I’m a big fan of Candlestick Charts. Nothing in technical charting gives more clear indication of coming session than a Candlestick. Yesterday, Dow Jones Industrial Average (DJIA), Nasdaq and S&P500; all three indices indicated a reversal of downtrend and hinted at a brief uptrend (a couple of days. maybe).
- All three were near the bottom support line,
- Nasdaq formed a long White Candle (or Green candle) coming up from the bottom,
- Dow Jones made a “Reverse Hammer” Candlestick.
- S&P500 also made a similar reverse hammer candlestick.
The reversal (or positive trend for today) was confirmed by the positive U.S. Futures (pre market) today.
Nasdaq gave a signal for today’s positive trade as early as yesterday’s first half an hour’s trading! It opened gap down and then kept climbing through the day to end up positive.
Dow Jones and S&P 500 followed the same pattern with one difference. They also opened with gap down, then made day’s low and after that, kept climbing up and pared the opening losses.
Asian stocks (Nikkei, BSE Sensex) also formed the same reversal pattern yesterday and were in positive territory today.
So, be ready for a positive opening.(unless some bad news comes and kills the trader sentiment).
BUT, be ready for a volatile session. There have been lots of gap up, gap down openings and peaks and troughs through the day to break a day trader’s back. This volatility is good ONLY if you are doing either positional trading or swing trading. Why you should keep away from day trading in current market situations; I’ll tell you later with other charts:)