Vol 1 Handouts Opt 3

Steve Nisons Candle Charting Essentials and BeyondVolume 1 of the Nison Educational Series

1

www.candlecharts.comFounder and President: Candlecharts.com

The Framework &Real Bodies and

Shadows1

open close

open

RealBody

high

low

Shadow

Real Bodies / Shadows

close

2

Open

Close

3


2

Reading the market Psychology

Bullish Engulfingpatterns as support

Bear Stearns Collapse

4

Helping youovercomingyour tradingchallenges

5

Entering trades too late Knowing when to exit Preserving trading capital Quickly recognizing the candle signals Paralysis by analysis Quickly recognizing candle signals Correctly using candlesticks

When to pull triggerWhen to ignore

Lack of confidence pulling the trigger

Trading Challenges:Trading Challenges:

6


3

Helping youovercomingyour tradingchallenges

7

Easy to Understand Early Reversals Safety First East + West All markets All Time Frames Accelerates Analysis

8

9


4

CandlestickCharting

Techniques

WesternCharting

Tools

Trade Management

www.candlecharts.com 10

ROCK SOLID CONFIDENCE

Seize tradingopportunities beforethey becomeapparent to others

Information isPower! Learn how toavoid losing trades

Pinpoint turningsignals with razorsharp accuracy

The Result:

11

What we learned:What we learned:

The Popularity of Candles The Anatomy of the Candle Line Candles and market psychology History of candles Benefits of Candles Candles are a tool not a trading

system Importance of Education

12


5

CandlestickCharting

Techniques

WesternCharting

Tools

Trade Management13

1

Early reversals

Safety First Trading

Quickly read themarkets message

Candlestick Charts

14

www.candlecharts.com

The Framework:Analyzing Real Bodies

and Shadows

The Framework:Analyzing Real Bodies

and Shadows

15


6



The longer the realbody the strongerthe momentum.

The relative sizeand position of theshadow displaysthe extent of pricerejection.

17


Whos in control?

The Real Body is the Essence of the Price Movement

18


7


Whos in control?

Basic Criteria:Small real body - black or white

Market Implication:Immediately preceding trendlosing momentum.

Support or Resistance:Not used

19


The cost of not using candles

Higher closes, highs and lows

20


What is one of the best ways to make money??

21


8


Basic Criteria: Market in up or down trend Open and close prices are the same

(or nearly the same)

Market Implication:Market at a point of indecision

Support or Resistance:Highest high of doji and priorcandle for resistance. Not used assupport

22


Saved by the light of the candles!

Those poortraders whogot fooled intobuying here.

23

24


9


Be cautious of new highs made with doji

24

Doji as Warning

Weekly Weakly

26


Doji Hints Rally Stalling

27


10


Doji Confirms resistance

28


Candles can be used in all time frames

Market istired

29


Use the highest high ofthose two sessions (topof upper shadow) asresistance

30


11


Doji as Resistance

31


Warning!

Reading the Markets Message Quickly!

32


Doji as resistance

33


12


Doji as Resistance

34

35


Whos in control?

Small Real Bodies (spinning tops)

Whos in control?

1

2

3

1

2

3

36


13


Shadows

Lower closes, lower highsand lower lows, but whatare shadows hinting?

37


Upper and Lower Shadows

Area of Supply

Area of Demand

38


Basic Criteria: Market in up or down trend Very long upper and lower shadow/

small real body towards the middleof sessions range

Market Implication:Market confused

Support or Resistance:Not used

39


14


Doji = caution

Market isTired

40


New low with high wave means caution

41

42


15


Candles help us read the markets message

What do the series of bullish shadows tellus about supply/demand near 63.50?Is it any surprise what happened a fewweeks later at that level?

43


Reading the Markets Message

44


Candles give 2x information Spinning Tops Doji warning and resistance Importance of Shadows Single candles and market psychology

45


16


Essentials of SingleCandle Patterns

46


Reversal SignalsReversal Signals

Where the currenttrend slows orreverses after thereversal pattern.

Most candle signalsare potentialreversals.

47


Single Candle Lines:The Bull Signals

Single Candle Lines:The Bull Signals

48


17

Basic Criteria Market in a downtrend Small real body (either color) at, or

near, top of range. Lower shadow at least 2x height real

body

Market ImplicationA chance to buy at the bottom

Support or ResistanceLow of hammer as support

49


Psychology Strong demand

50


Using Candles across the Spectrum

51


18


Hammers

Intra day chart

Using Candles across the Spectrum

52


Hammer as buy at $166.50

Doji as exitat $169.30

Result:almost $3per share inless than 10minutes!

Education = Confidence = $uccess

53


Hammer and trend

54


19

55


hammers lower shadow as Support

56


Hammer as Support

Hammer

57


20


Hammer as Support

Chart courtesy of Genesis FT

58


Why Protective Stops

59


Which three prices of thesession are on the high?

What happened duringthe session and bysessions end?

Dragonfly Doji

60


21


Dragonfly

61

Basic Criteria:Same shape as Hammer but marketin downtrend

Market Implication:In theory, potential bottom reversal

Support or Resistance:Not used as support

62


Inverted Hammer with confirmation

63


22


Single Candle Lines:The Bear Signals

Single Candle Lines:The Bear Signals

64

Basic Criteria: Market in up trend Small real body (black or white) at,

or near, bottom of session Upper shadow at least twice height

of the real body

Market Implication:Potential top reversal

Support or Resistance:High of signal as resistance

65


Shooting Star signals trouble overhead

66


23


Hammer as buy at $166.92

Shooting staras exitat $168.12

Education = Confidence = $uccess

67

What iswrong withthis so calledshootingstar?

Hint: look at upper shadow

68


A crack has entered the market

69


24


Shooting Stars as Resistance

70


Shooting Stars

71


Which three prices ofthe session are on thelow?

What happened duringthe session and bysessions end?

Gravestone Doji

72


25


Gravestone

73


Gravestone

74


Gravestone Doji

75


26

Shooting star

Hammer

76


If it appears from below,buy. If it appears fromabove then sell.

77

Basic CriteriaSame shape as Hammer but marketin uptrend

Market ImplicationIn theory, potential top reversal

Support or ResistanceNot used as resistance

78


27


There must be bearish confirmation forthe hanging man. This means waiting foran open or even better a close underthe bottom of the hanging mans realbody.

79


Hanging Man

80


Hanging Man

confirmation

81


28


Using Candles in a Box Range

Who has more control here? Who has more control here?

82


Box range which way?

83


Box range which way?

84


29



Hammer

85


Using the insights of single candle lines

86


Using Single Candle Lines

87


30



Whos in charge with the red arrows?

Whos in charge with the green arrows?

88


Reading Market Psychology

89


Most candles are reversals High wave candles One sided shadow candles: bull and bear Less emphasis on hanging man and inverted

hammer Box ranges and single candle lines Single candle lines to read the markets message

90


31


Essentials of MultipleCandle Lines

91

Double Candle Lines:The Bull Signals

Double Candle Lines:The Bull Signals

92

Basic Criteria Market in down trend White real body wraps around prior

session black real body

Market ImplicationBottom reversal

SupportThe lowest low of the two sessionsof the pattern

93


32

Classic Bull Engulf

94


Shadows for Insights

Lower closes, butwhat are shadowshinting?

95

Bullish Engulfing Pattern

96


33

How many black candles didthis wrap around?


97


Anythinghinting bearslosing force?

98

closeopenopen

99


34


100

Series of Bullish Engulfing Patterns

Shooting stars

101

Bullish Engulfing Pattern as Support

102


35

Bull Engulf as Support

Bullish Engulfing

Patterns

103

Basic Criteria Market in down trend Opens below prior low (or close) White candle closes more than 50%

into prior black real body


SupportThe lowest low of the twocandlestick lines

104

Piercing Pattern

105


36

Piercing Pattern

Not Piercing Patterns

106

Early clues of shifting supply/demand

107

Onneckclose=

prior low

PiercingPattern

Inneckclose=

prior close(small white

candle)

Thrustingclose above

prior low(small white

candle)

1 2 3

Patterns 1,2 and 3 are viewed as small, reactionary rallies where the bulls counter driveis weak. Selling chase begins under any of these patterns for momentum traders. 108


37

Basic Criteria Market in down trend First candle is an unusually long

black real body Second relatively small real body

(either color) within prior real body

Market ImplicationPrior trend is losing its breath

SupportNot used

109

Bull Harami

Not harami

110

Bull Harami

111


38

Bull Harami

112

Double Candle Lines:The Bear Signals

Double Candle Lines:The Bear Signals

113

Basic Criteria Market in up trend Black real body wraps around prior

session opposite color real body

Market ImplicationTop Reversal

ResistanceThe highest high of the two sessionsof the pattern

114


39

Bearish Engulfing Pattern

115

Bearish Engulfing pattern as resistance

116

Candles: Support and Resistance

117


40

Candles: Support and Resistance

118

Topoutsidereversal

Bottomoutsidereversal

Western Outside Reversals

119

Engulfing Patterns and Outside reversals

Topoutsidereversal

120


41

Engulfing Patterns and Outside Reversals

121

Engulfing pattern and trends

stops!

122

Basic Criteria Market in up trend Opens above prior high (or close) Black candle closes deeply into

prior long white candle

Market ImplicationTop reversal

Support or ResistanceThe highest high of the two linesthat make up the pattern

123


42

Dark Cloud Cover

124

Dark Cloud Cover as Resistance- FX

125

Dark Cloud Cover- Futures

Chart courtesy of Genesis FT

126


43

Dark Cloud Cover - Stock

127

Dark Cloud Cover as Resistance - Intraday

128

Basic Criteria Market in up trend First candle is an unusually long

white real body Second relatively small real body

(either color) within prior real body

Market ImplicationBears losing momentum

Support or ResistanceNot used

129


44

Bear harami

130

Bear Harami

131

Bull and Bear Harami

132


45

Triple Candle Lines:The Bull Signals

Triple Candle Lines:The Bull Signals

133

Criteria Market in downtrend First candle is long black Second candle small real body that

doesnt (or slightly) overlaps first realbody

Third candle is white real body thatgets deeply into first real body

Market ImplicationBulls now in control

SupportLow of three candles

white or black

134

Morning Star as Support

135


46

Morning Stars

136


137

Moring Star as Support

138


47

Morning Star

Variation

139


140

Triple Candle Lines:The Bear Signals

Triple Candle Lines:The Bear Signals

141


48

white or blackCriteria Market in uptrend First candle is long white Second candle small real body that

doesnt (or slightly) overlaps first realbody

Third candle black real body that getsdeeply into first real body

Market ImplicationBears are now in control

ResistanceHighest high of three candle lines

142

Evening Star

143

144


49

Evening Star

145

Evening Star

146

Evening star

147


50

Evening Star and Flexibility

148

Evening Star as Resistance

149

Evening Star Variation

150


51

On this 1 minute chartlook at the candlesignals sent by RIMMat 129.80/.90

Reading the Markets Message Quickly and Accurately

151

Reading the Markets Message Quickly and Accurately

152


1

2

3

153


52

Reading the Markets Psychology

154


Criteria Market in a downtrend Three relatively long white candles Last two open within, or over, prior

white real body Each candle closes at, or near, its high


Support or ResistanceNot used as support

155


Three Soldiers

156


53


Criteria Market in uptrend Three long black candles Open of last two within, or below, prior

black real bodies Each candle closes at, or near, its low

Market ImplicationTop reversal

Support or ResistanceNot used as resistance

157


Three Black Crows

158


Bullish and Bearish EngulfingPatterns

Brief description difference withcandles in FX

Piercing Pattern Simplifying Candle Analysis Dark Cloud Cover Bull and Bear Harami Reading the markets message

with dual candle patterns Morning and Evening Stars Being flexible in chart readings Soldiers and Black Crows

159


54

The trend before the signal continues after the signal

Three MethodsWindows

160

Rising and Falling Three Methods

Falling ThreeRising Three

161

Rising Three Methods

162


55

Falling Three Methods

163

Gap Higher =Rising Window

Gap Lower =Falling Window

164

A rising window is support

SupportZone

Most importantsupport level



56

Rising Window

166

Rising Windows

167

Broken Windows

Once the window is brokenit is no longer potential support

168


57

Candles in Context

ShootingStar, but

169

Candles in Context

170

How education SAVES you money

Bearish engulfingpattern, but you mustnot sell here!

171


58

Rising Window

Rising Window Hammer

172

A falling window is resistance

ResistanceZone

Most importantresistance level


Falling Window

174


59

Breaking Falling windows Resistance

175

Falling Window

176

Falling window

177


60

Small Windows

2 cents

178

When the market gaps above resistance or below support

Breakaway Gap

179

Breakaway Gap

180


61

Breakaway gap

181

Safety first Trading

Strong candles

182


Fry Pan Bottom Dumpling Top

183


62


Fry pan bottom

184

Fry Pan Bottom

185

Dumpling top

186


63

Upside gapping tasuki

downward gapping tasuki

Down gap parallelwhite lines

Up gap parallelwhite lines

187


Continuation candles Rising and falling three

methods Window essentials Large vs. small windows Windows and rounding

tops/bottoms Simplifying candle analysis

with windows

188

How NOT to use candlesticks

Oh my goodness! Themarket rallied after theshooting star!

189

Vol 1 Handouts Opt 3

Documents

Transcript of Vol 1 Handouts Opt 3