Click the Chart to EnlargeI have been waiting for a classic bottoming candle stick pattern to appear before starting to enter any bullish trades (expecting the market to rise). Finally today we got a truly classic candle pattern. The pattern is called a doji when the opening and closing price are the same or very close. This appears like a long line with a small cross hash mark on it.
The Japanese rice market traders who first discovered these patterns talked about how the market is in perfect balance when a doji is formed.
Stop and think about this..........the market moved wildly on almost the heaviest volume (most shares exchanged) in the history of the market. If you study price history you will know that huge volume days tend to have BIG price movements from open to close. Whenever a high volume, wide range doji happens something very rare is occuring.
I like to think of the Doji candle as an analogy to the apex point of a ball thrown high in the air. No matter with what force you launch that ball, at some time, at its highest point, the instantaneous velocity will be ZERO....momentary perfect balance. Then the ball will quickly change direction and fall down. The doji is the same. It is a point of momentary balance (no change from open to close) right at the apex, or turning point in the market.
Now it is certainly possible that today will not prove to be the lowest point before a major price advance, but I would heed the warning of the doji. I believe that based on many different factors, we are within hours to days of beginning a large advance in the market.
Pete
you've certainly picked an interesting year to start a blog on this.
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