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March 14th Market Wrap-Up

Today's trading produced some indecisive candlestick formations. Indecisive trading days become more relevant when they occur at technical levels that everybody else may be watching. The NASDAQ and the S&P 500 traded in decisively at the exact same levels the trends reversed a few weeks ago. Witnessing indecisive trading at obvious resistance levels provides much more relevant information of what might be occurring in investor sentiment. The Doji that formed in the S&P 500 at the recent high of two weeks ago makes for very simple trend analysis. The Doji rule, indicating which way a price movement will occur on how trading performs after a Doji, becomes a reliable indicator to demonstrate whether a trend is failing at a resistance level or whether a breakthrough of that resistance level has occurred. Having this observable candlestick factor allows an investor to make buying and selling decisions much more quickly than other trading techniques.

Strong candlestick patterns, such as the frypan bottom pattern, allows for continued profitability even when the overall market trend becomes doubtful. Candlestick patterns are created by the accumulative buying and selling decisions. Those decisions that create the pattern have already included the evaluation of what the overall market trend is doing. When the pattern continues to perform profitably, it merely indicates the market direction at nothing to do with the buying and/or selling of the candlestick pattern. This can be seen clearly when visually recognizing a frypan bottom breakout. This is the visual analysis that allows the candlestick investor to be in high profit trades an extremely high percentage of the time. A lower open in tomorrow's trading will likely create weakness in numerous stock positions but a frypan bottom pattern or a J-hook pattern still has a strong probability of continuing in the direction of the pattern.

 

 

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Good Investing,

The Candlestick Forum Team


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