Month: February 2021

S&P 500 May Extend Rally on Stimulus Hopes and a Weaker US Dollar

Investors are watching the economic data in the S&P 500 very closely. The data reveals that industrial production has declined slightly in Q3 of this year, compared to last year. Meanwhile, employment levels are on the rise. However, consumers have been pulling back from their work in recent months, due to slower wage growth. Consumer spending has picked up only recently, but companies are still cautious about laying off employees. To add to this dilemma, consumers are saving more money for the rainy days rather than spending it on unproductive assets.

As we move towards the expiration of the stimulus programs at the end of this year, the question that will be on everybody's lips is what might occur to the market when the Federal Reserve starts to raise interest rates again? If the economic data is good, then the market should continue its rally, and there is a strong likelihood that it will go higher. The S&P 500 might hit another all-time high, but the market will remain bullish, especially if unemployment rates fall below 5%. Unemployment rate falling below the official measure of five percent would trigger a correction in the market.

But what happens when the Federal Reserve raises rates and the dollar loses value? If the economic data turns negative and unemployment rises, it could trigger a sell-off in the S&P 500. Will investors still buy into the market when it experiences a correction? In a market like the stock market, where investors have lots of choices, the answer may vary. Some might think that a correction will last for a long time. Others might think that they'll ride out the correction, and by the time the S&P 500 regains strength, the weak dollar will be history, and the rally will resume.

If the U.S. government starts to raise interest rates, the dollar will likely lose value. That's one argument for holding off on buying the dollar. But if the economic data turns up negative, a sell-off in the U.S. dollar could follow. So, will investors still buy into the market when it experiences a correction? Again, the answer will vary.

Are investors waiting for a Fed rate hike to re-start a rally? A Fed rate hike could cause a dollar rally, as it does happen every time the central bank increases its interest rate. The key to this argument is timing: Right before an interest rate increase, a market may be ripe for a breakout upward trend in the U.S. dollar. Then, as rates start to rise, investors will fear that the rally will be short-lived, and they'll want to pull out of the market as quickly as possible.

Is it a bullish market, or a bearish market? In technical analysis, it's important to know whether a stock is overbought or oversold. In a bearish market, the market is considered oversold because the supply exceeds the demand. In a bullish market, the market is considered overbought because the supply exceeds the demand. So, a rally in the S&P 500 could last as long as the bulls are around. Once the bulls go away, the sellers can cash in and the losers have little to no equity.

Is this the end of the rally in the S&P 500? Not quite. Economic data will eventually force the dollar back down again, and traders must decide whether to ride out the bearish period and ride the rest of the market out, or sell out now to lock in profits before the bears rule the day. In my opinion, it is best to sell at the end of a bullish market, and ride out the rest of the trend with a bearish approach.

How to Read a Candlestick Chart

Candle stick graph and bar chart of stock market investment trading. Analysis Forex price display on computer screen.

Candlesticks have been used for trading ever since the ancient Chinese trading days. In fact, trading on candlesticks has been around since the 2nd century BC in China. This method of technical analysis was used by the emperors in China as the way to interpret the movement of the sun. These emperors would rotate their palms on the charts to tell how the market was performing. From this, they determined the direction of the market and set the buying and selling prices.

Candlestick charting is a simple and basic method of charting. However, it is often an extremely difficult method to learn because of its highly complex nature. The reason is that the placement of each candle on the chart is very important and interpreting the meaning of each one requires a great deal of knowledge of Forex trading. Candlestick charts contain two types of wicks. The top wick represents the most recent price change in the market, while the bottom wick symbolizes the previous price. On a candlestick chart, every white candle indicates the opening price in the trading period, which starts from the high of the session and goes up to the lowest price at the end of that period.

Candlesticks can also be made utilizing bar charts. Unlike the previous charts, however, there are no colored bars on candlesticks. Instead, the scale between the highs and lows of the trading day on the bar charts is represented by a color. Green indicates that the high touched point was reached in the trading session, while red indicates that it was surpassed by the low. Learning how to read a candlestick chart requires traders to have an in-depth knowledge of technical analysis and price action.

On a number of the stock and forex trading charts, candle formations are often used to represent a time-frame or price pattern. The time-frame refers to the number of days since the last closing price. Most traders use the time-frame indicator to identify whether a pattern is developing. When looking at the bullish or bearish candlesticks, you have to pay close attention to the size of the open and the size of the high and the low.

Another type of candlesticks, you need to pay close attention to is the hammer pattern. On this type of chart, the open of the formation is lower than the high and the lower wick represents the first small break of the price action, followed by a reversal of the trend. For the hammer candlesticks, you can expect continuation of movement upward until the support line is broken. When this happens, the price action will most likely continue on the higher path, heading towards the next break of the pattern. Keep in mind that bullish and bearish candle patterns usually go together.

Another important point you should note when learning how to read a Candlestick Chart is the reversal pattern. It is common for a candle formation to reverse itself. This may happen as the open of the formation is bigger than the high and the lower wick is breaking lower than the previous high. This makes it easier for the formation to reverse itself. As the price reverses, the open of the pattern goes higher and the price begins to reverse.

Traders who are using candlestick charts learn how to interpret the open and the closing prices. Knowing the direction of a trend is essential for successful day trading. Candlestick charting has made the analysis of these points much easier for traders to use. Traders can now see the direction by interpreting the color and size of the candle. Traders who study candlesticks will also learn how to identify support and resistance levels as well.

The upper wick in a bullish candlestick pattern represents a continuation of the previous trend. The lower wick in this case indicates that the previous reversal has ended and the current trend is up. Support in a bullish candlestick pattern means the previous trend is slowly fading out. Resistance in the upper wick area indicates that the current uptrend is breaking through an area of support. This means that traders will need to wait for further confirmation that the uptrend has moved past the support before entering into the risky territory of buying.

How to Manage the Emotions of Trading

Learning how to manage the emotions of trading is very important to any trader. The Forex markets are fast moving, volatile and full of possibility. Because of this you must be able to think quickly and make decisions to get yourself out of a position. That is why it is vital that you can think on your feet and react quickly. This will allow you to catch moves that other investors are not so likely to see coming.

The emotion of fear in trading has many characteristics. Fear can make you invest money you normally shouldn't, can cause you to miss good trading opportunities, and can cost you money. The best thing to do if you are experiencing fear is to acknowledge it and understand that it is present. You should then try and remove the negative emotions from your mind.

Dealing with your emotions can be tricky though. Many traders feel uncomfortable expressing their emotions in public and prefer to keep their activities private. However, this doesn't allow them to fully experience their emotions. If you're uncomfortable with your emotions then you will most likely procrastinate and not take advantage of the amazing opportunities that will present themselves as a result.

How to manage the emotions of trading starts by recognizing that all emotions are rooted in our interpretation of how the market behavior really is. The more you understand this the better chance you have of managing your emotions and avoiding costly mistakes. A great way to do this is to write down your thoughts as they happen. You should also ask others to read these thoughts for you. This will give you the opportunity to focus on the market behavior when you are feeling uneasy.

Another strategy is to develop a trading plan that involves a clear description of the behavior of the market. This will help you see which of your trades may be dangerous and should be halted. It will also help you identify areas of weakness and seek to overcome these problems before they arise. Trading plans also help you to gain a deeper understanding of the market behavior and therefore enable you to make better decisions.

Developing a trading plan also enables you to set short-term and long-term goals. Having clearly defined goals is necessary so you can determine your trading style and function properly. It is very common for traders to experience a variety of emotions, especially during times when they experience significant market fluctuations. The best way to deal with these emotions and to develop a solid trading plan is to develop a solid trading psychology.

Emotions are difficult to control but you certainly can practice techniques to alleviate some of the effects of anxiety. Consider working out in a quiet place at the end of each day. Also, if you feel that you are having trouble controlling your emotions then you can purchase or download trading software. These programs provide you with a range of built-in features and tools designed to alleviate the effects of anxiety and fear. There are a number of online trading sites that offer a variety of trading strategies and software so you should have no difficulty finding a suitable program for you.

When it comes to trading the market effectively, you need to be aware of the market and all the variables that influence it. Developing good trading skills and learning how to manage your emotions is essential to succeeding in the Forex market. However, you must also learn to remain calm and avoid making impulsive decisions which only have the potential to cost you money