THE CANDLESTICK COURSE long, black real body, with the closing price several points below the open, reveals negative or bearish sentiment, ‘The upper shadow in Exhibit 1.1a tells you that buying pressure pushed XYZ up toa high of 97. Stil, while the stock closed relatively high on the ses- sion, buyers were unable to hold it at 37 into the clase, The lower shadow shows that selling pressure forced the stock toa low of 20, Nonetheless, buy- ers came in to offer support there and propelled it up to close at 25, 6 points higher than the low. While we're talking about open and closing prices, we know that the Japanese place great importance on these eritical time pertods as they per- tain to the trading day. They beliove, as do most Western analysts, that the first hour of trading usually sets the tone for the day. One Japanese saying, states, “The first hour of the morning 1s the rudder of the day.” On opening, the market has absorbed and digested the events that took place since the prior day's close, The results are often volatile, The impact of market reaction can cause radical price changes for equities, or even entire industry groups. By the hour's end, the flurry of activity may substde a bit, and market participants have a pont of reference with which to work. An American market adage contends, “The amateurs open the market, and the professionals close 1.” Although it's an overstatement to assume the market's open fs populated strictly by novices, It’s true that the close of the day usually produces heavy emotional involvement. During the last hour, many market players adjust thetr positions. This is the time when traders, in- vestors, and Institutional managers decide whether or not to hold positions overnight. Margin calls on the futures markets are calculated by thetr price at the close, No wonder the last hour can produce volatile price swings fueled by strong emotions and hetghtened volume. Since both the opening and closing hours can be turbulent periods, if you choose to take part, remember to use caution and discipline. In the next section, we'll discuss one of the most critieal uses of candle charts; giving you early indications that the trend may be changing, Whether amature, extended trend, or a shorter, intormediate-term trend 15 in place, candle lines and patterns display powerful clues that a shift in control from bulls to bears, or viee-versa, 1s In process or could be imminent, Fora trader, this information 1s crucial. For an investor, recognizing these all-important, signals could make the difference between keeping hefty gains or giving them back to the market. The material you learned in this section will aid you in learning how to interpret these potent signals,