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October 18th Market Wrap-up

Using candlestick signals in conjunction with the T-line is a very powerful trend evaluation combination. It allows for very accurate assessments of what is occurring in a market/price move. As illustrated in the Dow, S&P 500, and the NASDAQ, it was very clear that bullish candlestick signals were occurring last week at the 200 day moving average area. A bounce and/or a reversal was likely to occur based upon those signals. But the question is how big a bounce or was there a reversal. The T line becomes a very valuable trend indicator tool. Note how accurately the bounce was identified in both the Dow and the S&P 500. Bullish candlestick reversal signals occurred at the 200 day moving average and a Doji failure could be seen making the T-line a very viable resistance level. Having the ability to identify exactly what is occurring in investor sentiment at important technical levels allows the candlestick investor to make highly accurate and appropriate trade decisions. Any buying over the past few days of trading required eventual bullish confirmation up through the T-line. Short positions that were not confirming with buy signals and closing above the T-line could remain in the portfolio.

 

 

Knowing that the uptrend was stalled at the T-line allowed for highly profitable/high probability short positions to be established or reestablished. This was the basis for shorting ROKU today on weakness. The bearish engulfing signal at the 50 day moving average made the prospects of the next target be in the 200 day moving average. Closing out long positions that had formed Doji's in the past day or two and were now trading below the T line made for immediate closing of those positions. Because candlestick signals and patterns are created by the reoccurring decision-making based upon human nature, the candlestick investor can move with much more aggressiveness and quickness for getting in or out of positions.

 

 

 

 

 

 

Chat session tonight at 8 PM ET with Stephen Bigalow & Jeff Gibby. Click here to register.

 

Good Investing,

The Candlestick Forum Team


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