Stock market lesson plans become very easy to follow when utilizing Candlestick analysis. Very simply, over the past two weeks while the Dow Jones was in the oversold condition, a few Candlestick bullish signals appeared. The Tweezer Bottom and the Bullish Engulfing signals illustrated that a bottom was forming.
At the same time, all the hype about Crude Oil prices appeared to be running rampant. $100 a barrel oil, what would that do to the US economy? The hurricane, how would that constrict the flow of oil? Gas lines, price gouging, spot shortages, all these things were being touted by the media. However, the Crude Oil chart was showing a Candlestick ‘sell’ signal. That information should have been put into the stock market lesson plans. Despite what the news indicates, the Candlestick signals tell you exactly what investor sentiment is doing.
Crude Light
There did the big buying pressure come from this week? The signals had indicated over the last two weeks that an uptrend may be starting. Look for some consolidation , profit-taking after the big move Tuesday, but then look for the uptrend to continue.
Realizing that the market direction is being influenced by Crude Oil prices, stock market lesson plans can be oriented around that analysis. As discussed in the Thursday night training sessions on the Candlestick Forum website, being able to analyze what other market factors are doing becomes additional analytical information for projecting whether to be long or short in equities.
The ease in which Candlestick signals can be utilized for analyzing all trading entities allows the Candlestick investor to quickly evaluate whether their portfolio should be predominately long or short. Outside influences such as Crude Oil prices, interest rates, the strength of the American dollar, or a multitude of other trading entities will at times be the predominate influencing factors on investor sentiment. Being able to identify reversals in those trading entities becomes a valuable tool.
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