Market Overview

High Profit Reliability - Scoop Pattern Results

Candlestick signals and patterns provide a huge advantage for investors. They allow investors to see what the next price move should be with a high degree of probability.

This is merely the result of hundreds of years of witnessing price moves formed by reoccurring investor sentiment. Investor sentiment creates price patterns due to reacting the same way over and over during specific market conditions.

Most investors panic sell at the bottom. This is reflected in candlestick charts. Most investors buy exuberantly at the top. This is also reflected in candlestick signals. These conditions, put into graphics. allow an investor to see when emotions are setting up for a potential reversal in a price move. It is a simple dynamic that allows the candlestick investor to be prepared for high profit/high potential trades.

Because investors react pretty much the same way during specific conditions of a price trend, a huge benefit is produced by the candlestick charts. It graphically reveals price movements that have resulted in predictable results. Not only are the signals the result of reoccurring investor sentiment but the accumulation of signals creates patterns that have highly predictable results.

Obviously, these patterns became recognized because the results produced inordinate profits. All boats will rise in a rising tide. Candlestick analysis creates a much greater profit potential on a multi-fold basis.

First, candlestick analysis provides the tools to analyze the general market direction with a relatively high degree of accuracy. It also allows for the the analysis of specific sectors, not only identifying which sectors should move positively, but which sectors should move positively with the most strength. This can then be fine-tuned by analyzing which stocks in each sector has the strongest chart. This can be done by identifying the strongest signals and/or patterns.

The scoop pattern has very specific results. It can be easily identified by a relatively flat trading area prior to a pullback. A scoop pattern does not have a simple scanning formula. It is usually easily identified upon simple candlestick signal scans. The scoop portion of the pattern usually shows up upon seeing a candlestick signal being confirmed. At that time, it becomes merely a visual recognition of the price history, a flat trading range, followed by a pullback, followed by a bullish signal confirmation.

Taking advantage of the expectations built into a scoop pattern allows an investor to have time to set up for the appropriate entry strategies. Buying the position can be done upon seeing the first evidence of the scoop forming or when the price breaks out through the handle (the flat trading area) and into new territory.

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Knowing there should be a strong price move coming out of a scoop pattern set-up allows for multiple option trade strategies. Aggressive strategies can be implemented with buying calls out-right or establishing an aggressive call spread. Because the pattern provides ample time to identify its set-up, the appropriate trade can be well-planned. Specific areas of the pattern allow for appropriate timing.

Chart: Natus Medical (NASDAQ: BBCN)

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Chart: NextEra Energy (NYSE: NEE)

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In either case, candlestick patterns dramatically improve the timing element of a trade. There are logical spots to be buying. Do all Scoop patterns provide big profits? Obviously not, but they produce a high percentage of profitable results, otherwise the patterns would not be recognized as patterns today.

The expected results also produce visual confirmation of when a pattern is working as expected or it has failed. In either case, the candlestick investor has a clear roadmap of what to do with the trade.

The Candlestick Forum provides simple scanning techniques for recognizing pattern setups. Candlestick patterns are not unusual formations. Investor sentiment constantly creates reoccurring price patterns because investor sentiment reacts the same way over and over. Use this information to your advantage.

Stephen W. Bigalow is author of “Profitable Candlestick Investing, Pinpointing Market Turns to Maximize Profits”, “High Profit Candlestick Patterns” and “Candlestick Profits, Eliminating Emotions” is also principal of the Candlestick Forum, the leading website on the Internet for providing information and educational material about Japanese Candlestick investing. Over 28 years of extensive study and utilization of candlestick analysis has produced an array of easy-to-learn educational material about Candlesticks. As one of the leading Candlestick experts in the nation, Mr. Bigalow, through consulting with major trading firms, has developed multiple successful trading programs from the day-trader to the long-term hold investor.

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