A Market Probe Versus A Shadow
A market probe is a way for the bulls and bears to measure the market desire to advance further in the current trend direction or not. A shadow is a rejection of the price reached; therefore, a reversal is more likely to follow with a shadow. The question that I ask myself when I see a candlestick shadow is, "Is that a shadow or a market probe?"
Let review the monthly chart of TSLA Tesla Inc's stock for an example of a market probe. In February 2020, with the monthly chart, we can see an upper shadow of the candlestick, which is often misinterpreted as a shadow, but instead, it is an example of a market probe. The market probed the price level of $191.16 but shortly retreated. The lower shadow for March 2020 is a bear trap. A bear trap is when the market gives a false bearish signal instead the market makes a price reversal and continues higher. In June 2020, the stock price of TSLA Tesla Inc advanced above that price level probed back in February 2020 which is $191.16. Again July 2020, the TSLA Telsa Inc probed a new high price of $357.90 and reached the current market price of $609.99 (as of the market closed on Friday, December 11, 2020). That is an increase of 221.76% from the initial market probe in February 2020 of $191.16.
The next question I think is how to determine whether that is a shadow or a market probe? Furthermore, the question after that is: Is that a market probe or a bull trap. Let save that for another discussion because that will require a more in-depth market analysis and more articles. Ultimately, it is the immediate market conditions and the final market decision that determines the price.
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Greenfield
Disclosure: Just a humble market opinion by Greenfield Analysis. This is not a recommendation. Greenfield Analysis has no investment in any of the securities mentioned in the article, no plan to initiate a trade in any of the securities mentioned, and does not receive any compensation for this market opinion.
A market probe is a way for the bulls and bears to measure the market desire to advance further in the current trend direction or not. A shadow is a rejection of the price reached; therefore, a reversal is more likely to follow with a shadow. The question that I ask myself when I see a candlestick shadow is, "Is that a shadow or a market probe?"
Let review the monthly chart of TSLA Tesla Inc's stock for an example of a market probe. In February 2020, with the monthly chart, we can see an upper shadow of the candlestick, which is often misinterpreted as a shadow, but instead, it is an example of a market probe. The market probed the price level of $191.16 but shortly retreated. The lower shadow for March 2020 is a bear trap. A bear trap is when the market gives a false bearish signal instead the market makes a price reversal and continues higher. In June 2020, the stock price of TSLA Tesla Inc advanced above that price level probed back in February 2020 which is $191.16. Again July 2020, the TSLA Telsa Inc probed a new high price of $357.90 and reached the current market price of $609.99 (as of the market closed on Friday, December 11, 2020). That is an increase of 221.76% from the initial market probe in February 2020 of $191.16.
The next question I think is how to determine whether that is a shadow or a market probe? Furthermore, the question after that is: Is that a market probe or a bull trap. Let save that for another discussion because that will require a more in-depth market analysis and more articles. Ultimately, it is the immediate market conditions and the final market decision that determines the price.
Thank you for reading! Please click Like and click Follow to see more.
Greenfield
Disclosure: Just a humble market opinion by Greenfield Analysis. This is not a recommendation. Greenfield Analysis has no investment in any of the securities mentioned in the article, no plan to initiate a trade in any of the securities mentioned, and does not receive any compensation for this market opinion.