The market considers a reversal but hesitates in doing so. The previous bearish pattern is not confirmed today. According to our rules, it is by now null and invalid. However, a new bearish pattern is developing and another SELL-IF alert is issued today. It is time to repeat the homework. Sounds tedious? Well, earning money is not easy. Keep an eye on after-hours and futures trading and digest all related news events, economic data and the outlook of the world stock markets prior to the next confirmation session.
You must again check if one of the following three bearish confirmation cases holds or not:
Does the market open with a downward gap? Your benchmark is the opening price of the gap. If the prices stay below this benchmark, sell your shares.
Does the market open at a level, equal to or above the previous day’s close? The benchmark is that closing price. If prices during the session stay below this benchmark, sell your shares. In both of the above cases, avoid selling if the prices during the session start going over the benchmark.
Check also the rare case in which market opens with a big upward gap but the day ends with a long black candlestick though still closing above the previous close. Such activity confirms the bearish alert and the benchmark is the closing price of the long black candlestick.
If one of these confirmation criteria is not met, or in case of a white candlestick or doji, SELL-IF alert remains valid (without confirmation) postponing the confirmation search to the next session. Any long white candlestick following a SELL-IF alert, on the other hand, makes the signal void and invalid.
Bearish alert is still valid so existing short positions should be carried. New short positions may be considered only in case of bearish confirmation.
