Steve Nison’s Unleashing the Profit Power of Candlesticks2013... · Steve Nison’s Unleashing the Profit Power of Candlesticks ... Steve Nison’s Unleashing the Profit Power of

Steve Nison’s Unleashing the Profit Power of Candlesticks

© 2013 candlecharts.com 1

With

Steve Nison, CMTPresident: Candlecharts.com

CandlestickCharting

Techniques

Candlesticks +Western

Indicators

Candlesticks + Trade Management

Quick review of candlestick essentials

Using Yorikiri candles assupport/resistance

Importance of shadows

Helping to avoid buying on false breakouts

Candlestick pattern variations for FX

When to use a candlestick signal for a newtrade and when to use to exit an existingtrade.

Using candlesticks as protective stops

Trading breakouts with candlesticks

Importance of short term trend

Correctly using single and doublecandlestick patterns

Steve’s favorite candle signal

Secrets of intraday candles for day andswing traders



Using candlesticks + West forincreased trade confidence

Change of Polarity

Falling off the Roof

Crack and Snap

Candlesticks in context

Adapting to the market

Candlestick confirmation

Steve’s most important trademanagement rule

Profit Leakers



Markets of your choice

Section 1:Nison Candlesticks

Section 1:Nison Candlesticks



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

www.candlecharts.com

open close

open

RealBody

high

low

Real Bodies / Shadows

ANATOMY OF THE CANDLESTICK LINE

close

Shadow

Profit Leaker




Reading the message of the candlestick line

The longer thereal body thestronger themomentum.

For FX traders this is a goodsubstitute for volume


Who’s in control?

“The Real Body is the Essence of the Price Movement”



Finding “Hidden”Support/Resistance

Finding “Hidden”Support/Resistance


Yorikiri Candlesticks


1st support(50% of entirecandle)

2nd support

2nd

resistance

1st

resistance(50% of entirecandle)




Center Tall White


Center of Long White Candle as Support


Center Long Black Candle



Retracements

(B)

(A)

50%

38.2%

61.8%

$100

$200

($150)

($162)

($138)


Very Long Real Bodies as Support

Very Long Real Bodies as Resistance

Fib retracement





Very Long Real Bodies as Resistance


Very Long Real Bodies


Who’s in control?

Basic Criteria:Small real body - black or white

Market Implication:Immediately preceding trendlosing momentum.




Higher highs, lows andcloses. Look at the shrinkingreal bodies. Does themarket still look good?

WHY THE BEST TRADERS USE NISON CANDLES

DOJI AND SPINNING TOP


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




Negative Selection

You saved $35/share by NOT going long here


One of the best ways to make money?

Saved from a 19% decline


Candles can be used in all time frames

“Market istired”



Profit Leaker


Doji Confirms resistance


Candles in Context

Analyze these doji in the context of what happened before. Areany of these a more likely reversal and why?

A B C



Volumes 1+2 of Nison Educational Series

Streaming video or DVDs

More details about this at www.nisonspecial.com/unleashedsale

Regular price at candlecharts.com

Be sure to order from your special link atwww.nisonspecial.com/unleashedsale

Special limited time price atwww.nisonspecial.com/unleashedsale




Profit Leaker


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




Doji as Resistance


Doji as resistance

Candles and Momentum Trading

Look at all thereversal signals

45

MKt at 90 1/2Buy the 90 call @ 2.125 days later sell to cover withmkt at 94 ½ @ 4.61More than 100% profit



1

2

3

Tell me about how youview each of the threedoji with the idea ofprior trend, overbought,confirming a technicalsignal, etc

Nison Chart Challenge

Profit Leaker


Reading the Message of the candle line

The longer the realbody the strongerthe momentum.

The relative sizeand position of theshadow displaysthe extent of pricerejection.



Shadows

Remember: location and size of the shadow should be considered whenanalyzing the market psychology.

Implication: Bearish long upper shadow offsets “rallying strength.”Bullish long lower shadows hints bears losing force.


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?




Shadows in Context

Small realbodies but bullshadows


Although this market isdescending, the long lowershadows offsets some ofthe negative outlook

Long Lower (Bullish) Shadows

Over 10% move in just a few days




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 Implication“A chance to buy at the bottom “

SupportLow of hammer as support


Psychology – Strong demand


Using candles to enter and exit




Hammers

Using Candles across the spectrum

What does this say?

Profit Leaker



Introducing:Nison Candle Scanner for the Free

NinjaTrader platform

With 28 Nison CertifiedCandlestick Signals

Is it a valid Nison candle?

Not hammers!

Seminar Bonus

INSTANT Free Upgrade from NCSto NCS PRO:Pro version includes the Intradayand FX Modules

$1,490 value!




The market will often retest thelower shadow of the hammer

Retest of hammer’s shadow

Buy here

Take $4 share profit here




Retest of hammer’s shadow


hammer’s lower shadow as Support

Monday March 4at 9pm NY time

Will be recorded




Why Protective Stops


1

2

34

5

Which are hammers and why?


www.nisonoptionsacademy.com

Buy at 144.50 on hammerSell at 151.50 (failure to holdover resistance)% gain on stock = 4.8%

Buy ATM 145 call @ $4.75Sell to close call 11 days laterfor $8.11% gain on options = 71%

Benefits of Options- Leverage








Scenario 1 – buy at hammerMkt @ $395: 400 call @ $11.30

Exit at doji ( red arrow 13 daysafter hammer) mkt @ 447: 400call @ $47.50 (320 % return)

Scenario 2 – buy based on MACDMkt @ $418 : 420 call @ $13.45

Exit at doji (5 days later) mkt @447: 420 call @ $31.20 (132%return)

Result: Nison candlesticksgenerated over 2x the profit!

Nison Candlestick strategies for long calls


Direction is the single most important thing you needto know to make money on any options trade

Directionblows away

impliedvolatility


AAPL

1) Hold IV constant at 26% and price +20% over 30 days

APPL @ 300: 60-day 300 call = $12.70

APPL @ 360: 30-day 300 call = $60.10

2) Hold Price Constant at $300 and IV +20% over 30 days

300 strike 60-day call: Vol @26% = 12.70

300 strike 30-day call: Vol 31.2% = 10.70

Result:

20% change in price = +$47.40 (374% gain)

20% change in Vol = -$2.00 (15% loss)

Implied Volatility vs. DirectionImplied Volatility vs. Direction



Nison Candlestick Secrets For Profiting in Options

Quickly finding the best opportunities in the options markets



Basic Criteria:• Market in up trend

• Small real body (black or white) at,or near, bottom of session

• Upper shadow at least twice heightof the real body

Market Implication:Potential top reversal

Resistance:High of signal as resistance




Shooting Star “signals trouble overhead”


Reading the Market’s Message


“A crack has entered the market”




Shooting Stars as Resistance


Shooting Stars

Profit Leaker



What iswrong withthis so called“shootingstar?”

Hint: look at upper shadow

Basic Criteria• Market in down trend

• White real body wraps around priorsession black real body

Market ImplicationBottom reversal

SupportThe lowest low of the two sessionsof the pattern

Bullish Bearish



Classic Bull Engulf


Bullish engulfing pattern + shadowsf

Lower closes, butwhat are shadowshinting?

Bullish Engulfing Pattern



How many black candles didthis wrap around?



Anythinghinting bearslosing force?

close

openopen




Candles in Context

Hi Steve,

I was a simulcast attendee of your recent seminars, as well as I am a member of MyCandlecharts.com. Thanks for all the education. My question is about the Dailyclose on New Zealand Dollar / US dollar chart (attached for easy reference). Wegot a Bullish Engulfing pattern but with a long upper shadow. What is thesignificance of the long shadow?Thanks a lot in advance.Regards,Hussam A.


Series of Bullish Engulfing Patterns



Bullish Engulfing Pattern as Support

Basic Criteria• Market in down trend

• Opens below prior low (or close)

• White candle closes more than 50%into prior black real body

Market ImplicationBottom reversal

SupportThe lowest low of the twocandlestick lines

On–neckclose=

prior low

PiercingPattern

In–neckclose=

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



Piercing Pattern

Piercing Pattern

Not Piercing Patterns

Early clues of shifting supply/demand



Basic Criteria• Market in up trend

• Black real body wraps around priorsession opposite color real body

Market ImplicationTop Reversal

ResistanceThe highest high of the two sessionsof the pattern


• Open of black candle can be at closeof prior white candle

Market ImplicationTop Reversal

ResistanceThe highest high of the two sessionsof the pattern

Bearish Engulfing Pattern



Bearish Engulfing pattern as resistance

Candles: Support and Resistance


Why the best traders use Nisoncandlesticks

Bottomoutsidereversal



Topoutsidereversal

Bottomoutsidereversal

Western Outside Reversals

Engulfing Patterns and Outside Reversals

1) What candle clues were there in the circledarea at A?

2) What was happening to the highs at A?

3) Why concept does 1 and 2 show that increaseodds of a turn? And would you sell short oradjust longs?

4) Why wouldn’t we be selling short at B with thespinning top and doji?

5) What pattern is at C?

B

C

A





This is interesting: I recently purchased atechnical analysis package from a “WELLKNOWN” technical analysis guru. Duringhis charting presentation he made severalreferences to candlestick patterns, and eachreferences that he made was absolutelywrong! …During a strong uptrend, he calleda large white real body after a small blackreal body a bullish engulfing pattern. If Iremember right – a bullish engulfing patterndoesn’t count during an uptrend. If I hadn’tbought and studied your education , Iwould never would have known that andwould have assumed that he was right. Andcould have lost a lot of money!

Thanks again for your great work!

-Carl


• Opens above prior high (or close)

• Black candle closes deeply intoprior long white candle

Market ImplicationTop reversal

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

Dark Cloud Cover



Dark Cloud Cover as Resistance- FX

Dark Cloud Cover- Futures

Chart courtesy of Genesis FT

Dark Cloud Cover - Stock



Dark Cloud Cover as Resistance - Intraday

Profit Leaker

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.



www.candlecharts.comwww.candlecharts.com

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


Think this market had troubles near $8.20?

Tweezers top

Tweezers top

Why is this nota Tweezers

bottom?


Tweezers Bottom



A rising window is support

SupportZone

Most importantsupport level


Rising Window

Rising Windows



Broken Windows

Once the window is brokenit is no longer potential support

Rising Window

Rising Window Hammer

1. What are the reversal signals?

2. Where is potential support?

3. Any signals confirmingsupport area forecasted in #2?


With these bearish signalsyou would have captured$400 -$500 on 100 shares



1. What are the reversal signals?2. Where is potential support?3. Any signals confirming support

area forecasted in #2?

Chart Challenge- answer

A falling window is resistance

ResistanceZone

Most importantresistance level


Falling Window



Breaking Falling window’s Resistance

Falling Window

Falling window



Small Windows

2 cents

CANDLES FOR GOLDEN OPPORTUNITIES OTHERSWILL MISS

Island bottom

Is this S1?

Chart Challenge

Which hammer (at the arrows)is a better buy and why?

After the second hammerwhere would you exit and why



CHART CHALLENGE

1

23

4

On each of these doji would you:A) Go longB) Go shortC) Do nothingAnd explain why

Doji 1Doji 2Doji 3Doji 4

Chart Challenge

1) What 2 candlestick pattern does thisform?

2) If you were long here what would youdo and why?

3) If you had no position would you sellshort here- why or why not?

Secrets of IntradayCandle Charts

(for Swing Traders):Using Intraday Windows


(for Swing Traders):Using Intraday Windows



Intraday Windows

Most intradaywindows fromone day to thenext


27th

28th

Intra-day window – not a window on daily chart


Intraday Candle Charts

Be more flexible withcandle patterns onintraday candle chartsthan with daily orweekly candles

Be more flexible withcandle patterns onintraday candle chartsthan with daily orweekly candles




White real body that wraps aroundprior session black real body or doji.


close

open

Intraday


Black real body wraps around priorsession white real body or doji.

close open

Intraday

NCS Pro (whichincludes FX and

Intradaymodules) takes

this variation intoaccount




(for Swing Traders):Finding “Hidden”

Support/Resistance


(for Swing Traders):Finding “Hidden”

Support/Resistance

Using intraday charts to uncover “hidden” support: 1 of 3

DailyOn this daily chart where isfirst support after this tallwhite candle on April 15?Let’s go to the intraday….




April 15


Intraday


Support zoneobtained fromintraday chart

On this daily chart we see whatoccurred after April 15


Daily



(for Swing Traders):Finding the Extra Early

Reversal Areas


(for Swing Traders):Finding the Extra Early

Reversal Areas



Intraday Candles for Early Reversals

Hammer onthis daily chartgives reversal

at $53.05

Hammer onthis intradaychart givesreversal at

$49.09 on thesame day


Dec 9

Secrets of intraday Candles

DailyIntraday

Usingintradayget buysignalhere

Bull hammer signal at $50.79

Intraday for Swing Traders – earlier reversals 1 of 2

Let’s look at thisdaily session froman intradayperspective



Bull signal at $48.68

On daily chart got bullish hammerat $50.79. On this 5 minute chartgot reversal more than $2 earlier withthis bullish engulfing pattern.

Intraday for Swing Traders – earlier reversals 2 of 2

Hello Steve,

I attended your seminar in NY. Pleaseattached find the log of my trade onEUR/USD. The first picture shows myshort entry based on a daily chart'sShooting star which confirmed theResistance.

Later on the 4hr. chart, a Dojiappeared which confirmed thesupport level. I exited the trade with+61 pips.

If you have anycomments/suggestions, please feelfree to do so.

Many thanks,Frank C.

“The first picture shows myshort entry based on a dailychart's shooting star whichconfirmed the resistance atbearish engulfing pattern.”

Harnessing the insights of intraday candles


Harnessing the insights of intraday candles

“Later on the 4hr. chart, aDoji appeared whichconfirmed the supportlevel. I exited the tradewith +61 pips.”

Resistance area frombear engulf on dailychart

Daily chart reversal withshooting star at 1.2900. Withthe reversal on intraday at1.2930 Frank would haveimproved his profit by 50%





(for intraday traders):Monitoring Daily

Support/Resistance


(for intraday traders):Monitoring Daily

Support/Resistance

Daily chart for support ( 1 of 2)

We are thinking of buying on the session at the arrow as marketapproaches solid band of support 43.25 on June 26. Let’s turn toan intra-day chart to see if there are any buy signals as the stocknears 43.25 ….. (see next chart).

June26

Buyingarea


Intra-day to place trade on confirmation of support ( 2 of 2)

On this 5 minute chart onJune 26, the dashed lineshows support area obtainedfrom prior daily chart near43.25. The hammer at thissupport was the buy signal

Hammer





1. What pattern is highlighted?

2. When would you sell short based on this pattern?

What would you dohere if long/why?

1.What two candle signals formed here?2.Are these confirming something else?3.Where would you have R1 and R2

Chart Challenge – Part 1

Chart Challenge – Part 2

What would you do here if flat (no position)?



Profit Leaker

Steve Nison’s Four Cs

for Trading Success


for Trading Success

Candlesticks in Context


“To know whereyou stand is asimportant as

candle patternrecognition.”

Candles in Context



Candles in Context

ShootingStar, but…

How education SAVES you money

Bearish engulfingpattern, but you mustnot sell here!




Profit Leaker

How NOT to use candlesticks

Oh my goodness! Themarket rallied after theshooting star!


for Trading Success


for Trading Success


Confirmation




4

March

11 18 25 1

April

8 15 22 29

May

6 13 20 28 3

June

38.5

39.0

39.5

40.0

40.5

41.0

41.5

42.0

42.5

43.0

43.5

44.0

44.5FED DEPT STRS

During this time, themarket is ascending.However, what are

reasons for caution?

Section 2:Nison Candlesticks +Western indicators

Section 2:Nison Candlesticks +Western indicators



The Multiplier Effect

Candlesticks andTrendlines

Candlesticks andTrendlines


This doji is showing ashift in psychology sinceit comes during a rally

Is this doji telling us there issomething different about themarket?




Doji in a Box Range



There is no trend toreverse with thisdoji– thus weignore it.

Doji in Context

Scenario1

Scenario2




Candles and Trend lines


Doji confirms resistance

How Education Saves You Big $$$

Major resistance 2.00-2.01




Long term resistance zone



Long term resistancezone



The Value of Owning the Knowledge




Candles and Trend Lines


Congratulations –you bought at

support!

Congratulations?– you bought at

support?


© Steve Nison’s Candlecharts.com



SupportSupport

ResistanceResistance


Change of Polarity


Change of Polarity




Change of Polarity


Don’t look through a well!

1

2

3

4

5

Why would we trade differently with Piercing Patterns4 and 5, compared to Piercing Patterns 1,2 and 3?

Hint: “Change of Polarity”


Profit Leaker



How Education helps SAVE and MAKE you money

Liquidated my stock portfolio

Entered the market here

How Education helps SAVE you money

Exited my stocks here

Evening star variation

How Education helps MAKE you money

Morning star variation

Entered themarket here



Snap

Crack

Target

Stop

Buy


Crack and Snap


Crack and Snap




Crack and Snap


Crack and Snap


Sell

Target

Stop




Falling off the Roof


Falling Off the Roof


Falling off the roof/subjectivity

Stop out level



Section 3:Nison Candlesticks +Trade Management

Section 3:Nison Candlesticks +Trade Management


for Trading Success


for Trading Success


Confirmation

Chameleon


Adapting to the Market

target

Trend is down




The low of thebullish engulfingpattern assupport. Oncehammer is formed(at the arrow) wethen adjust oursupport

Adapting


Adapting to the Market

Closed overWindow’s

Resistance

?

Candles in Context: 1 of 2

Which is a better sale?

Scenario 1 Scenario 2



Candles in Context: 2 of 2

Scenario 1 Scenario 2

Which is a better sale?

Why I went long:

1) Bullish engulfing at

support

2) Trend line breakoutof price

Was this a good tradethat just didn't work outor did I make a mistakein judgment that I can'tsee?

Thank you,Gary B

Nison Insider Access - Sample Question

Support

Bullish engulf

What do you say? Did hemake a mistake? If so what?

Profit Leaker




for Trading Success


for Trading Success

Consider Risk-Reward


Confirmation

Chameleon

Risk/Reward

Buy XYZ at 100

Support at 96

Price target (i.e resistance) at 108

Risking 4 looking to make 8 gives a 1:2 risk/reward

Importance of protective stops




Same Signal- but how different the strategy!


Candles and Risk – Reward: part 1

Candles in context

Bullishengulfingpattern thatwraps around3 red candles,but…



Candles in context – Crack and Snap

Crack and snap,but where is R1?


Candles and Risk - Reward: Part 2

Streaming video or DVDs



HERE ARE JUST SOME OF THE

BRAND NEW STRATEGIES YOU WILL LEARN:

New: The order of power for each candlestick signal

New: Nison 360° Candlestick Analysis for eachpattern

New: Steve’s favorite western indicator

New: The best time periods for moving averages

New: How to let your profits run

New: Using both western and price confirmation

New: Nison Insights for each pattern

New: Candles and Sectors/ETFs




Nison Candles for Higher Profits

Let’s see how candles +west called the lowsbefore a 1600 pip rally.

Nison Candles + West for Higher Profits

Nison Candles for Higher Profits

Small real bodies anddoji near $710

Falling window at$700 confirms a top

Bearish movingaverage dead cross at$650

Result: an extra$5000 on 100shares in yourpocket thanks tocorrect use ofcandlesticks!



Falling window at$700 confirms a top.$700 put @ $25

Bearish movingaverage dead cross at$650. $700 put @$58

Using options

Result: an extra$3300 in yourpocket on oneoptions contract!

Candles for Higher Profits

Markets of your choice

Documents

Steve Nison’s Unleashing the Profit Power of Candlesticks2013... · Steve Nison’s Unleashing the Profit Power of Candlesticks ... Steve Nison’s Unleashing the Profit Power of