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Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
Founder and President: Candlecharts.com
Candlestick Charting
Techniques
Western Western Charting Charting ToolsTools
Steve Nison’s
Trading TriadSuccessSystem
Steve Nison’s
Trading TriadSuccessSystem
Trade ManagementTrade Management
SystemSystem
www.candlecharts.com1
“If you want to see farther,you have to go higher”
“If you want to see farther,you have to go higher”
2
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
1
• Quickly read the k ’
Candlestick Charts
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market’s message
• “Safety First” Trading
• Early reversals
3
Reading the Market’s Message – Quickly and Accurately
Looks good
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Bear Sterns collapse
4
Looks good?
Reading the Market’s Message – Quickly and Accurately
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Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
Looks good?
Reading the Market’s Message – Quickly and Accurately
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Reading the Psychology of the market
Think the $ had trouble in this area?Bear shadows, evening star, bearish engulfing patterns, shooting star…..
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8
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
Good buy?
Negative Selection
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What is one of the best ways to make money?
Those poor traders who got fooled into buying here.
10
Owning the Knowledge
Let see what the candles tell us about supply/demandWhen prices get down near $62.00-61.50?
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Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
Owning the Knowledge
Buying at hammer near $62.00Target near $63.70 (resistance)
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Get into a new trend before othertrend before other
traders see it
13
Reading the Market’s Message – Quickly and Accurately
Bear Stearns Collapse
14
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
“Combinations of bullish and bearish candle lines indicate the direction of the market and investors psychological
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market and investors psychological conflicts at important turning points.”
15
It is easy to see who is in control here
It is easy to see who is in control here
How about now with these “spinning tops”?
How about now with these “spinning tops”?
16
Candles reveal twice the information asa bar chart
17
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
Candles help us read the market’s message
What do the series of bullish shadows tell us about supply/demand near 63.50?
Is it any surprise what happened a few weeks later at that level?
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Quickly see “ The Mode of the Market”
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What candles do – and don’t do
What happen each time this gets near $43?
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Candles‐ or any technical system can’t forecast surprises
20
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
Founder and President: Candlecharts.com 121
IINTRODUCINGNTRODUCING SSTEVETEVE NNISONISON’’SS 360360 CCANDLEANDLE AANALYSISNALYSIS
New – Strict criteria of a candle signal
New – Candles as support/resistance
New – Nison Insights
WWWWWW..CANDLECHARTSCANDLECHARTS..COMCOMWWWWWW..CANDLECHARTSCANDLECHARTS..COMCOM
New – Detailed psychology behind each signal
New – Momentum trading with candles
New – Price confirmation of a candle signal
New – Pattern in FX and non FX
22
BASIC CRITERIABASIC 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 PSYCHOLOGYPATTERN PSYCHOLOGY• For a sustainable rally, market has to be “pushed
up” - a doji shows the bullish momentum has now been curbed. The bulls now become concerned with this lack of sustained strength.
• Markets can sink of their own weight (i.e. don’t need sellers to pull markets lower- lack of buyers will do that) a doji hints buyers are now starting to absorb supply.
• The market is at a delicate turning period and could go either way.
123
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
If early in uptrends/downtrends, or middle of a box range, doji is not important
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Doji and Prior Move
Is the market overextendedat these doji?
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This doji is showing a shift in psychology since it comes during a rally
Is this doji telling us there is something different about the market?
26
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
Doji in a Box Range
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If early in uptrends/downtrends, or middle of a box range doji not important
Spinning tops and doji could be just a pause to a continuing trend
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29
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
The pause that refreshes?
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If early in uptrends/downtrends, or middle of a box range doji not important
Spinning tops and doji could be just a pause to a continuing trend
Doji generally work better at calling tops than bottoms.
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If early in uptrends/downtrends, or middle of a box range doji not important
Spinning tops and doji could be just a pause to a continuing trend
Doji generally work better at calling tops than bottoms.
Analyze shadows. Interpretation will differ on the type of upper and lower shadows
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of upper and lower shadows.
Center Doji = Equal length shadows
Most classic doji where bulls and bears are in balance
Upper Shadow Doji:
Unsustainable buying strength
Lower Shadow Doji:
Some buying strength left in the market
Source: Kabushiki Keisen no Mikata TsukaikataToshika No Tame No Senryakuzu- KichitaroKisamori
Confirmation is important since market at tipping point.
32
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
“Depending on the type of movement on the next day, one can get completely different readings”
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get completely different readings
33
Confirmation
Two Kinds of ConfirmationTwo Kinds of Confirmation
East + West
Price Confirmation
34
East + West Confirmation
Where a candle
signal confirms ag
Western technical
signal
35
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
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 bull candle signal) or below (for bear candle signal) the close of candle signal.
Less important to have East/West confirmation
Less important for momentum trades
The more ideal the candle pattern, the less important the candle confirmation
36
37
Candles and Price Confirmation
Plus of price confirmation:Improve odds of hammer working, But…
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Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
Price Confirmation Cautions
Consider buy/sell stop limits
Remember risk/reward!
Depends on your trading style
Higher probability at cost of profit potential
40
Price confirmation cautions
Consider buy/sell stop limits
Remember risk/reward!
Depends on your trading style
Higher probability at cost of profit potential
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Hammer
Confirmed
41
Which of these two scenarios is more important
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to have bearish price confirmation of the doji?
Note: this will not happen in FX
42
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
Doji and Price Confirmation
New high close and bull shadow. Bear confirmation thus more important
confirmed
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Because a doji or a spinning top in FX will be near the prior session
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close, you may want towait for bear confirmation
44
Forex doji and Price Confirmation
confirmed
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Why would you not be toonervous on this doji?
44A
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
Doji – but also a new high close
12
3
What about this doji?
confirmed
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Which of these two scenarios is more important
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to have bearish price confirmation of the doji?
46
Doji and Shadows
B ll h d
Equal shadows
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Bull shadow
47
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
Criteria: Use the highest high of those two sessions (top of upper shadow) as resistance
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Implication: Close over that area: market is “refreshed”. That is when we consider the bull momentum trade
48
Doji and Momentum
Doji as resistance
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Doji and momentum trading
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“Market refreshed”
51
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
Doji and momentum trading
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Doji confirming resistance
52
Review of candle benefits
What candles don’t do
Ad an ed doji ta ti s and on epts Advanced doji tactics and concepts
Price confirmation
53
Founder and President: Candlecharts.com 54
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
Long Lower (Bullish) Shadows
Although this market is Although this market is descending, the long descending, the long lower shadows offsets lower shadows offsets some of the negative some of the negative outlookoutlook
55
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Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
© www.candlecharts.com
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
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1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
© www.candlecharts.com
# Name Characteristics Nison Notes
1 Tall white double crew cut No shadows
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
59
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
© www.candlecharts.com
# Name Characteristics Nison Notes
2 Tall white closing crew cut Small lower shadow
Lower shadow shows market can break
under opening price
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
60
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
© www.candlecharts.com
# Name Characteristics Nison Notes
3 Power line (hammer) Shadow 2x or more real body. Can have very small upper shadow.
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
61
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
© www.candlecharts.com
# Name Characteristics Nison Notes
4 Tall White Upper shadow 25% or less real body
Upper shadow shows some rejection at
higher prices
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
62
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
© www.candlecharts.com
# Name Characteristics Nison Notes
5 Small white with bull shadow
Lower shadow less than 2x real body. Can have very small upper shadow.
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
63
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
© www.candlecharts.com
# Name Characteristics Nison Notes
6 Medium upper shadow Tall white
Same as line 4 but upper shadow 25% to 100% real body
“Maintains the Strength” but showing
increasing price rejection
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
64
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
© www.candlecharts.com
# Name Characteristics Nison Notes
7 Long upper shadow tall white
Same as 4 but upper shadow more than 100% of real body
Rare candle – ‘”Gives slight fearful feeling”
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
65
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
© www.candlecharts.com
# Name Characteristics Nison Notes
8 White spinning top Can have upper and lower shadows less than 100% of real body
“A drifting market”
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
66
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
© www.candlecharts.com
# Name Characteristics Nison Notes
9 Small white with bear shadow
Upper shadow from 1 to less than 2x real body. Can have small lower shadow.
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
67
1 2 3 4 5 6 7 8 9 10
More Bullish Less Bullish/Bear
© www.candlecharts.com
# Name Characteristics Nison Notes
10 Shooting starUpper shadow at least2x real body. Can have small lower shadow.
Neutral SessionsVery Strong Sessions Strong Sessions Bearish Sessions
68
More Bearish Less Bearish/Bullish
1 2 3 4 5 6 7
8
9 10
© www.candlecharts.com
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
69
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
1 2 3 4
5
6 7
8
910
More Bearish Less Bearish/Bullish
© www.candlecharts.com
# Name Characteristics Nison Notes
1 Long black double crew cut No shadows
70
More Bearish Less Bearish/Bullish
1 2 3 4 5 6 7
8
910
© www.candlecharts.com
# Name Characteristics Nison Notes
2 Long black closing crew cut Small Upper shadow
Upper shadow shows market can break
under opening price
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
71
More Bearish Less Bearish/Bullish
1 2 3 4 5 6 7
8
910
© www.candlecharts.com
# Name Characteristics Nison Notes
3 Shooting Star Shadow 2x or more real body. Can have very small lower shadow.
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
72
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
1 2 3 4 5 6 7
8
910
More Bearish Less Bearish/Bullish
© www.candlecharts.com
# Name Characteristics Nison Notes
4 Long black Lower shadow 25% or less real body Lower shadow shows demand at lower prices
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
73
More Bearish Less Bearish/Bullish
1 2 3 4 5 6 7
8
910
© www.candlecharts.com
# Name Characteristics Nison Notes
5 Small black with bear shadow
Upper shadow less than 2x real body. Can have very small lower shadow.
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
74
More Bearish Less Bearish/Bullish
1 2 3 4 5 6 7
8
910
© www.candlecharts.com
# Name Characteristics Nison Notes
6 Medium lower shadow long black
Same as line 4 but lower shadow 25% to 100% real body
Showing increasing demand and price
rejection at lower levels
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
75
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
More Bearish Less Bearish/Bullish
1 2 3 4 5 6 7
8
910
© www.candlecharts.com
# Name Characteristics Nison Notes
7 Long lower shadow black
Same as 4 but lower shadow more than 100% of real body
Rare candle – ‘”Gives slight fearful feeling” to
bears
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
76
More Bearish Less Bearish/Bullish
1 2 3 4 5 6 7
8
910
© www.candlecharts.com
# Name Characteristics Nison Notes
8 Black spinning top Can have upper and lower shadows less than 100% of real body
“A drifting market”
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
77
More Bearish Less Bearish/Bullish
1 2 3 4 5
8
910
© www.candlecharts.com
# Name Characteristics Nison Notes
9 Small black with bull shadow
Lower shadow from 1 to less than 2x real body. Can have small upper shadow.
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
78
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
More Bearish Less Bearish/Bullish
1 2 3 4 5 6 7
8
910
© www.candlecharts.com
# Name Characteristics Nison Notes
10 Hammer Lower shadow at least 2x real body. Can have small upper shadow.
Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions
79
Reviewed importance of real bodies
and shadows
White real body/shadow progression from White real body/shadow progression from
more to less bullish
Black real body/shadow progression from
more to less bearish
80
CandlesticksRe-Ignited!
Ad d
© www.candlecharts.com
Advanced Single Candle Lines:“One sided” shadow
candles
Founder and President: Candlecharts.com 81
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
BASIC CRITERIABASIC 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 STRICT CRITERIA
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• White real body
• No upper shadow
PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY After this last burst of selling, new buying has started. This rejection of lower prices is indicating a change in balance between bulls and bears. The net result: lessening of bears’ confidence of sustainability of lower price levels (and a reason for bulls to start getting more optimistic).
SUPPORT/SUPPORT/MOMENTUM TRADINGMOMENTUM TRADING
• Low of hammer as support
• Consider shorting under low of pattern.
82
White real body hammer is called a “Power Candle”
Can have small upper shadow (around 10% of lower shadow)
The more oversold and the longer the shadow, the higher degree of
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confidence
Often a retest of lower shadow
Bullish counterpart of Shooting Star (not a Hanging Man).
A hammer with a open/high/close at high is a Dragonfly doji
As a single candle line it is same in FX as other markets
83
A candlestick line or pattern requires two criteria:
• The shape of the line or pattern • The preceding trend
84
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
Hammer and trend
Not a hammer
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Power line
85
Hammer your way to profits
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Dragonfly doji
86
Retest of hammer’s shadow
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Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
Hammer As Support
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Will often retest lower
shadow
88
Hammer as Support
Market will often retest hammer’s lower shadow
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“To know where “To know where you stand is asyou stand is as
Same Signal- But look at the Difference in Trading Tactics
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you stand is as you stand is as important as important as candle pattern candle pattern recognition.”recognition.”
90
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
Hammer – Stops/Momentum
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Exit (or short)
91
Hammers and Stops/Momentum
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Hammer near support
Protective stop or momentum trade
92
BASIC CRITERIABASIC CRITERIA• Market in a uptrend
• Small real body at, or near, top of range.
• Must come at new high for move or significant rally
• Lower shadow at least 2x height real body
“S t k i th k t”
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“Suggests a peak in the market”
PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY Although it may seem that the market still has rising power left, it has shown that once the market has fallen, it has become very fragile.
SUPPORT/SUPPORT/MOMENTUM TRADINGMOMENTUM TRADING
• Not used as resistance
• Momentum: Trend is still up with this signal
93
Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
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Same as the hammer except, market in an uptrend
Can have small upper shadow (around 10% of lower shadow)
Must have bear confirmation with a lower close, or for those more
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aggressive, a lower opening
This is not the bearish counterpart of Hammer. The Shooting Star is the bearish counterpart.
Because of the bullish shadow, do not place much emphasis on this signal.
94
Pain!
1
2
4
3
5
Importance of Price confirmation
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BASIC CRITERIABASIC 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 CRITERIASTRICT CRITERIASTRICT CRITERIA STRICT CRITERIA • Black real body
• No lower shadow
PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY The strong retreat from higher prices shows either or/and:
1) bulls stepping back at higher levels
2) bears getting more aggressive
The result is that the bulls have second thoughts of their power and bears now have encouragement.
SUPPORT/SUPPORT/MOMENTUM TRADINGMOMENTUM TRADING
• High of shooting star as resistance
• Consider buying above high of pattern
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Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
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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 the longer the shadow, the higher degree of confidence.
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confidence.
Unlike a hammer, market doesn’t often retest upper shadow.
Bearish counterpart of Hammer (not Inverted Hammer.)
A Shooting Star with a open/high/close at low is a Gravestone doji.
As a single candle line this is the same in FX
97
Shooting Star with Price Confirmation
confirmed
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Shooting star but no price confirmation
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Steve Nison’s Candlesticks Re‐Ignited: Advanced Candlesticks to Boost Confidence and Success
For free continuing education and exclusive support for this video go to www.nisonu.com
Price Confirmation
If a candle signal confirms a western signal, there is less need for price confirmation
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Stops and Momentum Trading
Close over here would be a plus for the bulls
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Gravestone Doji
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Close under m.a. support
Gravestone doji
Gravestone Doji
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25 day moving average
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BASIC CRITERIABASIC CRITERIA• Market in downtrend
• Small real body at, or near, bottom of range.
• Must come at new low for move or significant decline
• Upper shadow at least 2x height real body
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• Upper shadow at least 2x height real body
PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY While the market closes at, or near its low, it has shown an ability to rise. This may get the bears slightly nervous.
SUPPORT/SUPPORT/MOMENTUM TRADINGMOMENTUM TRADING
• Not used as support
• Momentum: Trend is still down with this signal
104
Same as the shooting star, except market in a downtrend
Can have small lower shadow (around 10% of lower shadow)
Must have bull confirmation with a higher close, or for those more
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g ,aggressive, a higher opening
This is not the bullish counterpart of Shooting Star. The Hammer is the bullish counterpart.
Because of the bearish shadow, do not place much emphasis on this signal.
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Importance of Price Confirmation
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Always needs candle confirmation with this signal and hanging man candle.
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One sided candles with Nison 360° Candle Analysis:
Review of basic criteria
Strict Criteria
Using as support or resistance
Detailed psychology behind each pattern
Momentum trading
Nison insights
Why hanging man and inverted hammer lines less important
Single candle lines the same in FX
Importance of trend
Can’t buy/sell on every candle signal
107
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Advanced
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Candles:The Blended Candle Line
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“Japanese charts have meaning in a single candle, and when two candles
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are combined, the meaning becomes more significant.”
109
Source: KABUSHIKISOUBA NO TECHNICAL BUNSEKI – G.Ikutaro
A blended candle is a way of “compressing” combinations of candle lines into as if they made one candle
110
close 2close 2 =
How do we make a Blended Candle?
open 1open 1
close 2close 2
1) Use open of the first session for open of blended candle
2) Use close of the last session of pattern for close of blended candle.
3) Use highest high and lowest close of all sessions for upper and lower shadows of blended candle. 111
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think of Blended candle as a “Summary candle” of the pattern analyzed. How does this help?
1‐ To determine if a pattern is net bullish or bearish
2‐ To compare variations of candle patterns to determine the strength of the signal
Classic dark cloud cover
How is this non classic dark cloud cover different? What does it mean to the outlook?www.candlecharts.comwww.candlecharts.com 112
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Advanced Double Candle
Lines:Tweezers
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CRITERIACRITERIA• Two candles with matching highs (tweezers top) or lows (tweezers bottom)
• Uptrend for tweezers top and downtrend for tweezers bottom. But trend not critical.
• The first candle must be a long white (tweezers top) or long black (tweezers
Source: HAJIMETE KABUKA CHATO WO YOMU HITO NO HON by K. Hoshi
(tweezers top) or long black (tweezers bottom)
• 2nd candle must reflect diminishing of prior force
PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY The first candle shows bulls (tweezers top) or bears (tweezers bottom) are dominating. With the second candle showing an inability to continue the move implied by the first candle, we are starting to see the power of the prior trend dissipating. 114
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The more the 2nd candle closes into the first candle, the better the signal.
This is a minor pattern unless there is a candle reversal signal that also emerges at the 2nd candle (i.e. piercing pattern, shooting star).
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Not used as support or resistance or momentum trading unless 2nd candle is a reversal candle.
If both candles for tweezers top close at, or near the highs, or tweezers bottom close at or near the lows, this pattern would have less significance.
Source: HAJIMETE KABUKA CHATO WO YOMU HITO NO HON by K. Hoshi
115
Think this market had troubles near $8.20?
Tweezers top
Tweezers top
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Why is this not a Tweezers bottom? 116
Tweezers Bottom
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Using the “Blended Candle” to increase candle insights:
Is combination of candle lines bullish or bearish?
Is the candle pattern more – or less – strict? Is the candle pattern more – or less – strict?
Tweezers tops and bottoms – correct
interpretation
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Advanced Double Candle
Lines:The Bull Signals
Founder and President: Candlecharts.com 119
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BullishCounterAttackPattern
PiercingPattern
BullishEngulfing
Pattern
BullSash
Pattern
BullSeparating
Line
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BASIC CRITERIABASIC CRITERIA• Two session pattern
• Downtrend but even with no apparent trend, would be a positive signal
• Black real body followed by a long white real body that gaps lower on the open and then closes at or near black candle close.
• 2nd candle tall white
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STRICT CRITERIA STRICT CRITERIA • Both candles are large (very rare)
PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY With the gap down, bears are relieved. The “bulls are backed into a corner and came out fighting in a heroic fight. Kamikaze fights are always frightening, so the bears seeing this take to the sidelines and the bulls may get reinforcements.”
SUPPORT/SUPPORT/MOMENTUM TRADINGMOMENTUM TRADING
• Not used as support or resistance.
• Consider selling on move under low of pattern.
122
No pattern like this for FX since the market gaps lower.
While the ideal pattern is both large real bodies, we would still view this as important even if only the white
dl l
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candle was large
Closes do not have to be exactly the same
Opposite of bearish counter attack
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Bull Counter Attack
What do you think the bears are thinking after this session?
PS‐watch your language!
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Bull Counter Attack
124
BASIC CRITERIABASIC CRITERIA• Two session pattern
• Market in downtrend
• Open of white candle under prior close
• White candle closes more than ½ way into black real body.
STRICT CRITERIA STRICT CRITERIA
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• White candle opens under prior low
• Long black and tall white candle
PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY Bears in control is echoed by long dark candle. Sharp gap lower means bears have a strong foothold. But, with sharp bounce back by end of the session, the market has “displayed uneasiness at a low price.” The bears now sense danger.
SUPPORT/SUPPORT/MOMENTUM TRADINGMOMENTUM TRADING
• Lowest low of both candles as support
• Consider selling on move under support level 125
For FX, intraday and indexes can have the same (or within 2 pips for FX) open as prior close
Long black and then long white shows extreme shift in psychology
The more the white candle opens under
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The more the white candle opens under prior low /close, the better the signal (for non FX).
Opposite of dark cloud cover
Related patterns which need not be remembered 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
And this?
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Not Piercing Patterns
Although first candle wasn’t long black, what pattern is this?
128
Piercing Pattern
Not a piercing pattern
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For intraday okay to have open at‐ or very close‐ to prior close
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Early clues of shifting supply/demand
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BASIC CRITERIABASIC CRITERIA• Two session pattern
• Market in a downtrend
• White real body wraps around dark real body
STRICT CRITERIA STRICT CRITERIA
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• Small first candle small dark candle or doji
• Second candle is tall white that wraps around high-low range of first candle.
PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY • Small first candle reflects deterioration of
bear trend.
• Tall white candle leaves no doubt the bulls now in driver’s seat.
SUPPORT/SUPPORT/MOMENTUM TRADINGMOMENTUM TRADING
• Lowest low of either candle as support
• Consider shorting under low of pattern.
131
For FX, intraday and indexes can have the same open (or within 2 pips for FX) of prior close
The pattern has less significance if the real bodies are about the same size.
First candle can be doji
Candles in Engulfing Pattern (large wraps around small candle) are opposite those in
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around small candle) are opposite those in Harami Pattern (small candle in a large candle)
If Bullish Engulfing pattern appears during rally, Japanese call it a “last engulfing pattern”, and may be buying climax. Confirmation close under close of white candle. This is not an important pattern, just think about not buying.
FX Pattern
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This is interesting: I recently purchased a technical analysis package from a “WELL KNOWN” technical analysis guru. During his charting presentation he made several references to candlestick patterns, and each references that he made was absolutely wrong! …During a strong uptrend, he called a large white real body after a
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small black real body a bullish engulfing pattern. If I remember right – a bullish engulfing pattern doesn’t count during an uptrend. If I hadn’t bought and studied your package, I never would have known that and would have assumed that he was right.
Thanks again for your great work!Carl
133
Bullish Engulfing Patterns
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Price confirmation
No price confirmation after this bullish engulfing pattern
Price confirmation after this bullish engulfing pattern, but risk is still to low of pattern
Why didn’tI have this window as resistance?
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low of pattern
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Price confirmation
If you waited for the close of session of the bull engulf
look at what price you would be buying.
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Momentum trade
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Bear momentum trade
Why would you not buy on this pattern?
137
BASIC CRITERIABASIC 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
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of first candle
• 2nd real body is within 1st candle’s real body
PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY The long black candle echoes the heaviness of supply. But, the next session’s gap up, and lack of downside, follow through results in the bears seeing that their drive is becoming impeded.
SUPPORT/SUPPORT/MOMENTUM TRADINGMOMENTUM 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 have the same (or within 2 pips for FX) open as prior close
If the 2nd candle is a doji, the pattern is called a harami cross
The more the 2nd candle gets deeply into the black candle, the better the
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into the black candle, the better the signal.
Because FX, etc, white candle can’t get deeply into black real body, it is best to wait for bull confirmation by a higher open or close than the white real body.
In general, the less the 2nd candle gets into the black candle, the more confirmation is needed.
Opposite of bearish harami
FX Pattern
139
Bull harami
Think the market is different on this sessioncompared to prior session?
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Bull Harami
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PotentialSelling climax
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Bull Harami and momentum trading
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Momentum Trade
142
BASIC CRITERIABASIC CRITERIA• Trend not important
• Black candle followed by white candle that opens within black real body and closes over prior open.
STRICT CRITERIA STRICT CRITERIA • Both long real bodies
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Both long real bodies
• 2nd candle closes over prior high
• White real body closes at, or near, its highs
PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY The surprise gap, higher opening on the second day after a strong selling session, may initially be of minor concern. But, with the white candle’s strong close, the bears sense danger and also gives the bulls cause for optimism.
SUPPORT/SUPPORT/MOMENTUM TRADINGMOMENTUM TRADING
• Lowest low of both candles as support
• Consider selling on move under low of pattern 143
Since the market has to gap higher, this pattern not applicable to FX.
The higher the market gaps on the open, and the higher the close on the white candle, the more meaningful the pattern
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Remember risk/reward since this pattern is completed after substantial move has already occurred.
Opposite of Bear Sash pattern
If open of white candle is same (or higher) as prior open, it is a Bull Separating Line.
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Bull Sash Pattern
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Bull Sash
145
Risk/Reward
Bull Sash
Bull Sash
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Both of these are poor trade candidates
146
BASIC CRITERIABASIC CRITERIA• Trend not important
• Black candle followed by white candle that opens at (or above) prior open. Then closes over black candle open.
STRICT CRITERIA STRICT CRITERIA • Both long real bodies (rare)
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g ( )
• White real body closes at, or near, its highs
PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY While 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/SUPPORT/MOMENTUM TRADINGMOMENTUM TRADING
• Lowest low of both candles as support
• Consider selling on move under low of pattern 147
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Easy way to remember this pattern is the opens are the about the same (or the 2nd candle open gaps away from 1st
candles open.)
Since the market has to gap higher, this pattern not applicable to FX
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this pattern not applicable to FX.
Major challenge with this pattern is since it is completed after substantial move, it usually means poor risk/reward.
Opposite of Bear Separating Pattern
If open of white candle is within prior black real body, it is a Bull Sash Pattern.
148
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 look where it is!
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Advanced double candle bull signals using candle progression using in‐depth candle analysis for:
Bull counter ‐ attack
Piercing Pattern
B ll h Bull sash
Bullish Engulfing Pattern
Bull Separating lines
Bull Harami and confirmation
How some patterns have poor risk/reward and other Nison insights
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CandlesticksRe-Ignited!
Advanced
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Advanced Double Candle
Lines:The Bear Signals
Founder and President: Candlecharts.com 154
CANDLE PROGRESSIONDESCENDING BLACK REAL BODY
BearishCounterAttackPattern
Dark CloudCover
BearishEngulfing
Pattern
BearSash
Pattern
Bear Separating
Line
155
BASIC CRITERIABASIC CRITERIA• Two session pattern
• Uptrend but, even with no apparent trend would be a cautionary signal
• White real body followed by a black real body that gaps up on the open and then closes at or near white candles' close
STRICT CRITERIA STRICT CRITERIA • Both candles are large (very rare)
• Large black real body
PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY With the tall white, and especially with the gap higher next session, the bulls are happy. But then a strong bear counter force comes in to drag the market back to the prior close. The tone of the market now shifts from bullish optimism to uncertainty.
SUPPORT/SUPPORT/MOMENTUM TRADINGMOMENTUM TRADING
• Not used as support or resistance.
• Consider buying on breakout over high of pattern.
156
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No pattern like this for FX since the market gaps higher
While the ideal pattern is both large real bodies, we would still view this as important even if only the black
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p ycandle was large
Closes do not have to be exactly the same
Opposite of bullish counter attack
157
Bear Counter Attack
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Bear Counter- Attack
While this is not a bear counter attack since the closes are not the same‐ do you think there is a change in psychology after this session?
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Bull Counter Attack?
159
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BASIC CRITERIABASIC CRITERIA• Two session pattern
• Market in uptrend
• Open of black candle higher than prior close
• Black candle closes into white candle
STRICT CRITERIA STRICT CRITERIA Bl k dl l th 50% i t hit• Black candle closes more than 50% into white real body
• Black candle opens above prior high
• Tall white and black candles
PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY White candle and then gap higher keeps bulls happy. But, with black candle finishing well below white candle’s close, the “upward energy has cooled to the extreme” causing the bulls to become concerned and bears bolder.
SUPPORT/SUPPORT/MOMENTUM TRADINGMOMENTUM TRADING
• Highest high of both candles as resistance
• Consider buying on breakout over high of pattern 160
For FX, intraday and indexes can have the same (or within 2 pips for FX) open as prior close
If the black candle doesn’t get more than ½ way into white, it is called an “incomplete dark cloud cover” and it is
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pbest to wait for bear confirmation.
The more the open on black candle gaps away from the prior high/close, the better the pattern (for non FX).
Opposite of piercing patternFX Pattern
161
Dark Cloud Cover defines Resistance
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Dark Cloud Cover at resistance
Why is this t b lli h
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not a bullish engulfing pattern?
163
Dark Cloud Cover
164
Dark Cloud Cover and momentum
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Dark Cloud Cover
Is this telling you that there is a shift in psychology?
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Not dark cloud cover
Chart courtesy of Genesis FT
166
Dark cloud rains pain for the bulls
Think there is trouble near $410?
“Oh crap!”
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near $410?Happy time for the bulls‐ new high close!
167
BASIC CRITERIABASIC CRITERIA• Two session pattern
• Market in an uptrend
• Black real body wraps around light real body
STRICT CRITERIA STRICT CRITERIA
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• Small first candle small white or doji
• Second candle is long dark that wraps around high-low range of first candle.
PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY • Small first candle reflects rallying could be
running out of steam
• Long black candle visually shows the bears are now the controlling force.
SUPPORT/SUPPORT/MOMENTUM TRADINGMOMENTUM TRADING
• Highest high of either candle as resistance.
• Consider buying on breakout over high of pattern.
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For FX, intraday and indexes can have the same (or within 2 pips for FX) open as prior close
The pattern has less significance if the real bodies are about the same size.
First candle can be doji
Candles in Engulfing Pattern (large wraps around small candle) are opposite those in
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) ppHarami Pattern (small candle in a large candle)
If Bearish Engulfing pattern appears during selloff, Japanese call it a “last engulfing pattern and may be selling climax. Confirmation is a close above black candle close. This is not an important pattern- just think about not selling.
FX Pattern
169
Misinformation can cost you Big $$$
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170
Candles as Support
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S1
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Momentum Trading
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Candles and Momentum – trading the breakouts
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Price confirmation
The less ideal the pattern the more candle confirmation
is needed.Why is this bearish engulfing
pattern less than ideal?
Confirmation
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with lower close but risk
still to high of pattern
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Price confirmation
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Since pattern confirmed resistance less reason for price confirmation‐ but it depends on you trading style.
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BASIC CRITERIABASIC CRITERIA• Two session pattern
• Market in uptrend, but trend not critical
• First candle unusually long white 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
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• 2nd real body is within 1st candle’s real body
PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY The indications based on the tall white candle’s vitality is for the rally to continue. But, next session’s gap down and then failure to resume the advance to beyond the prior session, shows those who had forecast strength are wrong! The rally could now be running out of fuel.
SUPPORT/SUPPORT/MOMENTUM TRADINGMOMENTUM TRADING
• Not used as resistance (unless 2nd
candle is reversal signal (i.e. shooting star)
• Not used for momentum trading
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For FX, intraday and indexes can have the same (or within 2 pips for FX) open as prior close
If the 2nd candle is a doji, the pattern is called a harami cross
The more the 2nd candle gets deeply into the white candle, the better the
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into the white candle, the better the signal.
Because FX, etc, black can’t get deeply into white candle, it is best to wait for bear confirmation by a lower open or close than black candle’s real body.
In general, the less the 2nd candle gets more into the white candle, the more confirmation is needed.
Opposite of bullish harami
FX Pattern
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Bear Harami
Not Bear Harami
Because these are near the highs of the prior candle would want bear candle confirmation
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Confirmation important in FX
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BASIC CRITERIABASIC CRITERIA• Trend not important
• White candle followed by black candle that opens within white real body and closes under prior open.
STRICT CRITERIA STRICT CRITERIA • Both long real bodiesBoth long real bodies
• 2nd candle closes under prior low
• Black real body closes at, or near, its lows
PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY The white candle means the bulls are running the show. The next session, the market gaps lower and is not only unable to make up this lost ground, but closes under the white candle. This shows the bullish energy has been sapped out of the market resulting in very scared bulls.
SUPPORT/SUPPORT/MOMENTUM TRADINGMOMENTUM TRADING
• Highest high of both candles as resistance
• Consider buying on breakout over high of pattern 180
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Since the market has to gap lower this pattern not applicable to FX.
The more the market gaps down on the open, and the lower the close on the black candle, the more meaningful the pattern
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Keep in mind risk/reward since this pattern is completed after substantial move has already occurred.
Opposite of Bull Sash pattern
If open of black candle is same (or lower) as prior open, it is a Bearish Separating Line.
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Bear Sash
Bear Sash
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Bear Sash
Bear Sash
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Being a Market Chameleon
Bear Sash
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Bull Sash
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BASIC CRITERIABASIC CRITERIA• Trend not important
• White candle followed by black candle that opens at (or below) prior open. Then closes under white candle’s open.
STRICT CRITERIA STRICT CRITERIA B th l l b di ( )
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• Both long real bodies (rare)
• Black real body closes at, or near, its lows
PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY With the gap down on 2nd day, the bulls sense danger. To make matters worse for them, the market can’t even make up for the ground lost on the opening. The tide of the market momentum has now turned down.
SUPPORT/SUPPORT/MOMENTUM TRADINGMOMENTUM TRADING
• Highest high of both candles as resistance
• Consider buying on move above high of pattern 185
Easy way to remember this pattern is the opens are the about the same (or the 2nd candle open gaps away from 1st
candle’s open.)
Since the market has to gap lower this pattern not applicable to FX.
Major challenge with this pattern is
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Major challenge with this pattern is since it is completed after substantial move, could mean poor risk/reward.
Opposite of Bull Separating Pattern
If open of black candle is within prior white real body, it is a Bear Sash Pattern.
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Bear Separating line
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Bear Separating Line
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Bear Separating line
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Advanced double candle bear signals using candle progression using in‐depth candle analysis for:
Bear counter ‐ attack
Dark cloud cover
Bear sash
Bearish Engulfing Pattern
Bear Separating lines
How some patterns poor trade candidates
Bear Harami and confirmation
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Steve’s Favorite
Candle pattern
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A rising window is supportA rising window is support
Support Zone
Most important support level
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A falling window is resistanceA falling window is resistance
Most important resistance level
Resistance Zone
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Small vs. Large windows
Large
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Small window
Large window
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Importance of Windows
Shooting Star
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Importance of Windows
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Large and Small Windows
S1
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S2
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Large and Small Windows
R2
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R1
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Change of Polarity
ResistanceResistanceResistanceResistance
SupportSupport SupportSupport
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Windows and Change of Polarity
The most important aspect is the many times this resistance was tested‐ (which may have to do with
the window)
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Island Tops and Bottoms and Candles
Island TopIsland Top
Island BottomIsland Bottomwww.candlecharts.comwww.candlecharts.com 204
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How Windows Give you a Jump on the Competition
Formed an island bottom at this session
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S1?
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How Windows Give you a Jump on the Competition
R1?
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Formed an island top at this session
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Windows and Confirmation
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Closed under window by 2 and 9 cents and next day opened and closed over window again
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Three windows-note of caution
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Secrets of Using Intraday Candle Charts to Refine Entries with Windows
For small windows – or h th b tt fwhen near the bottom of
larger windows – look for intraday candle reversals
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Using intraday candles to confirm a Daily window
Turn signal at $31.15 on this 30 minute chart compared to
$31.60 on daily chart.
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While the bottom of this window (red dashed 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 of rising window on daily chart
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Advanced window tactics: Review of window basics
Large compared to small windows
h f l i d i d Change of Polarity and windows
Island tops/bottoms and windows
Confirmation with intraday candles
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