Commodity Trading Chart - Candlestick Signal Forte
When reading a commodity trading chart, the Candlestick signals provide a huge visual advantage. Keep in mind, the Candlestick signals were developed over the past few hundred years while trading Rice. The Japanese Rice traders analyzed reoccurring signals on their commodity trading chart when trying to pinpoint the exact times to get in and get out of Rice. The identification of those signals made the Honshu family immensely wealthy.
The signals they identified are as effective today as they were centuries ago. Candlestick signals are the graphic depiction of human emotion. Human emotion will always be the same. Whether you are analyzing a stock trading chart or a commodity trading chart, the same factors that have moved prices for centuries will still be in effect today. This is not any great revelation. The human psyche is very predictable when it comes to investment decisions. Candlestick charts visually depict investor sentiment.
A commodity trading chart will show a distinct advantage over a stock trading chart. The trends in a commodity trading chart will be more consistent, lasting for longer periods of time. The outside influences on a commodity are dramatically less than those found in a stock price. That can be used to an investor's advantage when analyzing a commodity trading chart.
As witnessed in the August Feeder Cattle chart, once a trend starts, it may continue for months at a time. Note how the gap-up after a Candlestick “buy” signal, the Hammer signal, started an uptrend that has persisted for three months.
As with most commodities, there are fewer elements to affect the supply and demand for a commodity. Grains and some of the soft commodities might have weather affect supply. The currencies may be affected by each other, the British pound, the Eurodollar, and the Swiss franc will usually trade the opposite direction of the US dollar.
Being able to analyze a commodity trading chart very quickly with Candlestick signals produces a huge advantage for being able to analyze what the equity markets would do. Crude Oil prices, the US dollar, Gold or any other commodity that could be affecting the direction of the equity markets can be seen and analyzed very efficiently using Candlestick signals.
Market Direction - The Dow has gotten toppy. The NASDAQ may start showing some consolidation over the next couple of days. Going into the long weekend, it would not be unusual to see the market trade flat for a couple of days. This should give the uptrend time to either consolidate or pullback slightly.
Although the Dow has shown some toppy indications, confirmed selling on Wednesday after a Hanging Man signal formed on Tuesday, it has not traded below the area of the close of the last large candle.
The 10,400 level in the Dow would be a logical support level on any pullback. That coincides with the 200 day moving average as well as the peak in the early part of May.
The NASDAQ has a slight gap at approximately the 2000 level. Also, the 200 day moving average is right at that level. A pullback in the NASDAQ would likely target that area.
Proof of the pullback will be illustrated with selling on Thursday. That should induce lightening up on some of the long positions for a few days. On the other hand, a positive trading day on Thursday, which would be indicated initially by the pre-market futures being relatively strong, would indicate more of a flat consolidation period.
Weaker futures in the morning followed by continued selling early should indicate to the short-term traders to take some profits. Longer-term investors should continue holding to see what the Dow will do at the 200 day moving average.