Advance Cabdlesticks Pattern

8/13/2019 Advance Cabdlesticks Pattern

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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

ToolsToolsSteve ison’s

Trading Triad

Success

System

Steve ison’s

Trading Triad

Success

System

Trade ManagementTrade Management

System System

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“If you want to see farther,

you have to go higher”

“If you want to see farther,

you have to go higher”

2






1

• Quickly read the

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


Bear Sternscollapse

4

Looks good?


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Looks good?



Reading the Psychology of the market

Think the $ had trouble in this area?

Bear shadows, evening star, bearish

engulfing patterns, shooting star…..


8






Good buy?

Negative Selection


What is one of the best ways to make money?

T h o se p o o r t r a d e r s

w h o g o t f o o l e d i n t o

b u y i n g h e r e .

10

Owning the Knowledge

Let see what thecandles tell us aboutsupply/demandWhen prices get downnear $62.00-61.50?







Owning the Knowledge

Buying at hammer near $62.00Target near $63.70 (resistance)


Get into a new

traders see it

13


Bear StearnsCollapse

14






“Combinations of bullish and bearishcandle lines indicate the direction of the

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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 theinformation as

a bar chart

17






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?


Quickly see “ The Mode of the Market”


What candles do – and don’t do

What happen

each time this

gets near $43?


Candles‐ or

any technical system can’t

forecast

surprises

20






Founder and President: Candlecharts.com 121

INTRODUCINGTRODUCING STEVEEVE NISONSON’S 366 CANDLENDLE ANALYSISALYSIS

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 signalNew – 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 c alled a cr oss

• 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 “pus hed

up” - a doji shows the bullish momentum has nowbeen curbed. The bulls now become concerned withthis lack of sustained strength.

• Markets can sink of their o wn weight (i.e. don’t needsellers to pull markets lower- lack of buyers will dothat) a doji hints buyers are now starting to absorbsupply.

• The market is at a delicate turning period and co uldgo either way.

123






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 marketoverextendedat these doji?


www.candlecharts.comwww.candlecharts.comwww.candlecharts.comwww.candlecharts.com

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






Doji in a Box Range


If early in uptrends/downtrends, or middle of a boxrange doji not important

Spinning tops and doji could be just a pause to acontinuing trend


29






The pause that refreshes?




Doji generally work better at calling tops thanbottoms.




Doji generally work better at calling tops thanbottoms.

Anal yze sh adow s. Int erpr etati on w ill d iff er o n th e type


.

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: KabushikiKeisen no Mikata TsukaikataToshikaNo Tame No Senryakuzu-KichitaroKisamori

Confirmation is important since market at tipping point.

32








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…







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


Hammer

Confirmed

41

Which of

these two

scenarios is

more

important


to have

bearish

price

confirmation

of the doji?

Note: this will not

happen in FX

42






Doji and Price Confirmation

New high

close and bullshadow. Bear

confirmation thusmore important

confirmed


Because a doji or

a spinning top in FX will

be near the prior session


close, you may want to

wait for bear confirmation

44

Forex doji and Price Confirmation

confirmed


Why would you not be too

nervous on this doji?

44A






Doji – but also a new high close

12

3

What about this doji?

confirmed


Which of

these two

scenarios is

more

important


to have

bearish

price

confirmation

of the doji?

46

Doji and Shadows

ll

Equal shadows


Bull shadow

47






Criteria: Use the highesthigh of those two sessions(top of upper shadow) asresistance


Implication: Close over thatarea: market is “ refreshed”.That is when we considerthe bull momentum trade

48

Doji and Momentum

Doji as resistance


Doji and momentum trading


“Market refreshed”

51






Doji and momentum trading


Doji confirming

resistance

52

Review of candle benefits

What candles don’t do

vance o ac cs an concep s

Price confirmation

53







Long Lower (Bullish) Shadows

Although this market isAlthough this market is

descending, the longdescending, the longlower shadows offsetslower shadows offsetssome of the negativesome of the negativeoutlookoutlook

55








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

© www.candlecharts.com 58

1 2 3 4 5 6 7 8 9 10



# Name Characteristics Nison Notes

1Tall white double crewcut

No shadows


59

1 2 3 4 5 6 7 8 9 10




2Tall white closing crewcut

Small lower shadowLower shadow shows

market can breakunder opening price


60






1 2 3 4 5 6 7 8 9 10




3 Power l ine (hammer)Shadow 2x or more real body. Can havevery small upper shadow.


61

1 2 3 4 5 6 7 8 9 10




4 Ta ll W hi teUpper shadow 25%

or less real body

Upper shadow showssome rejection at

higher prices


62

1 2 3 4 5 6 7 8 9 10




5Small white with bullshadow

Lower shadow less than 2x real body. Canhave very small upper shadow.


63








1 2 3 4 5 6 7 8 9 10




9Small white with bearshadow

Upper shadow from 1 to less than 2x realbody. Can have small lower shadow.


67

1 2 3 4 5 6 7 8 9 10




10 Shooting starUpper shadow at least2x real body. Can have small lowershadow.


68

More Bearish Less Bearish/Bullis h

1 2 3 4 5 6 7

8

9 10


Neutral SessionsWeak Sessions Bullish SessionsVery Weak Sessions

69






1 2 3 4

5

6 7

8

9

10

More Bearish Less Bearish/Bullish



1Long black double crewcut

No shadows

70


1 2 3 4 5 6 7

8

910



2Long black closing crew

cutSmall Upper shadow

Upper shadow showsmarket can break

under opening price


71


1 2 3 4 5 6 7

8

910



3 Shoot ing S ta rShadow 2x or more real body. Can have

very small lower shadow.


72






1 2 3 4 5 6 7

8

910




4 Long black Lower shadow 25% or less real bodyLower shadow shows

demand at lower prices


73


1 2 3 4 5 6 7

8

910



5Small black with bear

shadow

Upper shadow less than 2x real body. Can

have very small lower shadow.


74


1 2 3 4 5 6 7

8

910



6Medium lower shadowlong black

Same as line 4 but lower shadow 25% to100% real body

Showing increasingdemand and price

rejection at lower levels


75







1 2 3 4 5 6 7

89 10



7Long lower shadowblack

Same as 4 but lower shadow more than100% of real body

Rare candle – ‘”Givesslight fearful feeling” to

bears


76


1 2 3 4 5 6 7

8

910



8 Black spinning topCan have upper and lower shadows less

than 100% of real body

“A drifting market”


77


1 2 3 4 5

8

910



9Small black with bullshadow

Lower shadow from 1 to less than 2x realbody. Can have small upper shadow.


78







1 2 3 4 5 6 7

8

9

10



10 HammerLower shadow at least 2x real body. Can

have small upper shadow.


79

Reviewed importance of real bodies

and shadows

more to less bullish

Black real body/shadow progression from

more to less bearish

80

Candlesticks

Re-Ignited!


vance

Single Candle Lines:

“One sided” shadow

candles







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


• White real body

• No upper shadow

PATTERN PSYCHOLOGY PATTERN PSYCHOLOGY

Aft er t his last bur st o f sel lin g, new buyi nghas started. This rejection of lower prices isindicating a change in balance between bullsand bears. The n et result: lessening ofbears’ confidence of sustainability of lowerprice levels (and a reason for bulls to startgetting more optimistic).

SUPPORT/SUPPORT/MOMENTUM TRADINGMOMENTUM TRADING

• Low of hammer as support

• Consider shorting under low ofpattern.

82

White real body hammer is called a“ Power Candle”

Can have small upper shadow (around10% of lower shadow)

The more oversold and the longer theshadow, the higher degree of


confidence

Often a retest of lower shadow

Bullish counterpart of Shooting Star(not a Hanging Man).

A hamm er w ith a open/hig h/cl ose athigh is a Dragonfly doji

As a si ngl e candl e li ne it is s ame in FXas other markets

83

A candlestick line or pattern requires

two

criteria:

• The shape of the line or pattern • The preceding trend

84






Hammer and trend

Not a hammer


Power line

85

Hammer your way to prof its


Dragonfly doji

86

Retest of hammer’s shadow







Hammer As Support


i l l

o f t e n

r e t e s t

l o w e r

s h a d ow

88

Hammer as Support

Market will often

retest hammer’s

lower shadow


“To know where “To know where

ou stand is asou stand is as

Same Signal- But look at the Difference in Trading

Tactics


important as important as

candle pattern candle pattern

recognition.” recognition.”

90










Black real body most important.

Can have small lower shadow (around 10%of upper shadow).

The more overextended the rally and thelonger the shadow, the higher degree ofconfidence.


Unlike a hammer, market doesn’t oftenretest upper shadow.

Bearish counterpart of Hammer (notInverted Hammer.)

A Sho oti ng St ar w ith a open /hig h/cl ose a tlow is a Gravestone doji.

As a s ing le can dle l ine t his is t he sam e inFX

97

Shooting Star with Price Confirmation

confirmed


Shooting star but no price confirmation









Close under

m.a. support

Gravestone doji

Gravestone Doji


25 day

moving

average

103

BASIC CRITERIABASIC CRITERIA• Market in downtrend

• Small real body at, or near, bottom of r ange.

• Must come at new low for move or signifi cantdecline

•



While the market closes at, or near itslow, it has shown an ability to rise. Thismay get the bears slightly nervous.


• Not used as support

• Momentum: Trend is still dow n with

this signal

104

Same as the shooting star, exceptmarket in a downtrend

Can have small lower shadow (around10% of lower shadow)

Must have bull confirmation with a

higher close, or for those more


aggressive, a higher opening

This is not the bullish counterpart ofShooting Star. The Hammer is thebullish counterpart.

Because of the bearish shadow, do notplace much emphasis on this signal.

105






Importance of Price Confirmation


Always needs candle

confirmation with this signal and

hanging man candle.

106

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

Candlesticks

Re-Ignited!

Advanced


Candles:

The Blended

Candle Line







“Japanese charts have meaning in asingle 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” combinationsof candle lines into as if they made one candle

110

close2close2 =

How do we make a Blended Candle?

open 1open 1

1) Use open of the first session for open of blended candle

2) Use close of the last session of pattern for close ofblended candle.

3) Use highest high and lowest close of all sessions forupper and lower shadows of blended candle. 111






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

Candlesticks

Re-Ignited!

Advanced


Double Candle

Lines:

Tweezers


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: HAJIMETEKABUKA CHATO WO YOMU HITO NOHON by K.Hoshi

bottom)

• 2nd candle must reflect diminishing of prior

force


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






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: HAJIMETEKABUKACHATO WO YOMU HITO NOHON by K.Hoshi

115

Think this market had troubles near $8.20?

Tweezers top

Tweezers top


Why is

this

not

a Tweezers

bottom? 116

Tweezers Bottom







Using the

“Blended

Candle”

to

increase

candle

insights:

Is combination of candle lines bullish or bearish?

– –

Tweezers tops and bottoms – correct

interpretation

118

Candlesticks

Re-Ignited!

Advanced


Double Candle

Lines:

The Bull Signals









BullishCounter AttackPattern

PiercingPattern

BullishEngulfing

Pattern

BullSash

Pattern

BullSeparating

Line

121

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 whitereal body that gaps lower on the open andthen closes at or near black candle close.

• 2nd candle tall white



• Both candles are large (very rare)


With the gap down, bears are relieved. The“bul ls are backed into a corner and came

out fighting in a heroic fight. Kamikaze

fights are always frightening, so t he bearsseeing this take to the si delines and the

bulls may get reinforcements.”


• Not used as support o r resistance.

• Consider selling on move under lowof pattern.

122

No pattern like this for FX sincethe market gaps lower.

While the ideal pattern is both largereal bodies, we would still view this

as important even if only the white


can e was arge

Closes do not have to be exactlythe same

Opposite of bearish counter attack

123






Bull Counter Attack

What do you think

the bears are thinking

after this

session?

PS‐ watch your

language!


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 intoblack real body.



• White candle opens under prior low

• Long black and tall w hite candle


Bears in control is echoed by long darkcandle. Sharp gap lower means bears have astrong foothold. But, with sh arp bounce backby end of the session, the market has

“di splayed uneasiness at a low price.” Thebears now s ense danger.


• Lowest low of both candles as

support• Consider selling on move under

support level 125

For FX, intraday and indexes can have thesame (or within 2 pips for FX) open as priorclose

Long black and then long white showsextreme shift in psychology

The morethewhi tecandleo ens under


prior low /close, the better the signal (fornon FX).

Opposite of dark cloud cover

Related patterns which need not beremembered are on-neck (atekubi), in-neck(irikubi) and thrusting (sashikomi).FX Pattern

126






Piercing pattern as support


Piercing Pattern

And this?


Not Piercing Patterns

Although first candle wasn’t

long black, what pattern is this?

128

Piercing Pattern

Not a piercing pattern


For intraday okay to

have open at‐ or very

close‐ to prior close

129






Early clues of shifting supply/demand



• Market in a downtrend

• White real body wraps around dark realbody



• Small first candle small dark candle or doj i

• Second candle is tall white that wrapsaround high-low range of first candle.


• Small first candle reflects deterioration ofbear trend.

• Tall white candle leaves no doubt the bulls

now in driver’s seat.


• Lowest low of either candle assupport

• Consider shorting under low of

pattern.

131

For FX, intraday and indexes can have thesame open (or within 2 pips for FX) of priorclose

The pattern has less significance if the realbodies are about the s ame size.

First candle can be doji

Candles in Engulfing Pattern (large wraps


Harami Pattern (small candle in a largecandle)

If Bullish Engulfing p attern appears duringrally, Japanese call it a “ last engulfingpattern”, and may be buying climax.Confirmation close under close of whitecandle. This is not an important pattern, justthink about not buying.

FX Pattern

132






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 tocandlestick patterns, and each

references that he made was absolutely

wrong! …During a strong uptrend, hecalled a large white real body after a


small black real body a bullish engulfingpattern. If I remember right – a bullish

engulfing pattern doesn’t count during an

uptrend. If I hadn’t bought and studiedyour package, I never would have known

that and would have assumed that hewas right.

Thanks again for your great work!Carl

133

Bullish Engulfing Patterns


Price confirmation

No price confirmation

after this bullish

engulfing pattern

Price confirmation

after this bullish

engulfing pattern,

but

risk

is

still

to

l

Why didn’t

I have this

window as

resistance?


low o pa ern

135






Price confirmation

If you waited for the close

of session of the bull engulf

look at what price you

would be

buying.


Momentum trade


Bear momentum trade

Why would you not

buy on this pattern?

137


• Market in downtrend, but trend not critical

• First candle unusually long dark c andle

• Second candle is much smaller than 1 st candle(about 25% or less).

• 2nd candle can be the same-or o pposite color-of f i rs t candle


• 2nd real body is within 1st candle’s real body


The long black candle echoes the heaviness ofsupply. But, the next session’s gap up, andlack of downside, follow through results i n thebears seeing that their drive is becomingimpeded.


• Not used as support (unless 2nd

candle is reversal signal (i.e.hammer)

• Not used for momentum trading

138








Bull Harami and momentum trading


Momentum

Trade

142

BASIC CRITERIABASIC CRITERIA• Trend not important

• Black candle followed by white c andle thatopens within black real body and closes overprior open.


• Both lon rea lbodies


• 2nd candle closes over prior high

• White real body closes at, or near, its highs


The surprise gap, higher opening on thesecond day after a strong selling session,may initially be of minor concern. But, withthe white candle’s strong close, the bears

sense danger and also gives the bulls causefor optimism.


• 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 theopen, and the higher the close on thewhite candle, the more meaningful the

pattern


Remember risk/reward since thispattern is completed after substantialmove has already occurred.

Opposite of Bear Sash pattern

If open of white candle is same (orhigher) as prior open, it is a BullSeparating Line.

144






Bull Sash Pattern


Bull Sash

145

Risk/Reward

Bull Sash

Bull Sash


Both of these are poor trade candidates

146


• Black candle followed by white candle that opens at(or above) prior open. Then closes over black candleopen.


• Both long real bodies (rare)


• White real body closes at, or near, its hi ghs


While the bears may be surprised to s ee the market

gapping sharply higher from a prior w eak 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.


• Lowest low of both candles assupport

• Consider selling on move under lowof pattern 147






Easy way to remember this pattern isthe opens are the about the same (or

the 2nd candle open gaps away from 1st

candles open.)

Since the market has to gap higher,t hi s at ter n n ot a l ic ab le t o FX


.

Major challenge with this pattern issince it is completed after substantialmove, it usually means poorrisk/reward.

Opposite of Bear Separating Pattern

If open of white candle is within priorblack real body, it is a Bull SashPattern.

148

Bull Separating line


Looks good on the outside!

This is a poor trade candidate‐ why?









Candlesticks

Re-Ignited!

Advanced


Double Candle

Lines:

The Bear Signals


CANDLE PROGRESSIONDESCENDING L CKRE L ODY

BearishCounter Attack

Pattern

DarkCloudCover

BearishEngulfing

Pattern

Bear Sash

Pattern

BearSeparating

Line

155


• Uptrend but, even with no apparent trendwould be a cautionary signal

• White real body followed by a black realbody that gaps up on the open and thencloses at or near white candles' close


• Both candles are large (very rare)

• Large black real body


With the tall white, and especially with thegap higher next session, the bulls arehappy. But then a strong bear counter forcecomes in to drag the market back to theprior close. The tone of the market nowshifts from bullish optimism to uncertainty.


• Not used as support o r resistance.

• Consider buying on breakout overhigh of pattern.

156






No pattern like this for FX since

the market gaps higher While the ideal pattern is both large

real bodies, we would still view thisas im ortant even if onl the black


candle was large

Closes do not have to be exactlythe same

Opposite of bullish counter attack

157

Bear Counter Attack


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?


Bull Counter Attack?

159








Dark Cloud Cover at resistance

Why is this

ll


not a bull sh

engulfing

pattern?

163

Dark Cloud Cover

164

Dark Cloud Cover and momentum







Dark Cloud Cover

Is this telling

you that there

is a shift in

psychology?


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!”


Happy time for

the bulls‐ new

high close!

167


• Market in an uptrend

• Black real body wraps around light realbody

STRICT

CRITERIA

STRICT

CRITERIA


• Small first candle small white or doji

• Second candle is long dark that wrapsaround high-low range of first candle.


• Small first candle reflects rallying could berunning out of s team

• Long black candle visually shows the bearsare now the controlling force.


• Highest high of either candle asresistance.

• Consider buying on breakout overhigh of pattern.

168








Momentum Trading


Candles and Momentum – trading the breakouts


Price confirmation

The less ideal the pattern the

more candle confirmation

is needed.

Why is this bearish engulfing

pattern less than ideal?

Confirmation


with lower close

but risk

still to high of

pattern

174






Price confirmation


Since pattern confirmed resistance less reason for price

confirmation‐ but it depends on you trading style.

175


• Market in uptrend, but trend not critical

• First candle unusually long white candle

• Second candle is much smaller than 1 st

candle (about 25% or less).

• 2nd candle can be the same-or oppositecolor-of f irst candle


• 2nd real body is within 1st candle’s real body


The indications based on the tall w hitecandle’s vitality is for the rally to continue.But, next session’s gap down and then failureto resume the advance to beyond the priorsession, shows those who had forecast

strength are wrong! The rally could now berunning out of fuel.


• Not used as resistance (unless 2nd

candle is reversal signal (i.e.

shooting star)• Not used for momentum trading

176

For FX, intraday and ind exes can havethe same (or within 2 pips for FX) openas prior close

If the 2nd candle is a doji, the pattern iscalled a harami cross

The more the 2nd candle gets deeplyintothe white candle thebetter the


,signal.

Because FX, etc, black can’t get d eeplyinto white candle, it is best to wait forbear confirmation by a lower open orclose than black candle’s real body.

In general, the less the 2nd candle getsmore into the white candle, the moreconfirmation is needed.

Opposite of bullish harami

FX Pattern

177






Bear Harami

Not Bear

Harami

Because these

are near the

highs of the

prior candle

would want

bear candle

confirmation


Confirmation important in FX



• White candle followed by black candle thatopens within white real body and closesunder prior open.


• Both lon rea lbodies

• 2nd candle closes under prior low

• Black real body closes at, or near, its lo ws


The white candle means the bulls are runningthe show. The next session, the market gapslower and is not only unable to make up thislost ground, but closes under the whi tecandle. This shows the bullish energy hasbeen sapped out of the market resulting invery scared bulls.


• Highest high of both candles asresistance

• Consider buying on breakout overhigh of pattern 180






Since the market has to gap lower thispattern not applicable to FX.

The more the market gaps down on theopen, and the lower the close on theblack candle, the more meaningful thepattern


Keep in mind risk/reward since thispattern is completed after substantialmove has already occurred.

Opposite of Bull Sash pattern

If open of black candle is same (orlower) as prior open, it is a BearishSeparating Line.

181

Bear Sash

Bear Sash


Bear Sash

Bear Sash







Being a Market Chameleon

Bear Sash


Bull Sash

184


• White candle followed by bl ack candle that opens at(or below) prior open. Then closes under whi tecandle’s open.



• ot ong rea odes rare

• Black real body closes at, or near, its lows


With the gap down on 2nd day, the bulls sensedanger. To make matters worse for them, themarket can’t even make up for the ground lost onthe opening. The tide of the market momentum hasnow turned down.


• Highest high of both candles as

resistance• Consider buying on move above

high of pattern 185

Easy way to remember this pattern isthe opens are the about the same (orthe 2nd candle open gaps away from 1st

candle’s open.)

Since the market has to gap lower thispattern not applicable to FX.


since it is completed after substantialmove, could mean poor risk/reward.

Opposite of Bull Separating Pattern

If open of black candle is within priorwhite real body, it is a Bear SashPattern.

186






Bear Separating line


Bear Separating Line


Bear Separating line







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

190

www.candlecharts.comwww.candlecharts.comFounder and President: Candlecharts.com 191

Steve’s

Favorite

Candle pattern

192








Importance of Windows

Shooting Star


Importance of Windows


Large and Small Windows

S1


S2

198








202

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)


Island Tops and Bottoms and Candles

Island TopIsland Top

Island BottomIsland Bottomwww.candlecharts.comwww.candlecharts.com 204








Three windows-note of caution


Secrets of Using Intraday Candle

Charts to Refine Entries with Windows

For small windows – or

w en near e o om o

larger windows – look for

intraday candle reversals

209

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.


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

210





Advanced window

tactics:

Review of window basics

Large compared to small windows

Change of Polarity and windows

Island tops/bottoms and windows

Confirmation with intraday candles

211

Documents

Advance Cabdlesticks Pattern