There are technical analysis basics that can greatly enhance the production of extraordinary profits in the markets. Candlestick signals amplify the ability to identify high profit chart patterns. The visual aspects of Candlestick signals make evaluating high profit trades very easy.

One of the technical analysis basics is identifying a Candlestick bullish signal followed by a gap-up. A gap, witnessed after a Candlestick “buy” signal, also has powerful implications. Knowing that a gap represents enthusiasm for getting into or out of a stock position creates the forewarning that a strong profit potential situation is about to occur or has occurred. Where is the best place to see rampant enthusiasm? At the point you are buying, near the bottom. Obviously, seeing a potential Candlestick “buy” signal, at the bottom of an extended downtrend is a great place to buy. In keeping with the concepts taught in Candlestick analysis, we want to be buying stocks that are already oversold, to reduce the downside risk. What is even better to see is the evidence that buyers are very eager to get into the stock.

Reiterating the technical analysis basics of finding the perfect trades, as found in the book “Profitable Candlestick Trading”, having all the stars in alignment makes for better probabilities of producing a profit. The best scenario for a high profit trade is a Candlestick “buy” signal, in an oversold condition, confirmed with a gap-up the following day.

As illustrated in the Bombay Company Inc., the uptrend was obviously instigated after a gap-up and large bullish candle following a Doji. The fact that prices gapped up was immediate demonstration that buyers wanted to get into this stock with great fervor.

Unofficially, statistics illustrate an 80% or better probability that a trade will be successful when stochastics are oversold, a Candlestick “buy” signals appears, and prices gap up. (The Candlestick Forum will offer our years of statistical figures as “unofficial.” Even though over fifteen years of observations and studies have been involved, no formal data gathering programs have been fully utilized. However, the Candlestick Forum is currently involved with two university studies to quantify signal results. This is an extensive program endeavor. Results of these studies will be released to Candlestick Forum subscribers upon completion.)

Having this technical analysis basic statistic as part of an investor’s arsenal of knowledge creates opportunities to extract large gains out of the markets. The risk factor remains extremely low when participating in these trade set-ups.

Many investors are afraid to buy after a gap-up. The rationale being that they don’t like paying up for a stock that may have already moved 3%, 8%, 10%, 20% already that day. Witnessing a Candlestick “buy” signal prior to the gap-up provides a basis for aggressively buying the stock. If it is a the bottom of a trend, that 3%, 8%, 10% or 20% initial move may just be the beginning of a 50% move or a major trend that can last for months.

Utilizing this technical analysis basic concept will dramatically increase the potential of profits being produced in one’s portfolio. This is not difficult analysis. Candlestick analysis is the application of common sense investment practices put into graphic depiction.

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Gap at the Bottom

One of the most effective commodity trading systems is the analysis of Candlestick signals. Candlestick signals were developed trading rice for hundreds of years. Most commodity trading systems are usually implemented using fundamental analysis to determine what the supply and demand of that particular commodity will be in the future.
Candlestick signals provide a very effective format for setting up profitable commodity trading systems.

Commodities, usually leveraged extensively for trading purposes, need to have a trading system that immediately tells you what is going on with price movement. A small move in price can affect profits dramatically one way or the other.

Commodity trading systems require much closer analysis. Major reversals in trends are much more easily identified when using Candlestick signals. In normal commodity trading movements, “normal” meaning other than extraordinary events causing massive price movements, investor sentiment is much easier to identify than in the equities. The investor sentiment usually evaluates the supply and demand influencing that commodity price.
Crude Oil prices can be effectively analyzed. The major corporations that utilize commodity trading systems for hedging their energy or inventory costs can benefit immensely through Candlestick analysis.

As demonstrated in the Crude Oil chart, the June contract, the recent Dark Cloud signal illustrated that crude oil prices may not have too much strength left in the current up-move. A gap down below the 50 day moving average was an indication that investor sentiment was back to the bearish direction.

Commodity trading systems evaluated correctly can also be utilized for analyzing the direction of the equity markets. Crude oil prices, which have recently been affecting the market direction, are a prime example.

The fact that crude oil prices are now showing weakness, due to the larger than expected reserves, can add strength to the equity markets. For commodity traders, the analysis of the weak Candlestick signals, close to the 50 day moving average, becomes a clear indication that prices might be in a bearish mode.

One of the most effective commodity trading systems is the analysis of Candlestick signals. Candlestick signals were developed trading rice for hundreds of years. Most commodity trading systems are usually implemented using fundamental analysis to determine what the supply and demand of that particular commodity will be in the future.
Candlestick signals provide a very effective format for setting up profitable commodity trading systems.

Commodities, usually leveraged extensively for trading purposes, need to have a trading system that immediately tells you what is going on with price movement. A small move in price can affect profits dramatically one way or the other.

Commodity trading systems require much closer analysis. Major reversals in trends are much more easily identified when using Candlestick signals. In normal commodity trading movements, “normal” meaning other than extraordinary events causing massive price movements, investor sentiment is much easier to identify than in the equities. The investor sentiment usually evaluates the supply and demand influencing that commodity price.
Crude Oil prices can be effectively analyzed. The major corporations that utilize commodity trading systems for hedging their energy or inventory costs can benefit immensely through Candlestick analysis.

As demonstrated in the Crude Oil chart, the June contract, the recent Dark Cloud signal illustrated that crude oil prices may not have too much strength left in the current up-move. A gap down below the 50 day moving average was an indication that investor sentiment was back to the bearish direction.

Commodity trading systems evaluated correctly can also be utilized for analyzing the direction of the equity markets. Crude oil prices, which have recently been affecting the market direction, are a prime example.

The fact that crude oil prices are now showing weakness, due to the larger than expected reserves, can add strength to the equity markets. For commodity traders, the analysis of the weak Candlestick signals, close to the 50 day moving average, becomes a clear indication that prices might be in a bearish mode.

Being able to analyze a commodity chart can produce extremely large profits. Not only does Candlestick analysis produce profitable trades, the stop loss process involved with Candlesticks allows an investor to set up a format for cutting losses quickly.

To learn more about Commodity and Futures Trading – Click Here for our Free 10 Part Lesson

Learn the 12 major signals in Candlestick analysis and you can develop very effective commodity trading systems.

The basic characteristics of Candlestick signals can produce extremely strong profits. The signals become an integral part of analyzing that a high profit pattern may be forming. The first indication of the development of a high profit pattern can be identified when Candlestick signals appear.

Stock market graphs have become dramatically more sophisticated in the past 10 years. Computer software services provide excellent stock market graph capabilities. Candlestick signals allow investors to clearly evaluate price movements using online stock market graphs.

The major benefit today’s investors have is the ability to do multiple technical analysis research processes instantly. Most online stock market graphs can be customized to the investors specifications. Having stock market graphs clearly illustrating Candlestick signals makes finding high profit patterns very easy to find.

Candlestick signals make analyzing reoccurring patterns much easier to evaluate on stock market graphs. An investor will be able to identify reoccurring human reactions much faster when knowing the implications of the signals. The benefit of being able to identify Candlestick signals is that it alerts an investor that high profit patterns are developing. Candlestick signals can provide immediate proper analysis of many patterns. Being able to identify a high profit pattern developing, and visualizing the confirmation with the signals, allows an investor to exploit profits at the most opportune times. One of the most profitable signals is the Scoop pattern.

The Scoop pattern works very effectively. It can be visually recognized easily. The Candlestick signals allow an investor to exploit it properly. The explanation of how and why it works is subjective.

The pattern is formed after a lengthy period of flat trading. The flat trading is usually composed of small, indecisive trading days. After a recognized flat trading time frame, the price starts to back down. The flat trading period is considered the “handle” to the scoop.

The term “recognized” is visually determining a flat trading area. The flat trading will usually sustain for a longer length of time than what is usually seen in the price movement of that trading entity. It becomes obviously lengthy to the point where it becomes boring.

It may be the boredom that finally makes the price head down. Investors get tired of waiting for it to do something. However, after a few days the small “buy” signals start showing up. The price starts moving back up toward the flat area, creating the scoop.

An inordinate percentage of the time, when the price comes back up to the flat trading area, the trend continues in a strong upward direction. This may be the result of everybody that was bored with the trading seeing that it is finally moving and start adding to their positions again.

Scoop Pattern

The visual recognition of the handle, being followed by the pullback, should be the “alert”. Seeing new buying, after a few days of a pullback, is a set up for a low risk trade. Buying near the bottom of the scoop allows the stop loss area to be at the low of the scoop. The first test should be the flat trading area. A breakout through that area indicates that a good trend is in the making.

The Affiliated Computer Services chart reveals a flat trading period followed by the price breaking down. After just a few days of a pullback, bullish Candlestick signals started to appear. Being able to visualize the handle, followed by a pullback, then witnessing Candlestick “buy” signals, should alert the Candlestick investor to the potential of a Scoop pattern forming.

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Having the ability to recognize when a potentially high profit pattern is forming will dramatically increase profit potential. The use of simple visual chart analysis can be fine-tuned when recognizing when a trend is about to reverse. That knowledge allows an investor to take advantage of Scoop pattern profits at their optimal buying points.

Stock market programs, what every investor should have!!! However, most investors have no inkling of how to research stock market programs. Unfortunately most investors put their portfolio together with a scattered approach to buying positions. Because they do not have stock market programs for defining when to buy, they definitely do not have a program for when to sell.

Candlestick signals are as accurate for defining the time to sell as they are for showing the time to buy. Considering that the signals are still around after hundreds of years of utilization and producing profits, it should be assumed that there is something in the signals that work. As hard as it is for most investors to find a system that produces many good trades, it is even harder to figure out when to sell, especially when the enthusiasm is running over for owning a particular stock.

Buy low, sell high. The same emotional problems that most investors have when buying into a stock, when there is panic in the streets, occurs just as frequently when investors try to figure out when to sell.

The Japanese traders say “let the market tell you what the market is going to do.” The utilization of Candlestick signals makes analyzing the direction of the markets and stock price trends relatively easy. It becomes difficult at times to sort out what the price intentions are when listening to the many scenarios from the so-called “market experts.” Watching the financial news stations will always provide a multitude of opinions on where the market or a stock price is going. Using Japanese Candlestick signals will circumvent all that noise.

The one basic factor built into Japanese Candlestick signals is that they are formed by the cumulative knowledge of all of the investor input, the buying and selling, of a trading entity or trading entities, during a certain time period. No matter what you hear elsewhere, the Candlestick signals tell you exactly what the investor sentiment is doing.

When an investor is fortunate enough to be holding a stock that has made a strong up-move, the same emotional factors enter the selling decision. Where do I sell? Two emotional elements enter the picture. First, there is greed. The average investor wants to hold on to profitable stock positions because one could keep going to the moon and ‘make me rich’. We imagine how much money we would make if the trend continued for another profitable 20 points. This emotional strategy now deters the rational decision of selling when it is time to sell. Instead of analyzing where the trend could be ending, what the stock price could potentially do becomes the overriding factor. Unfortunately investment prices do not give a hoot about what an investor is “hoping” for.

Fear is the next factor. How stupid we would look if we sold a stock at $20.00 and it went to $30.00. The biggest fear becomes selling out too early. Investors usually have a hard enough time identifying profitable trades. They definitely do not want to sell out too early. That fear now causes investors to hold on to a position well past the time that it should have been sold, giving back a good portion of the profits. Candlestick signals eliminate that dilemma. Hundreds of years of refinement have defined “high probability” sell signals. Using the major Candlestick “sell” signals will immensely increase your profits. Candlestick analysis provides a format for establishing buys and sells.

Most investors do not have a game plan when it comes to their investment dollars. They buy when somebody tells them about a good stock to buy. The next purchase might be something they read in the newspaper or a magazine article. After a while, they have a portfolio of positions of which they don’t remember why they bought each position, which certainly means they do not have a program for when to sell the positions.

Buying a position using a Candlestick buy signal puts the probability of being in a correct trade highly in the investors favor. Conversely, selling a position when the Candlestick sell signals start to appear puts the probabilities of being out of a trade near the optimal sell areas highly in the investors favor also. The critical word is probabilities. The probabilities already have been identified through the use of Candlestick signals for centuries.

Does that mean that every buy signal is going to work correctly? Definitely not! But it does put the Candlestick investor into positions that have a great probability of working. It also allows the investor to close out trades that aren’t working immediately, cutting the losses short.

The Candlestick sell signals create a high probability situation indicating that is time to take profits. Does this mean that every sell signal indicates the absolute top of a trend? Definitely not! But it does provide a format to indicate that the probabilities are that the top is near. Additionally, there is nothing wrong with selling a position when the probabilities say it is time to sell and buying back later when the signals indicate that is time to buy again.

There is nothing wrong with getting out of a position when the signals say it is a good time to get out and buying back, even at a higher price, when the signals indicate the buyers are coming back in. The point of investing is not to maximize your profits on each trade. The point of investing is to maximize your profits in your account.

When the Candlestick signals indicate that the probabilities are not in your favor, why fight it? As illustrated in the Dow chart, the bullish trend from late October into mid-November started to reveal Candlestick sell signals, an Evening Star signal, a Bearish Engulfing signal, and a few Doji’s. This congestion area became an opportune time to take profits in some of the stock charts that had moved up and were now getting toppy. And with simple analysis, upon seeing the trend exhibiting bullish Candlestick formations coming up out of the congestion area would have been a signal to buy back into the positions that had pulled back or buy new positions that were showing good strong buy signals at the time the Dow was moving up again.

This is not rocket science. This is being able to visually analyze what the Candlestick signals are telling us. The final trend has come to an end when stochastics show an overbought condition and Candlestick sell signals appear. Once again, the probabilities tell us that it is time to take profits.

When the market in general starts to get toppy, the valuation of individual stock charts becomes more easy to analyze. If the markets are getting toppy and a stock position is getting toppy, again, why go against the probabilities? Take profits. If the market turns back up or the stock starts showing buy signals again, it can always be bought back. Why sit in a position when the Candlestick signals that have worked effectively for centuries are challenging investors to get out?