Candle Analysis – Watch Tomorrow’s Markets Carefully

By Chris Diodato

Last week was pretty uneventful to most portfolios.  I took some losses as I watched my options decay, and otherwise, I was bored too.  However, notice that some significant candle formations began to form.  First, the shooting star pattern in the Dow Jones.

 

This is typically a bearish pattern.  Of course, we want to wait for a breakdown.

What else?  Notice the long red candle from last Tuesday.  All three proceeding days after that day were bound within that single day’s range.  This now creates a pattern called a “falling three methods.”

Once again, this is a bearish pattern, but we must wait until confirmation.

So, speculating right now, if the falling three methods plays out, that means that tomorrow or Tuesday will be accompanied with a large drop in the major indices.  At 11 PM EST, right now, I already see the trendline of the past three days being broken through on the Dow’s futures chart.

 

Happy trading!

~Christopher Diodato

Christopher Diodato

About Christopher Diodato

I have been trading since my eighteenth birthday to pay for my college tuition. It was at first rocky, but now trading is my love, my work, and my passion. In addition to my experience in markets, I have passed all three exams to obtain the Chartered Market Technician (CMT) credential. I believe that I am the youngest to ever do so! I want to help out small investors to make some money on the side. There's a common notion out there that "big money" rules all. I disagree. With enough hard work and discipline, anyone can become the next Paul Tudor Jones!