To the average trader, candlestick patterns are a bunch of crosses and odd shapes with bizarre names, like the three black crows, or the abandoned baby bottom.
But as odd as they may sound, they can provide powerful insight into direction.
For example, one of the oddest ones is the doji cross. But if you spot one of these at top or bottom of trend, you may have uncovered an opportunity to trade a trend reversal. The profit stars, more commonly known as dojis, are commanding reversal signals. These are formed when the candlestick opens and closes at the same level, implying indecision in the stock price.Read More
When it comes to trading, one of the best ways to tell what’s happening is by paying attention to the flow of money in and out of a stock.
Surely, none of us want to buy a stock if money is flowing out, right?
Instead, we want to buy if we’re seeing money flow in, or short if we begin to see signs that money is about to start flowing out of a stock.Read More
Oil is still a fickle beast.
Prices may have slipped from a lofty high of $73 to about $64 in June 2018. But the fear that sent prices lower may have been a bit overblown on news that Russia and the Saudis hinted they may boost oil production by up to a million barrels a day – ending the production freeze.
At the time, the Saudis boosted their daily output in May to the highest level since October, ahead of an OPEC meeting where they could propose raising production even higher, phasing out months of voluntary cutbacks.Read More
Learning how to read stock charts can be a very simple process. The major signals clearly illustrate trend reversals. Most investors, when learning how to read stock charts, feel that they need a multitude of indicators on one chart. Candlestick analysis does not require numerous indicators. When utilizing the major candlestick signals, chart analysis becomes very easy. The major signals reveal an immense amount of information. When learning how to read stock charts, the process should be as simple as possible.Read More
Spinning Tops are depicted with small bodies relative to the shadows. This demonstrates some indecision on the part of the bulls and the bears. They are considered neutral when trading in a sideways market. However, in a trending or oscillating market, a relatively good rule of thumb is that the next days trading will probably move in the direction of the opening price. The size of the shadow is not as important as the size of the body for forming a Spinning Top.Read More
The best time to buy fear is when there’s too much of it.
But who in their right mind can tell when there’s just too much?
Honestly, any one can.
You just have to know what you’re looking for with over-extensions on the Volatility Index (VIX) along with its upper Bollinger Band (2,20) and Williams’ %R.Read More
When Munehia Homma first created candlestick charts in they 1700s, he had no idea it’d change the way we look at stocks 300 years later.
To him, candlestick charting was meant for the rice trade.
He’d record the opening day’s price of rice, the low and the close. And over time, he’d begin to see price patterns in his recordings, mapping out repetitive signals in the price bars. He’d soon give them names, like spinning tops, dojis, and hanging man – candlestick names we still use to this day. The discovery of such patterns helped him successfully predict future direction of rice prices, giving him a significant advantage over other traders.Read More
At times, we forget to see the forest for the trees.
Even though market chaos erupted over Syria and fears of a trade war in early 2018, we often forget that markets are quite resilient, especially when the economy is still strong.
We witnessed this in early 2018.Read More
Apparently, Donald Trump and Amazon.com have some bad blood.
However, don’t let it scare you away from buying the stock. Instead, on Trump-tweeting induced weakness, it’s actually a solid opportunity.
In late February 2017, the President tweeted his concerns that Amazon does not pay enough taxes and its pays too little to the U.S. Postal Service to deliver. The President also argued that Amazon’s current tax deal “is closing stores all over the country.”Read More
Traders are often told to buy excessive fear or greed.
Unfortunately, many aren’t aware of when to actually pull the trigger, or realize when fear or greed have gotten way out of control.
But there’s a simple way to know exactly when to buy and when to sell.Read More
Volatility has been severe in 2018.
After watching the Dow Jones Industrials explode from 24,809 to a high of 26,616, the bottom appeared to fall out starting February 2, 2018, as the Dow fell 665 points.
The Dow would fall another 1,175 points on February 5, and another 1,032 points on February 8, 2018. On March 1, 2018, the Dow would fall another 420 points.Read More
One of the best ways to make money on the Street is by spotting excessive bouts of fear and greed.
In fact, that’s how some of the most famous investors made their money.
In short, they were buying when others were scared, and selling when others got too greedy. They were exploiting the very psychology of herd mentality.
And we can do much of the same.Read More
All of a sudden, there’s a gap in the chart of your favorite stock.
Surprise news, earnings, something unexpected caused a bout of extreme optimism or pessimism that resulted in the move.
Look at Palo Alto Networks (PANW), for example. In early June 2017, shares closed at $118.59. However, shortly after the close, news of a massive cyber attack began hitting headlines. Orders come flooding in overnight. The next day, the stock opens at $140.Read More
It’s always interesting listening to fundamental and technical analysts argue.
Just as fundamental investors like to laugh at technical analysis, technicians laugh at the absurdity of investing just on fundamentals. It’s a never-ending, laughable fight.
Fundamental analysis shows us what’s under the hood, and whether or not an asset is over- or underpriced, as compared to the competition. In fact, Warren Buffett, Baron Rothschild and Sir John Templeton subscribed to this school of thought and made a fortune. They seeks to uncover the intrinsic or true value of an asset, and is dependent on future sales, earnings, and estimates. It’s pain-staking research at times.Read More
No one ever said technical analysis was easy.
But over time, with practice, the easier it becomes.
For months, we’ve introduced you to several technical tools. However, the one we get the most questions about are Fibonacci retracements. To many, this took is considered complex and outdated. But to be very honest, it’s not complex at all once you practice with it.
When it comes to trading, one of the best ways to tell how strong or weak a stock may be is by paying attention to the Money Flow Index (MFI).
In its simplest terms, money flow is another momentum indicator that indicates strength of money flowing in and out of a stock. If the flow of money into the stock is weak, we’ll begin to see MFI trend down. But as money flows into a stock, we can see this happening when MFI trends up.
It’s also essential in determining overbought and oversold conditions.Read More