Adding short positions to the portfolio was a natural process over the past few weeks of trading. The natural evolution of price trends puts the candlestick investor heavily in the general direction of the market. Over the past few weeks, confirmed sell signals instigated profit-taking of bullish trades. Strong candlestick sell signals and the lack of any uptrend in the overall general market instigated adding more short positions to the portfolio. This process allows a candlestick investor to be situated comfortably in profitable positions when most of the portfolio is now oriented toward the short side. This is not rocket science. This is merely identifying where the influences/pressures of investor sentiment are moving prices. Candlestick signals are the graphic depiction of investor sentiment.

 

 

We will conduct a "Members Only" chat session tonight at 8:00 pm EST.

Good Investing,

The Candlestick Forum Team


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