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September 13th Market Wrap-Up

Knowing the high probability results of candlestick signals and patterns allows the candlestick investor to take advantage of profitable trades immediately without having to wait for further confirmation. The trend analysis of the market in general is greatly simplified by knowing what should occur after specific candlestick signals. Yesterday's trading in the Dow showed a Doji, closing above the T line after a piercing signal the previous day. Closing above the T line wasn't implication that the uptrend was in progress. Knowing the simple Doji rule, prices will move in the direction of how they open after a Doji aggressive buying on the positive open today. Add the fact that yesterday the NASDAQ formed a Doji/hammer signal just below the T line, demonstrating there was no dramatic selling pressure in the market. When the NASDAQ gapped open above the T line today, it was very clear that the probabilities are pretty strong for the continued uptrend. Knowing the reoccurring actions of human nature allows candlestick investors to identify high profit trade set ups and high probability trend reversals.

Because candlestick signals provide an immense amount of information as to the nature of investor sentiment, when applied to analyzing Western patterns, the ultimate entry and exit strategies can be put into place. Wave three illustrated in MTCH was identified by a MorningStar signal/left right combo, that illustrated the resistance level of the wedge formation was being breached. This allows for the ultimate entry of trades whether buying stocks or options. Candlestick reversal signals at obvious support and resistance levels dramatically improve the probabilities of being in the right trade at the right time. Candlestick signals and patterns work profitably? Definitely not, but the reason the Japanese Rice traders have identified them as being reversal signals is due to to the high percentage of profitable trade set ups. This is based upon one simple factor! The signals and patterns are created by the most consistent investment indicator, human nature.



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Good Investing,

The Candlestick Forum Team



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