Candlestick Pattern and Eminis

Candlestick Patterns and Eminis

By looking at a historical price chart, it is obvious that overall market movements are highly significant for the value of your holdings over a particular time period.  This is particularly true for the Standard & Poor’s 500.  Certain candlestick patterns, however, have been particularly useful in trading this index via S&P e-minis. You can use candlestick patterns and eminis together, and an individual investor can ascertain a sense of market sentiment in order to optimize entry and exit points for profitable position undertaking.

Candlestick Patterns and eminis – Using the doji with S&P minis

What appears to be particularly successful in the S&P e-minis market is the use of what is commonly referred to as doji candlestick formations.  A doji, in essence, resembles a cross, a plus sign, or an inverted cross.  Technical candlestick analysis attempts to recognize certain chart patterns over a certain time period to predict the probable future price movements of a particular investment.  The various types of doji formations that can occur represent particularly successful patterns for successfully trading the S&P e-minis market. For this market, many technical analysts feel that the doji is the most important type of candlestick formation to recognize, as it can be shown to offer a signal of the beginning of a minor, intermediate, or major trend reversal.  The inability to recognize these patterns for the S&P e-minis market could result in an individual investor being on the wrong side of a position.

Candlestick Patterns and Eminis – Not all dojis are created equal

Generally, there are four types of dojis: common, dragonfly, gravestone, and long legged.  Each one of these patterns will appear when the opening and closing prices are the same, such that there is no candlestick body but simply wicks.  The distinguishing characteristics of each doji type are their visual appearance.  In the S&P e-minis market, the formation of doji candlestick patterns is easily recognizable.  Candlestick patterns and eminis work extremely well together.

They will appear at times when there has been a previous significant movement in one direction or another.  Their appearance represents a strong indication that the market is set to pause in the previous movement of the underlying long-term trend.  After the appearance of a doji candlestick formation, more likely than not, a reversal in price action can be observed.  The larger the wick is in this particular pattern, the more significant the signal for a price reversal is viewed by the market participants.

Candlestick Patterns and eminis – Capitalizing upon market reversals

The appearance of these types of candlestick patterns do not guarantee that a reversal in price action will occur, but they have been shown to be at least a highly probabilistic initial indicator of possible reversal action.  As a result, when they are used with other technical analysis tools and indicators, they can be greatly beneficial in giving individual investors the opportunity to recognize optimal points of entry for the undertaking of trading positions.  Any tool and indicator is only as good as the expertise and experience of the individual utilizing them.  Candlestick patterns and eminis, the fact that these patterns have been used with great success by certain individuals for centuries warrant that they should be investigated and mastered by anyone who wants to improve his or her S&P e-mini investment results.

Candlestick patterns and eminis are a common marriage among top futures traders.  Where you have volume you have candlestick patterns that print highly predictable trade set-ups. Use these to your advantage for larger low risk profits.

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