Below is a monthly candlestick chart for the HUI which is made up of black and white candlesticks. When you see a string of black candlesticks all in a row you know you’re in a strong impulse move down and when you see a string of white candlesticks all in a row you know you’re in a strong impulse move up.

Note the four white candlesticks all in a row from the January low made this year. If you see a black candlestick that forms during a strong impulse move up, many times it will show up on the daily chart as some kind of consolidation pattern. The black candle formed right on top of the 2013 support and resistance line that had reversed its role from resistance to support on the backtest.

The higher this initial impulse move goes up before a good correction takes hold, will have a direct impact on the consolidation patterns and impulse moves that will follow down the road. This first impulse leg up is giving us previews of coming attractions. The higher and stronger the better.