The Candlestick Summit - Candlestick Charts - Learn ... Nison Candlestick Summit – Day 1 4...
Transcript of The Candlestick Summit - Candlestick Charts - Learn ... Nison Candlestick Summit – Day 1 4...
The Nison Candlestick Summit – Day 1
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The Candlestick SummitReaching the top levels of Nison
candlesticks- Day 1
CandlestickCharting
Strategies
Candlesticks +Western
Indicators
Candlesticks + Trade Management
Approximate Time Line
Day 1
9-12 Neutral and Bullish Advanced CandlesticksBreak 10:15
Lunch 12-1
1-4 Advanced Bear CandlesticksBreak 2:15
Day 2
9-12 Candlesticks + Advanced Western IndicatorsBreak 10:15
Lunch 12-1
1-4 Candlesticks + Advanced Trade ManagementBreak 2:15
Note: will be interspersing using Nison Candle Scanner throughout the session
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THE 3 CHALLENGES
1. When to Enter
2. When to Exit
3. Which Markets
Solution:Use Software
to Quickly Find a Watch List
Contact Paul for info
© Steve Nison’s Candlecharts.com
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”Any trader who relies oncandlestick charting will find[NCS] a fast, flexible, andefficient tool that could add totheir trading effectiveness”
“I was quickly and easily able to implement allof the features of the NCS software. And thatit was coupled with the free Ninja Trader wasespecially helpful.
NCS saves time for quicker and timelieranalysis potentially leading to better trades,fewer losses, and more profitability. A toolsuch as this that provides quick and accurateanalysis is a trader’s dream.”
– Mark Kowalkowski
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WWW.CANDLECHARTS.COMWWW.CANDLECHARTS.COM
INTRODUCING STEVE NISON’S 360° CANDLE ANALYSIS
New – Strict criteriaof a candle signal
New – Detailed psychologybehind each signal
New – Momentumtrading with candles
New – Candles assupport/resistance
New – NisonInsights
New – Priceconfirmation of a
candle signal
New – Patternin FX and
non FX
BASIC CRITERIA• Open and close the same (or within a few cents or
pips)
• Market trending up or down
• Also called a cross
• Doji in a rally called Northern doji
• Doji in a decline called Southern doji
“A time to wait without a position in the market”
PATTERN PSYCHOLOGY• For a sustainable rally market has to be “pushed
up” - a doji shows the bullish momentum has nowbeen curbed. The bulls now become concerned withthis lack of sustained strength.
• Markets can sink of their own weight (i.e. don’t needsellers to pull markets lower- lack of buyers will dothat) a doji hints buyers are now starting to absorbsupply.
• The market is at a delicate turning period and couldgo either way.
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If early in uptrends/downtrends, or middle of a box rangedoji not important
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Doji and Prior Move
Is the marketoverextendedat these doji?
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This doji is showing ashift in psychology since itcomes during a rally
Is this doji telling us there is somethingdifferent about the market?
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Doji in a Box Range
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Chart courtesy of Genesis FT
If flat, what would you do at doji lines at 1,2 and 3 and why?
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2
3
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2
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Nison Case Study
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This doji is showing ashift in psychology since itcomes during a rally
Is this doji telling us there is somethingdifferent about the market?
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If early in uptrends/downtrends, or middle of a boxrange doji not important
Spinning tops and doji could be just a pause to acontinuing trend
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The pause that refreshes?
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If early in uptrends/downtrends, or middle of a boxrange doji not important
Spinning tops and doji could be just a pause to acontinuing trend
Don’t forget shadows
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Analyze shadows. Interpretation will differ on the type ofupper and lower shadows.
Center Doji = Equal length shadows
Most classic doji where bulls and bears are inbalance
Upper Shadow Doji:Unsustainable buying strength
Lower Shadow Doji:Some buying strength left in the market
Source: Kabushiki Keisen no MikataTsukaikata Toshika No Tame NoSenryakuzu- Kichitaro Kisamori
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If early in uptrends/downtrends, or middle of a boxrange doji not important
Spinning tops and doji could be just a pause to acontinuing trend
Don’t forget shadows
Confirmation is important since market at tippingpoint.
Confirmation
Two Kinds of ConfirmationTwo Kinds of Confirmation
East + West
Price Confirmation
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Using a move after the initial candle signal to validate signalUsing a move after the initial candle signal to validate signal
Price Confirmation
Can be a close (or open) above (for bullcandle signal) or below (for bear candlesignal) the close of candle signal.
Less important if have East/Westconfirmation
Less important for momentum trades
The more ideal the candle pattern theless important the candle confirmation
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Candles and Price Confirmation
Plus of price confirmation:Improve odds of hammer working,But…
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Candles and Price Confirmation
Plus of price confirmation:Improve odds of hammer working,But at cost of higher entry price
Price confirmation
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Price Confirmation Cautions
Consider buy/sell stop limits
Remember risk/reward!
Depends on your trading style
Higher probability at cost ofprofit potential
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Price confirmation cautions
Consider buy/sell stop limits
Remember risk/reward!
Depends on your trading style
Higher probability at cost ofprofit potential
Hammer
Confirmed
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Which ofthese twoscenarios isit moreimportantto havebearishpriceconfirmationof the doji?
Note: this will nothappen in FX
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Doji and Price Confirmation
New highclose and bullshadow. Bearconfirmation thusmore important
confirmed
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Because a doji ora spinning top in FX willbe near the prior sessionclose you may want towait for bear confirmation
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Forex doji and Price Confirmation
Why would you not be toonervous on this doji?
confirmed
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Doji – but also a new high close
12
3
What about this doji?
confirmed
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Which ofthese twoscenarios isit moreimportantto havebearishpriceconfirmationof the doji?
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Doji and Shadows
Bull shadow
Equal shadows
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Criteria: Use the highesthigh of those two sessions(top of upper shadow) asresistance
Implication: Close over thatarea: market is “refreshed”.That is when we considerthe bull momentum trade
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Doji and Momentum
Doji as resistance
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Doji and momentum trading
“Market refreshed”
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Rolling up with calls
Mkt @ 90.5Buy 90 call @ 3.35
5 days later getting nervous.Mkt @ 94 ½Sell to close 90 call @ 5.70Use $2.35 profit andbuy 96 call @ $.2.75
Breakout! Buy a call.No need to limitprofit potential
Presented by Steve NisonPresident: candlecharts.com
Quickly finding the best opportunities in the options markets
Las Vegas, Sat/Sun- June 4 & 5
FIRST TIME EVER!
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Doji and momentum trading
Doji confirmingresistance
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Session with long upper and lowershadow compared to real body
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© www.candlecharts.com
Neutral Sessions
1 2 3 4 5 6 7 8 9 10
Very Strong Sessions Strong Sessions Bearish Sessions
More Bullish
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Less Bullish/Bear
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© www.candlecharts.com
# Name Characteristics Nison Notes
1Tall whitedouble crew cut(Yorikiri)
No shadows
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
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# Name Characteristics Nison Notes
2Tall white closingcrew cutYorikiri)
Small lower shadow
Lower shadowshows market can
break underopening price
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
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# Name Characteristics Nison Notes
3Power line(hammer)
Shadow 2x or more realbody. Can have very smallupper shadow.
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
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© www.candlecharts.com
# Name Characteristics Nison Notes
4 Tall WhiteUpper shadow 25%
or less real body
Upper shadowshows somerejection at
higher prices
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
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# Name Characteristics Nison Notes
5Small whitewith bullshadow
Lower shadow less than 2xreal body. Can have verysmall upper shadow.
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
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# Name Characteristics Nison Notes
6Medium uppershadow Tallwhite
Same as line 4 but uppershadow 25% to 100% realbody
“Maintains theStrength” but
showingincreasing price
rejection
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
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© www.candlecharts.com
# Name Characteristics Nison Notes
7Long uppershadow tallwhite
Same as 4 but upper shadowmore than 100% of realbody
Rare candle –”Gives slight
fearful feeling”
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
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# Name Characteristics Nison Notes
8White spinningtop
Can have upper and lowershadows less than 100% ofreal body
“A driftingmarket”
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
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# Name Characteristics Nison Notes
9Small whitewith bearshadow
Upper shadow from 1 to lessthan 2x real body. Can havesmall lower shadow.
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
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# Name Characteristics Nison Notes
10 Shooting starUpper shadow at least2x real body. Can have smalllower shadow.
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
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YORIKIRI (TALL) CANDLES
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1st support(50% of entirecandle)
2nd support
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YORIKIRI (TALL) CANDLES
Very Long Real Bodies as Support
Middle Tall White Candle
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More Bearish Less Bearish/Bullish
1 2 3 4 5 6 7
8
9 10
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
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1 2 3 4
5
6 7
8
910
More Bearish Less Bearish/Bullish
# Name Characteristics Nison Notes
1Long blackdouble crew cut
No shadows
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More Bearish Less Bearish/Bullish
1 2 3 4 5 6 7
8
910
# Name Characteristics Nison Notes
2Long blackclosing crew cut
Small Upper shadow
Upper shadowshows market
push overopening price
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
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More Bearish Less Bearish/Bullish
1 2 3 4 5 6 7
8
910
# Name Characteristics Nison Notes
3 Shooting StarShadow 2x or more real
body. Can have very smalllower shadow.
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
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1 2 3 4 5 6 7
8
910
# Name Characteristics Nison Notes
4 Long blackLower shadow 25% or less
real body
Lower shadowshows demandat lower prices
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
More Bearish Less Bearish/Bullish
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More Bearish Less Bearish/Bullish
1 2 3 4 5 6 7
8
910
# Name Characteristics Nison Notes
5Small black withbear shadow
Upper shadow less than 2xreal body. Can have very
small lower shadow.
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
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© www.candlecharts.com
More Bearish Less Bearish/Bullish
1 2 3 4 5 6 7
8
910
# Name Characteristics Nison Notes
6Medium lowershadow long black
Same as line 4 but lower shadow25% to 100% real body
Showingincreasing
demand and pricerejection at lower
levels
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
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More Bearish Less Bearish/Bullish
1 2 3 4 5 6 7
8
910
# Name Characteristics Nison Notes
7Long lowershadow black
Same as 4 but lower shadowmore than 100% of real
body
Rare candle –‘”Gives slight
fearful feeling”to bears
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
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More Bearish Less Bearish/Bullish
1 2 3 4 5 6 7
8
910
# Name Characteristics Nison Notes
8Black spinningtop
Can have upper and lowershadows less than 100% of
real body
“A driftingmarket”
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
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© www.candlecharts.com
More Bearish Less Bearish/Bullish
1 2 3 4 5
8
910
# Name Characteristics Nison Notes
9Small black withbull shadow
Lower shadow from 1 to lessthan 2x real body. Can have
small upper shadow.
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
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More Bearish Less Bearish/Bullish
1 2 3 4 5 6 7
8
910
# Name Characteristics Nison Notes
10 HammerLower shadow at least 2xreal body. Can have small
upper shadow.
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
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2nd
resistance
1st
resistance(50% of entirecandle)
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YORIKIRI (TALL) CANDLES
Very Long Real Bodies as Resistance
The
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Black or white candle with long lowershadow compared to real body.
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Basic Criteria• Market in a downtrend
• Small real body (either color) at, ornear, top of range.
• Lower shadow at least 2x height realbody
Market Implication“A chance to buy at the bottom “
SupportLow of hammer as support
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BASIC CRITERIA• Market in a downtrend
• Real Body White or Black
• Small real body at, or near, top of range.
• Lower shadow at least 2x height real body
“A chance to buy at the bottom”
STRICT CRITERIA• White real body
• No upper shadow
PATTERN PSYCHOLOGYAfter this last burst of selling, new buyinghas started. This rejection of lower prices isindicating a change in balance between bullsand bears. The net result: lessening ofbears’ confidence of sustainability of lowerprice levels (and a reason for bulls to startgetting more optimistic).
SUPPORT/MOMENTUM TRADING
• Low of hammer as support
• Consider shorting under low ofpattern.
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White real body hammer is called a“Power Candle”
Can have small upper shadow (around10% of lower shadow)
The more oversold and the longer theshadow, the higher degree ofconfidence
Often a retest of lower shadow
Bullish counterpart of Shooting Star(not a Hanging Man).
A hammer with a open/high/close athigh is a Dragonfly doji
As a single candle line it is same in FXas other markets
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Hammer and trend
Power line
Not a hammer
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Hammer As Support
Willoftenretestlower
shadow
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Hammer – Stops/Momentum
Exit (or short)
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Hammers and Stops/Momentum
Hammer near support
Protective stop ormomentum trade
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No need to learn allNinja! Just a few simpletools from Ninja to fullyuse NCS.
No software to deliver. 1)download 2) get licenseapproved and then you’re ready!
Text or video versions ofUser Manuals
Find Steve’sFavorite CandleSignals inSeconds
Find Steve’sFavorite CandleSignals inSeconds
Accelerate your AnalysisAccelerate your Analysis
BASIC CRITERIA• Market in downtrend
• Small real body at, or near, bottom of range.
• Must come at new low for move or significantdecline
• Upper shadow at least 2x height real body
PATTERN PSYCHOLOGYWhile the market closes at, or near itslow, it has shown an ability to rise. Thismay get the bears slightly nervous.
SUPPORT/MOMENTUM TRADING
• Not used as support
• Momentum: Trend is still down withthis signal
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Same as the shooting star exceptmarket in a downtrend
Can have small lower shadow (around10% of lower shadow)
Must have bull confirmation with ahigher close, or for those moreaggressive, a higher opening
This is not the bullish counterpart ofShooting Star. The Hammer is thebullish counterpart.
Because of the bearish shadow do notplace much emphasis on this signal.
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Importance of Price Confirmation
While a typical candle signalrequires less candle confirmationif at support/resistance with thissignal (and hanging man) youalways need candle confirmation
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BullishCounterAttackPattern
PiercingPattern
BullishEngulfing
Pattern
BullSash
Pattern
BullSeparating
Line
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Black real body followed by a white realbody that gaps lower on the open andthen closes at, or near, black candleclose.
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BASIC CRITERIA• Two session pattern
• Downtrend but even with no apparent trendwould be a positive signal
• Black real body followed by a long whitereal body that gaps lower on the open andthen closes at or near black candle close.
• 2nd candle tall white
STRICT CRITERIA• Both candles are large (very rare)
PATTERN PSYCHOLOGYWith the gap down bears are relieved. The“bulls are backed into a corner and cameout fighting in a heroic fight. Kamikazefights are always frightening, so the bearsseeing this take to the sidelines and thebulls may get reinforcements.”
SUPPORT/MOMENTUM TRADING
• Not used as support or resistance.
• Consider selling on move under lowof pattern.
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No pattern like this for FX sincethe market gaps lower.
While the ideal pattern is both largereal bodies, we would still view thisas important even if only the whitecandle was large
Closes do not have to be exactlythe same
Opposite of bearish counter attack
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Bull Counter Attack
BullCounterAttack
What do you thinkthe bears are thinking
after this session?
PS- watch yourlanguage!
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White real body that wraps aroundprior session black real body or doji.
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BASIC CRITERIA• Two session pattern
• Market in a downtrend
• White real body wraps around dark realbody
STRICT CRITERIA• Small first candle small dark candle or doji
• Second candle is tall white that wrapsaround high-low range of first candle.
PATTERN PSYCHOLOGY• Small first candle reflects deterioration of
bear trend.
• Tall white candle leaves no doubt the bullsnow in driver’s seat.
SUPPORT/MOMENTUM TRADING
• Lowest low of either candle assupport
• Consider shorting under low ofpattern.
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For FX, intraday and indexes can have thesame open (or within 2 pips for FX) of priorclose
The pattern has less significance if the realbodies are about the same size.
First candle can be doji
Candles in Engulfing Pattern (large wrapsaround small candle) are opposite those inHarami Pattern (small candle in a largecandle)
If Bullish Engulfing pattern appears duringrally Japanese call it a “last engulfingpattern and may be buying climax.Confirmation close under close of whitecandle. This is not an important pattern, justthink about not buying.
FX Pattern
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This is interesting: I recently purchased atechnical analysis package from a“WELL KNOWN” technical analysisguru. During his charting presentationhe made several references tocandlestick patterns, and eachreferences that he made was absolutelywrong! …During a strong uptrend, hecalled a large white real body after asmall black real body a bullish engulfingpattern. If I remember right – a bullishengulfing pattern doesn’t count during anuptrend. If I hadn’t bought and studiedyour package, I never would have knownthat and would have assumed that hewas right.
Thanks again for your great work!Carl
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Bullish Engulfing Patterns
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Price confirmation
No price confirmationafter this bullishengulfing pattern
Price confirmationafter this bullishengulfing pattern,but risk is still tolow of pattern
Why didn’tI have thiswindow asresistance?
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Price confirmation
If you waited for the closeof session of the bull engulf
look at what price youwould be buying.
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Momentum trade
Bear momentum trade
Why would you notbuy on this pattern?
Small real body inside an unusuallylong black real body.
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BASIC CRITERIA• Two session pattern
• Market in downtrend, but trend not critical
• First candle unusually long dark candle
• Second candle is much smaller than 1st candle(about 25% or less).
• 2nd candle can be the same- or opposite color-of first candle
• 2nd real body is within 1st candle’s real body
PATTERN PSYCHOLOGYThe long black candle echoes the heaviness ofsupply. But the next session’s gap up and lackof downside follow through results in the bearsseeing that their drive is becoming impeded.
SUPPORT/MOMENTUM TRADING
• Not used as support (unless 2nd
candle is reversal signal (i.e.hammer)
• Not used for momentum trading
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For FX, intraday and indexes can havethe same (or within 2 pips for FX) openas prior close
If the 2nd candle is a doji, the pattern iscalled a harami cross
The more the 2nd candle gets deeplyinto the black candle the better thesignal.
Because FX, etc, white candle can’t getdeeply into black real body it is best towait for bull confirmation by a higheropen or close than the white real body.
In general the less the 2nd candle getsinto the black candle the moreconfirmation is needed.
Opposite of bearish harami
FX Pattern
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Bull harami
Think the market isdifferent on thissessioncompared to priorsession?
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Bull Harami
PotentialSellingclimax
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Bull Harami and momentum trading
MomentumTrade
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BASIC CRITERIA• Two session pattern
• Market in downtrend
• Open of white candle under prior close
• White candle closes more than ½ way intoblack real body.
STRICT CRITERIA• White candle opens under prior low
• Long black and tall white candle
PATTERN PSYCHOLOGYBears in control is echoed by long darkcandle. Sharp gap lower means bears have astrong foothold. But with sharp bounce backby end of the session the market has“displayed uneasiness at a low price.” Thebears now sense danger.
SUPPORT/MOMENTUM TRADING
• Lowest low of both candles assupport
• Consider selling on move undersupport level
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For FX can have the same (or within a few 2pips) open as prior close
Long black and then long white showsextreme shift in psychology
The more the white candle opens underprior low /close the better the signal (fornon FX).
Opposite of dark cloud cover
Related patterns which need not beremembered are on-neck (atekubi), in-neck(irikubi) and thrusting (sashikomi).
FX Pattern
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Piercing pattern as support
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Piercing Pattern
Not Piercing Patterns
Although first candle wasn’tlong black what pattern is this?
And this?
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Piercing Pattern
For intraday okay tohave open at- or veryclose- to prior close
Not a piercing pattern
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Early clues of shifting supply/demand
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Black candle followed by white candlethat opens within black real body andcloses over prior open.
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BASIC CRITERIA• Trend not important
• Black candle followed by white candle thatopens within black real body and closes overprior open.
STRICT CRITERIA• Both long real bodies
• 2nd candle closes over prior high
• White real body closes at, or near, its highs
PATTERN PSYCHOLOGYThe surprise gap higher opening on thesecond day after a strong selling sessionmay initially be of minor concern. But withthe white candle’s strong close the bearssense danger and also gives the bulls causefor optimism.
SUPPORT/MOMENTUM TRADING
• Lowest low of both candles assupport
• Consider selling on move under lowof pattern
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Since the market has to gap higherthis pattern not applicable to FX.
The higher the market gaps on theopen, and the higher the close on thewhite candle the more meaningful thepattern
Remember risk/reward since thispattern is completed after substantialmove has already occurred.
Opposite of Bear Sash pattern
If open of white candle is same (orhigher) as prior open, it is a BullSeparating Line.
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Bull Sash Pattern
Bull Sash
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Risk/Reward
Bull Sash
Bull Sash
Both of these are poor trade candidates
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BASIC CRITERIA• Trend not important
• Black candle followed by white candle that opens at(or above) prior open. Then closes over black candleopen.
STRICT CRITERIA• Both long real bodies (rare)
• White real body closes at, or near, its highs
PATTERN PSYCHOLOGYWhile the bears may be surprised to see the market
gapping sharply higher from a prior weak session,
imagine their fear (and the bulls happiness) as the
market continues its advance without hesitation the
next session. The tide of the market has changed
from one to which the bears were in control to one
where the bulls are now calling the shots.
SUPPORT/MOMENTUM TRADING
• Lowest low of both candles assupport
• Consider selling on move under lowof pattern
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Easy way to remember this pattern isthe opens are the about the same (orthe 2nd candle open gaps away from 1st
candles open.)
Since the market has to gap higherthis pattern not applicable to FX.
Major challenge with this pattern issince it is completed after substantialmove, it usually means poorrisk/reward.
Opposite of Bear Separating Pattern
If open of white candle is within priorblack real body, it is a Bull SashPattern.
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Bull Separating line
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Looks good on the outside!
This is a poor trade candidate- why?
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Bull Separating line
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Bull Separating line
Bull separating but lookwhere it is!
TWEEZERS BOTTOMTWEEZERS BOTTOM
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Two candles that have the same lows.First candle large black.
Source: HAJIMETE KABUKA CHATO WO YOMU HITO NOHON by K. Hoshi
CRITERIA• Two candles with matching highs (tweezers
top) or lows (tweezers bottom)
• Uptrend for tweezers top and downtrendfor tweezers bottom. But trend not critical.
• The first candle must be a long white(tweezers top) or long black (tweezersbottom)
• 2nd candle must reflect diminishing of priorforce
PATTERN PSYCHOLOGYThe first candle shows bulls (tweezers top)or bears (tweezers bottom) are dominating.With the second candle showing an inabilityto continue the move implied by the firstcandle, we are starting to see the power ofthe prior trend dissipating.
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The more the 2nd candle closes into thefirst candle the better the signal.
This is a minor pattern unless there isa candle reversal signal that alsoemerges at the 2nd candle (i.e. piercingpattern, shooting star).
Not used as support or resistance ormomentum trading unless 2nd candle isa reversal candle.
If both candles for tweezers top closeat, or near the highs, or tweezersbottom close at or near the lows, thispattern would have less significance.
Source: HAJIMETE KABUKA CHATO WO YOMU HITO NOHON by K. Hoshi
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Tweezers Bottom
First candle long black, second candle small real body, third candleis white that gets deeply into first real body.
white or black
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FX
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Morning Star as support
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Abandoned Baby
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Almost abandoned baby
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RISING THREE METHODS
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A series of small candles inside therange of a tall white candle. The lastcandle is another tall white.
RISING THREE METHODS
Highlight Key - $79 value
NinjaTrader Trade Navigator Trade Station
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Three consecutive white candles,each with a higher close.
Three Soldiers
www.candlecharts.comFounder and President: Candlecharts.com
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A rising window is support
SupportZone
Most importantsupport level
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Small vs. Large windows
Smallwindow
Largewindow
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Importance of Windows
Shooting Star
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Quickly see Windows
If I had only seen this!
Change of Polarity
Support Support
ResistanceResistance
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Windows and Change of Polarity
The most importantaspect is the many
times this resistancewas tested- (which
may have to do withthe window)
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Windows and Confirmation
Closed under window by 2 and 9cents and next day opened andclosed over window again
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Three windows-note of caution
Secrets of Using Intraday Candle Charts toRefine Entries with Windows
For small windows – orwhen near the bottom oflarger windows – look forintraday candle reversals
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Using intraday candles toconfirm a Daily window
While the bottom of this window (reddashed line) did hold as support:1) Based on black candle it looked
dangerous to buy.2) By the end of the bull engulf day it
would have been a poor trade- why?
Bottom ofrisingwindow ondaily chart
Turn signal at$31.15 on this 30
minute chartcompared to
$31.60 on dailychart.
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BASIC CRITERIA• Market in an uptrend
• Black or White real Body
• Small real body at, or near, bottom of range.
• Upper shadow at least 2x height real body
“A crack has entered the market”
STRICT CRITERIA• Black real body
• No lower shadow
PATTERN PSYCHOLOGYThe strong retreat from higher prices shows eitheror/and:
1) bulls stepping back at higher levels
2) bears getting more aggressive
The result is that the bulls have second thoughts oftheir power and bears now have encouragement.
SUPPORT/MOMENTUM TRADING
• High of shooting star as resistance
• Consider buying above high ofpattern
1
2
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Black real body most important.
Can have small lower shadow (around 10%of upper shadow).
The more overextended the rally and thelonger the shadow, the higher degree ofconfidence.
Unlike a hammer, market doesn’t oftenretest upper shadow.
Bearish counterpart of Hammer (notInverted Hammer.)
A Shooting Star with a open/high/close atlow is a Gravestone doji.
As a single candle line this is the same inFX
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Shooting Star with Price Confirmation
confirmed
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Shooting star but no price confirmation
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How Education and NCS Helps Improve Profits
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BASIC CRITERIA• Market in a uptrend
• Small real body at, or near, top of range.
• Must come at new high for move orsignificant rally
• Lower shadow at least 2x height real body
“Suggests a peak in the market”
PATTERN PSYCHOLOGYAlthough it may seem that the marketstill has rising power left, it has shownthat once the market has fallen, it hasbecome very fragile.
SUPPORT/MOMENTUM TRADING
• Not used as resistance
• Momentum: Trend is still up withthis signal
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Same as the hammer except market inan uptrend
Can have small upper shadow (around10% of lower shadow)
Must have bear confirmation with alower close, or for those moreaggressive, a lower opening
This is not the bearish counterpart ofHammer. The Shooting Star is thebearish counterpart.
Because of the bullish shadow, do notplace much emphasis on this signal.
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Pain!
1
2
4
3
5
Importance of Price confirmation
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Think this market had troubles near $8.20?
Tweezers top
Tweezers top
Why is this nota Tweezers
bottom?
CANDLE PROGRESSIONDESCENDING BLACK REAL BODY
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CANDLE PROGRESSIONDESCENDING BLACK REAL BODY
CANDLE PROGRESSIONDESCENDING BLACK REAL BODY
CANDLE PROGRESSIONDESCENDING BLACK REAL BODY
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CANDLE PROGRESSIONDESCENDING BLACK REAL BODY
CANDLE PROGRESSIONDESCENDING BLACK REAL BODY
BearishCounterAttackPattern
DarkCloudCover
BearishEngulfing
Pattern
BearSash
Pattern
BearSeparating
Line
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White real body followed by a black realbody that gaps higher on the open andthen closes at, or near, white candleclose.
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BASIC CRITERIA• Two session pattern
• Uptrend but even with no apparent trendwould be a cautionary signal
• White real body followed by a black realbody that gaps up on the open and thencloses at or near white candles' close
STRICT CRITERIA• Both candles are large (very rare)
• Large black real body
PATTERN PSYCHOLOGYWith the tall white, and especially with thegap higher next session the bulls are happy.But then a strong bear counter force comesin to drag the market back to the priorclose. The tone of the market now shiftsfrom bullish optimism to uncertainty.
SUPPORT/MOMENTUM TRADING
• Not used as support or resistance.
• Consider buying on breakout overhigh of pattern.
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No pattern like this for FX sincethe market gaps higher
While the ideal pattern is both largereal bodies, we would still view thisas important even if only the blackcandle was large
Closes do not have to be exactlythe same
Opposite of bullish counter attack
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Bear Counter Attack
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Bear Counter- Attack
Bull Counter Attack?
While this is not a bearcounter attack since thecloses are not the same- doyou think there is a change inpsychology after this session?
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Black real body wraps around priorsession white real body or doji.
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BASIC CRITERIA• Two session pattern
• Market in an uptrend
• Black real body wraps around light realbody
STRICT CRITERIA• Small first candle small white or doji
• Second candle is long dark that wrapsaround high-low range of first candle.
PATTERN PSYCHOLOGY• Small first candle reflects rallying could be
running out of steam
• Long black candle visually shows the bearsare now the controlling force.
SUPPORT/MOMENTUM TRADING
• Highest high of either candle asresistance.
• Consider buying on breakout overhigh of pattern.
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For FX, intraday and indexes can have thesame (or within 2 pips for FX) open as priorclose
The pattern has less significance if the realbodies are about the same size.
First candle can be doji
Candles in Engulfing Pattern (large wrapsaround small candle) are opposite those inHarami Pattern (small candle in a largecandle)
If Bearish Engulfing pattern appears duringselloff Japanese call it a “last engulfingpattern and may be selling climax.Confirmation is a close above black candleclose. This is not an important pattern- justthink about not selling.
FX Pattern
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Misinformation can cost you Big $$$
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Candles as Support
S1
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Candles and Momentum – trading the breakouts
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Price confirmation
The less ideal the pattern themore candle confirmation
is needed.Why is this bearish engulfing
pattern less than ideal?
Confirmationwith lower close
but riskstill to high of
pattern
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Price confirmation
Since pattern confirmed resistance less reason for priceconfirmation- but it depends on you trading style.