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April 23rd Market Direction

A major advantage of candlestick analysis is the ability to project the direction of a trend. It also allows for the projection of a non-trend. This is currently occurring when analyzing the direction of the market indexes. The past few trading days have seen a selling bias, creating an overall market direction predominantly sideways. What is the advantage of analyzing a sideways market? It provides an investor with the opportunity to have the portfolio situated with both long and short positions. Simple candlestick scanning techniques allow the candlestick investor to identify the most bullish trade set ups as well as the most bearish trade set ups. With a trading universe of over 10,000 trading entities, simple candlestick scans will always identify enough bullish and bearish trades for any investor no matter how lethargic the overall market trend will be.

Understanding what each candlestick signal and pattern represent allow for establishing positions that will not be greatly affected by the overall market trend. The frypan bottom is a strong example of a candlestick pattern that is developed based upon the build up of investor sentiment over a longer period of time. It disregards what is occurring in the overall market trends. Each time a candlestick investor utilizes the information built into a candlestick pattern, it produces much higher probabilities of being in the correct trades at the correct time.

 

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

Good Investing,

The Candlestick Forum Team


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