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Monday, March 05, 2012

Heikin Ashi Candles on YM, ES, NQ & TF

Depicted on the Daily chartgrid below of the YM, ES, NQ & TF are Heikin Ashi candles.

After today's close, the only one that has begun to trend downward on this timeframe (according to the Heikin Ashi definition) is the TF (as there is no upper shadow on today's bearish red candle, which reflects strong selling). Based on this method, the TF has broken its Daily uptrend, while the other three e-mini futures indices are consolidating and show indecision (as there are both upper and lower shadows)...today's red candle will need to be confirmed tomorrow by a flat-top red candle to confirm that the uptrend has also been broken on the YM, ES & NQ.

Subsequent Daily flat-top candles will then need to be made on all of them to confirm continued strong selling pressure.


The Daily chartgrid below of the YM, ES, NQ & TF depicts traditional candles. As can be seen, buying pressure pushed price back up on all of them, except on the NQ which closed near its low of the day. The TF bounced up before touching its rising 50 sma to form a bullish harami hammer.

Because of the conflicting bearish signal from the Heikin Ashi candle and the bullish signal from the traditional candle, the TF merits a close watch tomorrow and in subsequent days. Furthermore, as it has demonstrated the greatest weakness of late, any further drop could produce a drag on the others. Additionally, the low close on today's traditional candle on the NQ shows some weakness.