JAPANESE CANDLESTICK PATTERNS

1. JAPANESE CANDLESTICK PATTERNS

2. CANDLESTICK SHADOW • The line that appears above and below the body is referred as the SHADOW, WICK or the TAIL • Its almost as important as the body • It shows us the range for that period • It adds to the body’s interpretation of the market psychology • It represents the high and low for that period • The tail on the top shows us the high for that period • The tail on the bottom shows us the low for that period

3. CANDLESTICK SHADOW

4. CANDLESTICK SHADOW Possible Resistance Possible Support • A long SHADOW can show support or resistance • depending on where it is in the candle and where • It’s located on the charts

5. BASIC CANDLESTICK PATTERNS • MARUBOZO • SHORT DAY • LONG DAY • SPINNING TOP • DOJI PAPER UMBRELLA

6. MARUBOZO • Shows large range between the opening and closing price with immediate strength or weakness • Usually the second bar in a reversal or continuation pattern • Has no shadows

7. SHORT DAYS • Shows small range between the opening and closing price • Small Shadows • Multiple short days can indicate consolidation

8. LONG DAYS • Shows large range between the opening and closing price • Shows strength and weakness

9. SPINNING TOPS • The shadows are longer than the body • Shows indecision • Also seen in consolidation

10. DOJI GRAVESTONE DRAGONFLY LONG-LEGGED FOUR PRICE • The open and close must be equal or very close • Gravestone is BEARISH when at the top of a short term rally • Dragonfly is BULLISH when at the bottom of a short term break • Long-Legged shows INDECISION • Usually seen in illiquid markets, no trades may have took place

11. GRAVESTONE DOJI SELL BELOW • Gravestones must be seen at the top of a short term uptrend • Buying comes in right from the opening showing continued strength followed by a selloff later in the day, closing near or on the lows • There could be a small wick or very small body • This must be followed by a confirmation bar to confirm trade • Must sell below the lows

12. DRAGONFLY DOJI BUY ABOVE • Dragonflys must be seen at the bottom of a short term downtrend • Selling comes in right from the opening showing continued weakness followed by a rally later in the day, closing near or on the highs • There could be a small wick or very small body

13. PAPER UMBRELLA • Color does not matter • Location on the charts is what’s important • They can have small shadows

14. CANDLESTICK REVERSAL PATTERNS • HAMMER • HANGING MAN • INVERTED HAMMER • SHOOTING STAR • ENGULFING • HARAMI • HARAMI CROSS • DOJI STAR • EVENING STAR • MORNING STAR

15. HAMMER BUY ABOVE • Hammers must be seen at the bottom of a downtrend • Aggressive selling right from the open with a recovery • throughout the day, closing near the highs creates the handle • Color of the body does not matter • Must wait for the next candle to confirm before putting on the trade

16. HANGING MAN SELL BELOW • The Hanging Man must be seen at the top of an uptrend • Aggressive buying right from the open with a selloff • throughout the day, closing near the highs creates the pattern • Color of the body does not matter • Must wait for the next candle to confirm before putting on the • trade

17. INVERTED HAMMER BUY ABOVE • Inverted Hammers must be seen at the bottom of a downtrend • Buying comes in right from the opening with a selloff later in the day • Color of the body does not matter

18. SHOOTING STAR SELL BELOW • Shooting Stars must be seen at the top of an uptrend • Buying comes in right from the opening showing continued strength followed by a selloff later in the day, closing near the lows creating the small body • Color of the body does not matter • Must wait for the next candle to confirm before putting on the • trade

19. ENGULFING BUY ABOVE SELL BELOW • In an uptrend the open should be higher than previous bars high and in a downtrend the open should be lower than the previous bars low showing a continuation of the trend • The close in should then totally engulf the previous bars high or low to enter the trade

20. HARAMI SELL BELOW BUY ABOVE • The current candle’s range should be completely engulfed by the previous candle’s body • The colors of the bodies should be reversed for a reversal • The size of the second candle affects the magnitude of the reversal • Must wait for the next candle to confirm before putting on the • trade

21. HARAMI CROSS SELL BELOW BUY ABOVE • The current candle’s range should be completely engulfed by the previous candle’s body • The size of the second candle affects the magnitude of the reversal • Must wait for the next candle to confirm before putting on the • trade

22. DOJI STAR BUY ABOVE SELL BELOW • Shows indecision, use overbought/oversold technical indicators when at tops or bottoms of a move • Needs a confirmation candle

23. MORNING/EVENING DOJI STAR BUY ABOVE SELL BELOW • The star must gap lower at the bottom of a down trend or gap higher at the top of an up trend • Needs a confirmation candle

24. MORNING/EVENING STAR BUY ABOVE SELL BELOW • The star must gap lower at the bottom of a down trend or gap higher at the top of an up trend • Needs a confirmation candle

25. ABANDONED BABY BUY ABOVE GAP GAP SELL BELOW • Must have a gap in the direction of the trend followed by a Star or Doji • This must be followed by another gap in the opposite direction

26. PIERCING LINE BUY ABOVE • Bullish reversal • Continuation of a bearish trend seen by lower open, making new lows, following a long red candle • Closes the day higher than 50% of the previous body

27. DARK CLOUD COVER SELL BELOW • Bearish reversal • Continuation of a bullish trend seen by higher open, making new highs, following a long green candle • Closes the day lower than 50% of the previous body