candlestick course...•indicates a major reversal pattern after an extended bearish trend. ... •...

Candlestick Course PDF

Presented by Juan MaldonadoElliott Wave Street® Expert

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www.elliottwavestreet.com – [email protected] - Copyright – Elliott Wave Street® - All rights reservedwww.elliottwavestreet.com – [email protected] - Copyright – Elliott Wave Street® - All rights reserved

Origin of Japanese Candlesticks

The charts represented by Japanese Candlesticks originate in Japan. Rice was used as "currency"

The feudal lords kept the rice in warehouses in Osaka and traded coupons (guarantee receipts). Rice is the first futures market in history.

Japanese Candlesticks

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Open

Close

Low

Close

Buyers in control.

Above green bullish opening.

The further the price moves away from the bullish opening, the stronger the bulls are.

Open

Low

Sellers in control.

Below red bearish opening.

The further the price moves away below the opening the stronger the bears are.

Body

Bearish pressure:

Sellers selling low to cover lower and/or bulls are covering their positions.

Lower wick

• Every transaction is neutral; one seller and one buyer. The first trade of a candle is not bearish or bullish.

• The second trade determines the direction.

Upward pressure:

Buyers buying high to sell higher and/or bears are covering their positions.

High HighUpper wick

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Range High to low = measures volatilityLarger range = increased volatility

Body – Color Green = Buying - Red = Selling

Body – Size Opening to closingmomentum/strength and commitment

Wick – Location Lower = Buying - Upper = Selling

Wick – Size Degree of Purchase o Sale

The Close the most important price because amateurs open the market and professionals close the market.

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Big Body 1 2 3 4 5

From more bullish to less bullish (left to right)

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Big Body 1 2 3 4 5

From more bearish less bearish (left to right)

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Common Sense and Logic

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One Candlestick Patterns

✓ Hammer✓ Hanging Man✓ Shooting Star

✓ Inverted Hammer✓ Big Body

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Hammer

• It happens at market lows after an extended bearish trend.• The lower wick should be bigger than two times the body size.

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Hanging Man

• It happens at market highs after a bullish trend.• The lower wick should be bigger than two times the body size.

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Shooting Star

• It happens at market highs after a bullish trend.• The upper wick should be bigger than two times the body size.

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Inverted Hammer

• It happens at market lows after an extended bearish trend.• The upper wick should be bigger than two times the body size.

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Big Body

Big Body

Bulls have absolute control in that area of the market.

Big Body

Bears have absolute control in that area of the market.

• The big body happens when the candle is large compared to the other candles in the area.

• It is a candle of opportunity, and it can change the feeling of the market for the longer term.

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Two Candlestick Patterns

✓ Bullish Engulfing ✓ Bearish Engulfing

✓ Bullish and Bearish Harami

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Bullish Engulfing

• The first candle is red, and the second candle is green.• The second candle completely covers the body of the first candle.• Wicks are not considered.• Indicates a major reversal pattern, after an extended bearish trend..

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Bearish Engulfing

• The first candle is green, and the second candle is red.• The second candle completely covers the body of the first candle.• Wicks are not considered.• Indicates a major reversal pattern, after an extended uptrend.

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Bullish Harami

• The first candle is red, and the second candle is green.• The second candle opens higher than the previous candle close and closes lower

than the previous candle's opening.• Wicks are not considered.• Indicates a major reversal pattern after an extended bearish trend.

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Bearish Harami

• The first candle is green, and the second candle is red.• The second candle opens lower than the close of the previous candle and closes

higher than the open of the previous candle.• Wicks are not considered.• Indicates a major reversal pattern after an extended bullish trend.

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Three Candlestick Patterns

✓ Morning Star ✓ Evening Star

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Morning Star

• The price is in a bearish trend.• The body of the first candle is red• The second candle is an indecision candle, usually a Doji.• The third candle shows evidence that bulls have entered the market quite strongly.• The bullish candle should close above 50% of the red candle.• Indicates a major reversal after an extended bearish trend.

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Evening Star

• The price is in a bullish trend. • The body of the first candle is green • The second candle is an indecision candle, usually a Doji.• The third candle shows evidence that the bears have entered the market quite strongly.• The bearish candle should close below 50% of the green candle.• Indicates a major reversal after an extended bullish trend.

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One Candlestick Patterns

✓ Spinning Tops✓ High Wave Candles

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Spinning Tops

• Spinning Top is a small body candlestick.• The wicks are symmetrical, with upper and lower shadows of approximately equal

length.• Spinning tops can happen during the bullish or bearish trend.

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High Wave Candles

• The high wave candle happens at the market highs • The upper wick should be bigger than two times the body size.• The difference with the spinning top is the size of the wicks, were the high wave

candles have more prominent tails.

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Than Dangerous DOJI

✓ Doji✓ Dragonfly Doji✓ Gravestone Doji✓ Northern Doji✓ Southern Doji

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Doji

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Dragonfly Doji

Lower Shadow.

Extremely bullish.

At the start, the bears were in complete control, and then the bulls destroyed them.

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Gravestone Doji

Upper Shadow.

Extremely Bearish.

At the start, the bulls were in complete control, and then the bears destroyed them.

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Two Candlestick Patterns

✓ Piercing✓ Dark Cloud Cover

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Piercing

• Price is in a downtrend.• The body of the first candle is red.• The second candle is green and closes at 50% or higher of the red candle.• Is less powerful than a bullish engulfing.

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Dark Cloud Cover

• Downtrend.• The body of the first candle is green.• The second candle is red and closes at 50% or lower of the red candle.• Is less powerful than a bearish engulfing.

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The Storytellers

✓ Tweezers✓ Crows✓ Soldiers

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Tweezers

Two candles with the same High or Low.

Tweezer Top and Dark Cloud Cover

Tweezer Top and Harami Cross

Tweezer Top and Hanging Man

Patterns during the bullish trend

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Tweezers

Two candles with the same High or Low.

Patterns during the bearish trend

Tweezer Bottom and Hammer

Tweezer Bottom and Harami

Tweezer Bottom and Piercing

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Three Black Crows

Three consecutive bearish candles after a bullish trend, each closing below or near the low of the previous candlestick.

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Three White Soldiers

Three consecutive bullish candles after a bearish trend, each closing above or near the high of the previous candlestick.

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Windows or Gaps

✓ Window✓ Rising Window✓ Falling Window

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Rising Window

It's a continuation pattern. The Japanese say follow the direction of the window.

The Empty Price is a space where there were no trades. It works as a support.

EMPTY PRICE

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Falling Window

It's a continuation pattern. The Japanese say follow the direction of the window.

The Empty Price is a space where there were no trades. It works as a resistance.

EMPTY PRICE

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candlestick course...•indicates a major reversal pattern after an extended bearish trend. ... •...

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