On Friday the DJIA went from being down 400 points to closing up 100 points. The broad based reversal formed what looked like hammer candles on the daily charts of all the indices. The hammer candle is usually a bullish indication, but context and confirmation are required before price patterns or indicators can be traded.
Regarding context, we noted Friday on Twitter that large spinning top candles formed on the weekly charts. The spinning top is a candle with a narrow opening and closing range situated at the center of a candle with large upper and lower wicks.
It represents an attempt by a stock or index to move higher which is followed by failure to hold higher levels, and an attempt to move lower followed by a failure to hold lower levels. The close ultimately returns to and closes in the area where it opened, suggesting basically, indecision.
The market appears, however, to have made a decision, at least, in the early going of Monday’s session.