At the close of the markets February 27th, all is quiet on the western front. Our Oil trade in the form of an inverse ETF is still open. Let’s take a couple of minutes to discuss the chart.
This how it looked yesterday. You may recall we got in at the upper red line and placed our stop at the lower red line, making it a trailing stop.
Here is how it looks at the end of trading today. We have a gap up at the start of the day. Gaps are created by pent up demand in something. At the opening the price can jump right to an increased value. In the world of 24 hour markets we don’t see gaps as much as we used. Traders used to have trading systems built around gaps. Maybe they still do; they are just not as busy as they used to be.
We have a candle looking all lonely sitting up there. It suits me, the sudden rise has anchored my trailing stop much higher.
We should discuss the makeup of the candle. Not the lipstick, etc – wise guy, I mean the good sized wicks or shadows at each end of the candle. This is detailed in Book 1 of my Basic Trading series which you can go and get for FREE. click https://charlesgoddard2020-f52a.gr8.com
The body of the candle is the price movement from open to close. The candle is red, therefore it was a down day. The open of the day was the top of candle and the close is the bottom of the candle. The wicks show us what the price was up to during the course of the day. In this case the price ran up, but the bulls couldn’t hold on; the price ran down, but the bears also couldn’t hold. A fight has taken place between the bulls and the bears, supply and demand, buyers and sellers. You can call the opposing forces whatever you want.
As a holder of trade on the long side of the market, we would have been happier if the candle had been a solid green (an up candle in my scheme) with little or no wicks. It would have meant the bulls were in charge all the day long.
If you look back to the left you can see a somewhat similar candle. This represents resistance and as such we need to have enough buying power to get through it. Let’s see what tomorrow brings.