A bullish pattern has developed and a BUY-IF alert is issued. You will also see if we erred badly in our previous SELL signal. So a warning is in order. Confirmation in the next session means that the signal failed. This failure amounts to missing a significant bullish opportunity. You can, however, still ride on a back wagon of the bullish train by following the guidelines below. Now, the task is to confirm the validity of this bullish pattern. A confirmation will mean that we have underestimated the bullish power of the market. We are posting daily the current confirmation status, but It is still your duty to do your homework. A good starting point would be to keep an eye on futures trading to get preliminary hints about the direction of the market. Related news, events, economic data, and the world stock markets should also be closely followed prior to and during the confirmation week.
There are three possible cases of confirmation. This week, you have to follow the sessions carefully to check if these cases will hold or not:
The week opens with an upward gap, signaling a bullish sentiment in the first case. Your benchmark will be the week's opening price. If the prices stay over the benchmark, go long. Any white candlestick with an upward gap is a valid confirmation criterion.
In the second case, the week opens at a level, equal to or below the previous week’s close. The benchmark is that previous close. If prices during the week stay over the benchmark, go long. Any white candlestick closing above the previous week’s close is the second confirmation criterion.
If, however, in both cases, the prices during the week start coming below the benchmark, avoid buying. Sell if you feel a definite tendency in prices to close the week below the benchmark.
The third case of confirmation is rarely observed. The week opens with a big downward gap suggesting a very bearish week, and the week ends with a long white candlestick, but still closing below the previous week’s close. However, such a week satisfies the third confirmation criterion and in this case the closing price of the long white candlestick is taken as the price of confirmation.
If one of the three confirmation criteria is not fulfilled, or in case of a black candlestick or a doji on the confirmation week, the BUY-IF alert remains valid, however without confirmation and the three confirmation criteria are then sought in the following week. The only exception is the long black candlestick. Any long black candlestick following a BUY-IF alert makes it (the signal) void and invalid.
Do not consider any new short positions given the bullish alert and the recent bullish momentum. Short sellers must cover their positions to prevent further losses, especially if the market confirms the BUY-IF signal, in which case we owe you an apology about the previous SELL signal.
