Make no mistake about it, last week was a very important week for the stock market. Looking on the weekly equity charts, you will see one of the most powerful Japanese candlestick lines. This one line on the chart indicates that there could be some major problems ahead for the stock market.
In my new video I explain what this line is and how it can play out in the short and longer-term time frames.
As always our videos are free to watch and there is no need for registration. I would really like to get your feedback on this powerful formation and what you see for the markets ahead.
All the best,
Adam Hewison
President of INO.com
Co-creator of MarketClub
Excellent... and true. Not always a 100% indication, but often a great indicator, especially on a weekly chart.
The weekly bearish engulfing candle discussed in the video appears to be a negative signal, especially with 20/20 hindsight from today. However, classically, this candle stick formation is usually applied at the top of a trend. Using it at the top of a 3 week period may be stretching the definition of a trend as that is a rather short timeframe, but it may be sufficient (and appears to be prescient given today's strong bearish action).
Also interesting in the video of the appearance of the subsequent doji, but this exemplifies why you can't evaluate a weekly candle until the end of the week. As one can see today, that doji is no longer a doji, but has become a large red candle. What it will actually be at the end of the week, only time will tell.
Robbie,
I totally agree with what you are saying that the weekly red negative engulfing line (bearish) needs to be confirmed by the end of the week. When you're using weekly charts you have to wait until the end of trading that week which normally comes on Friday to get a strong confirmation.
This week's close has special importance and should be watched closely.
All the best,
Adam
Hi Adam!
This is one of my favorite candlestick reversal patterns - although I use a modified version when scouting this setup..
Good stuff, as always!
Cheers!
Frank
I also noticed this bearish engulfing candle on the weekly charts of the other index futures during my review this past weekend, notably the S&P emini charts, and have (so far) benefitted accordingly
S & P weekly
1) Price traded through the 200 and then fell back below
2) Price also traded through it's 50% retracement and has fallen below. Price has retested the 50% for resistance.
3) Price has held the 1150 resistance level as well.
4) MACD set at 21-55-13 turned down end of May 2010. May of 2009 is when it last turned up.
5) 1040 area is the current support and possible neck line for the Head & Shoulders.
6) If we break and hold ( weekly close below 1040 ) we shoould see our next target at the 940-950 area. We have a solid band of support between 956 and 869. Lots of conjestion in this area
Lots of confluence to be sure.
Given our current spending practices and lack of real job growth this move is very likely to happen
Just my 2 cents for it worth.
KH
San Diego
Again, thank you for the heads-up,
and the reminder to look at the weekly chart also.