Candlesticks at Trade10.com- The science of trading market momentum for stocks, options, futures and bonds.

Critical Day Analysis

Our critical day analysis is all about trend reversals. We tell you when there is a high potential for a reversal of the short trend and we've been doing it since 1994 with an 80%* accuracy.

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WALK THROUGH A CRITICAL DAY

OUR SERVICE

MARKETS

UNDERSTAND THE CHARTS

Candlesticks

Candlestick charting is a method developed by the Japanese in the 1600 to help analyze the price of rice contracts. The chart is made up of both black and white candle bodies, often with "wicks" at both ends. A single white candlestick body indicates that the opening price was at the bottom of the body, the closing price was at the top of the body, meaning gains for the period. If the candle has wicks on either end, the bottom wick represents the low prices traded during that period and the top wick indicates the high of the period. When a candle body is black or colored in, the opening price is the top of the candle body and the closing price is the bottom of the candle body and again if there are wicks, they represent intra-day highs and lows. Candlesticks allow for a quick read on changes in supply and demand. Using the critical day analysis with candlestick interpretation can help provide confirming evidence of trend reversal very early in the movement. Critical days are given to members three days before the critical day arrives and provides advance warning of a potential trend reversal. When combined with an understanding of other market indicators and charting methods such as candlestick charting, these studies can open up to a world of trading opportunity.

We have better than an 80%* success rate over 6 years with an average of 5 signals a month.

Critical Days on the graph below are shown with Blue and Red dots. The blue dots, above or below the price plot, indicate successful critical days. Red dots indicate failures. A successful critical day indicates that the short trend did reverse, as expected by members, going into that period.

A look at Candlestick interpretation

Bullish Patterns :

Long white candle

Hammer - small real bodies and long lower shadow or wick. Bullish if they occur after a significant downtrend.

Engulfing Lines - Bullish if it occurs after a downtrend. It occurs when a small black candle is followed by a large white candle.

Morning Star - Bullish pattern and indication of potential bottom for prices. This pattern indicates a possible trend reversal.

Doji Star - Indicates a reversal potential but also indecision. A Doji Star requires price confirmation of a trend reversal to be tradable.

Bearish Patterns :

Long black candle

Hanging Man - These candles are bearish if they occur after a significant up trend. They have small real bodies and long lower shadows or wicks.

Dark cloud cover - Bearish pattern of a white candle followed by a black candle in an upward trend.

Engulfing Line - Strongly bearish if occurring after a significant up trend. A small bullish candle is engulfed by a large black candle.

To the right technical studies are examined in more detail to provide a sense of conformational evidence for traders of the critical day. Click on any of the terms to take a closer look at a technical discussion on that topic. All formations, patterns, indicators and technical tools fail at various times and so should only be used to build a body of evidence in forming a trading decision rather than being solely relied upon. There are a number of valuable studies that lead to intuitive understandings about price and volume but a strong compliment to technical analysis is an understanding of the trends and changes in the fundamentals and economic activity that ultimately lead valuation levels in the markets.

Walk through a critical day

The graphs show a price plot of the Dow Jones Industrials from Sept 28/00 to early November. The First graph ends on November 3/00, two days before an upcoming critical day on November 7/00. Our members looking at the market are expecting a trend reversal to occur due to the high rate of success in our research. Ideally a member will be using their own skills to judge the supply and demand changes, using technical and fundamental indications to confirm suspicions of a reversal, and trade accordingly.
On the second graph we see that the price action on November 6 was a bullish day, reversing the short trend so that the short trend leading into the critical day is now up. A critical day is an expectation of a reversal of the short trend that immediately precedes the critical day. In the case of the November 7 signal, given to members 3 days before, is an indication that the upward moving trend, recognized at the close of November 6 is expected to reverse direction.
On the third graph we can see that November 7 was a low volatility after a large gain on November 6 of about 160 points for the Dow Jones Industrials. The subsequent move over the three days following the November 7 signal saw the Dow Jones Industrials fall 376 points. The next day, November 13, the Dow Jones Industrials lost an additional 83 points with intra-day low a full 609 point loss since the open on the critical day.

Most recent signals

You can see the short trend immediately prior to a successful critical day, reverses coming away from the critical day. Often a failed critical day will indicate a stronger bias in the market for continuation of the trend that was in place prior to the critical day. A failed signal can therefore provide as much information and opportunity as a successful one.