TSX closes at 13,841 which was in a whisker of the high for the day of 13,844. When the close is at the high or near the high for the day, the candlestick is classed as having a shaven head.
The bullish white candlestick for today (Thursday) is a graphical presentation of what is logically bullish:
- The TSX index opened above both the previous day’s (small red insignificant candlestick) close and the close for the bullish white shaven head candlestick on Tuesday.
- There was a small lower shadow which indicated that there was little sell-off after the open.
- It was a relatively tall candlestick which was just a graphical representation of the 161 point (+1.18%) move in the index.
- There was no upper shadow: in other words there was no profit taking at the top of the market.
The bulls were definitely in charge today and I now want to introduce the concept of confirming indicators. Please customize Bigcharts so that we are singing from the same page in the hymn book, and then look at the 6-month daily candlestick chart which will open in a new window. On this chart you will notice the following:
- You will see the bullish white candlestick where I snipped the chart for this post.
- All three short-term simple moving averages are above each other and are moving up.
- The close today is above all the short-term moving averages.
- The trading volume was relatively high. The trading volume is the fuel that lights the candlestick and should increase as the index rises.
- The on balance volume is trending up. It should move in the direction of the price trend: if not, we have divergence and this is not good.
- The MACD indicator, a short-term momentum indicator, is moving up in the direction of the price trend.