Technical analysis provides a graphical picture of the market and one of the most colorful components is the mighty candlestick: a light to illuminate the darkness at the end of the tunnel.
The January snippet to the right — showing the bullish candlestick for today — was snipped from this 6-month daily candlestick chart . This is a live chart that changes daily. Refer to this live 6-month chart for a better overall view of the trend and the chart pattern.
So what are the components of a white bullish candlestick?
- It should be a relatively tall compared to other candlesticks in the chart pattern. This indicates a nice price move for the day: the TSX closed at 13,465.75, up 206.12 points, or 1.6 per cent.
- It should open close to the low of the day and close near the high of the day as indicated by small shadows (wicks). In other words, buyers came in at the open and kept buying right to the top. The price movement was nearly straight up for the day with very little selling pressure.
The energy and materials stocks were the big movers today. Traders saw support developing around the 13,300 level and went for the ride. But, unless there is a break above 13,500; the TSX is still in a consolidation (sideways) trading range. Will there be a follow-through on the buying tomorrow? Or will the day traders start selling at the 13,500 level?
For an investor with a longer term perspective, I would not buy into the market unless there is a confirmed close above 13,500. Then you maybe able to ride another upward leg in the index.