SP500, NASDAQ, DJI: CANDLES SPEAK: 04.04.2021

Today would be a good day to evaluate a possible impact of sudden very bearish candles in the bullish train.

The daily charts of SP500, Nasdaq, and DJI futures can confidently be viewed as bullish and this is reasonably supported by various indicators.

However, from the perspective of candlestick theory, both NQ and DJI futures on Friday made a very strong bearish statement by forming a Gravestone Doji/Hammer type of candle after a rather strong rally.

Musings

  1. If on Monday the indices continue a strong rally and close above the top of the Doji candles, the Doji would be considered as “false alarm”.
  2. If on Monday the indices move sharply lower and close with some red candles, it would definitely swing the odds to the bears side. The bigger the red candle, the higher the odds.
  3. If on Monday the indices close with a short candle (red or green), the indices are likely taking a pause (indecision). In this case, the bearish pressure continues.

Was the Friday’s closure the canary in the coal mine or just a flick? It would be a very interesting opening today and a session tomorrow.

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