Short Selling

Many investors do not like short selling. There is the stigma that short selling induces negative
connotations and is Un-American. However, short selling is a vital part of market movements. It
provides liquidity and stability in price movements. Short selling is also extremely profitable.
The anguish of watching long positions go down is completely reversed with the exhilaration of
knowing those prices going down are producing profits. The markets go up and down. Having the ability to identify those directions permits an investor to make profits in any market
conditions.

Short selling greatly enhances returns. Price patterns that work extremely well as bullish
indicators perform just as well as bearish indicators. Candlestick buy signals in an oversold
condition produce an extremely high probability of producing an uptrend. Conversely, candlestick sell signals witnessed in overbought conditions produce extremely high probability that a downtrend is going to occur. Those signals/patterns, occurring with other technical indicators such as trend lines and moving averages, dramatically increases those probabilities.

Short selling, when a candlestick signal appears in an overbought condition and at a major resistance level such as a moving average, becomes a very easy trade set-up to identify.

Knowing what patterns could form at specific technical levels makes analyzing the market direction in general that much easier.

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