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April 4th Market Wrap-Up

Candlestick signals provide the nature of the buying or selling during a trend. As illustrated in the indexes, on days that the Dow was trading indecisively lower, the NASDAQ was trading higher. Today the Dow is trading decisively higher while the NASDAQ was trading indecisively but mildly lower. When the indexes are trading with one trading positive one day and another index trading positive the next day, this merely reveals there is no change of investor sentiment, merely rotations from sector to sector. The overall trend is much better analyzed when the trend remains above the T line. That analysis of eliminates the prospects of being whipsawed as a trend is slowly oscillating in one direction or the other. Today's positive trading took the Dow up above the high that was established in February, further confirming the wedge breakout of last week. The graphics of candlestick analysis provides a much more clear indication of the bullish or bearish sentiment that provides additional confirmation to price patterns. The assumption of a wedge breakout is that there will be another wave, the same magnitude as the previous wave prior to the wedge formation.

Knowing that the uptrend is likely to remain in progress, the candlestick investor can take advantage of the price patterns that are breaking out, not only producing a high probability of being in the correct direction but also being in trades that are going to produce inordinate profitability. Candlestick analysis works for all markets, whether trading stocks, currencies, or commodities. The J-hook pattern is very prevalent in the current lean hog chart. Because the overall market trend eliminates the prospects of bearish sentiment slowing down a bullish pattern uptrend, candlestick pattern breakouts provide much greater profitability during the uptrend than merely an uptrending stock during the uptrend. The assumption has to be that wave three is in progress in the Dow, making the likelihood of another major move to the upside highly probable.

 

 

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Good Investing,

The Candlestick Forum Team


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