Reversing Candles Offer Short-Term Support

I consider reversing candles IF they occur after a lengthy trend.

And if a key price support/resistance level is tested simultaneously, all the better! There were plenty of reversing candles on Thursday as U.S. equities were very weak in early morning trading, but came to life in the afternoon session. Procter & Gamble (PG) is a defensive stock that had finished lower for 9 consecutive trading days:

Enter Procter & Gamble (PG):

The stock market has been insanely volatile in recent days and PG is a defensive stock where volatility is somewhat limited, which might be something that many more defensive-oriented traders appreciate. The early morning selling appeared to be extending a key price breakdown. Instead, PG bounced back strongly on Thursday afternoon and a "piercing" candle printed. This type of candle, after a lengthy downtrend, usually results in short-term bullish action. I'd be cautious on any close beneath 137.83. Otherwise, I believe it's entirely possible that PG moves back up to test its moving averages near the 144 level.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.