Advanced Candlestick Charts

advanced candlestick charts

Candlestick 101

One of the most important parts of technical analysis may be candlestick 101. The candlestick charting method was brought to the west (the United States) by a man names Steve Nisson.

Nison is known as the founding father to candlestick 101 in the western part of the world. His book, Japanese Candlestick Charting Techniques includes everything from the basics, such as constructing the candlesticks and learning the patterns, to advanced topics, such as the rules of multiple technical techniques.

The candlestick is made up of two parts, the body and the shadow. A body that is filled in means prices opened higher than they closed. A body that is not shaded means prices opened lower than they closed. Below is an example of multiple daily candlestick charts strung together to form price movement.

One of the greatest benefits to trading with candlestick charts is the ability to visually see what is going on. Other types of charts like bar and line charts have their place, but I have found for day trading with 5 and 15 minute bars especially the candlestick tells you much more about what is going on in the trend than the other types of charts that are out there.

The Hanging Man Reversal

The hanging man alone does not initiate a sell or short signal. Tuesday's price action, closing below the body of Monday does however confirm this bear signal.

While the past two weeks have produced light volume, we have a potential pullback to the prior resistance (now new support). If we are to make a new high this pattern would have failed, therefore our stop would be placed just above the highs for short positions.

In Review

There is something to be said about keeping it simple. As the saying goes "Simple yes, easy no." It is often most beneficial to trade with the least amount of clutter on your screen and fully understanding candlestick charts (I beleive) allows you to trade based off the only two "real time" indicators, price and volume. Once you cna mster price and volume the rest is gravy.

Whether you are new to candlestick charts or a seasoned pro-the reward from reading Japanese Candlestick Charting Techniques will be immediate and long lasting.

...more at TJMacTrading.com

About the Author

Tim Racette Futures Trader, Chicagoland native, blog at EminiMind.com, Competitive Mountain Biker, Entrepreneur, and Graduate of Arizona State University.

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Candlestick Charts: An Introduction to Using Candlestick Charts $29.81 Clive Lambert is one of the UK's leading experts in the use and application of Japanese candlestick chart analysis. I have known him for many years and have learnt to greatly respect his depth of knowledge and the objectiveness it brings to his market strategies." - Adam Sorab, Chairman, Society of Technical Analysts (STA) The aim of this book is to introduce candlestick analysis to anyone from an absolute beginner to an experienced market professional. The text is written to be simple enough for someone new to the topic, but should not exclude those with more experience. The author's aim is to change the simple viewing of a candlestick chart into a search for the answer to the perennial question: "Who's controlling the market; the Bulls or the Bears?"

Encyclopedia of Candlestick Charts $84.99 Following in the footsteps of author Thomas Bulkowski's bestselling "Encyclopedia of Chart Patterns"--and structured in the same way--this easy-to-read and -use resource takes an in-depth look at 103 candlestick formations, from identification guidelines and statistical analysis of their behavior to detailed trading tactics. "Encyclopedia of Candlestick Charts" also includes chapters that contain important discoveries and statistical summaries, as well as a glossary of relevant terms and a visual index to make candlestick identification easy.

All about Candlestick Charting $15.59 SHED LIGHT ON PRICE MOVEMENTS WITH CANDLESTICK CHARTING "Wayne Corbitt has introduced a wonderfully informed book on Japanese candlestick analysis ... This book should be in the library of every technical analyst who shows even the slightest interest in Japanese candlestick analysis." Gregory L. Morris, author of "Candlestick Charting Explained" and Chief Technical Analyst and Chairman of the Investment Committee for Stadion Money Management "All About Candlestick Charting" covers all of the basics of this 250-year-old Japanese trading method and explains how to combine it with contemporary Western technical analysis tools. The result is a powerful trading synergy that gives you an edge over the competition every minute of the trading day. Even if you have no experience with candlesticks, this guide will open your eyes to a style of trading that will greatly enhance your understanding of the markets. All About Candlestick Charting provides all there is to know about: Candlestick construction, analysis, reversal patterns, and continuation patternsCombining candlestick patterns with Western technical analysis tools, such as trends, support and resistance, momentum indicators, and volumeAlternative charting methods, including Three-Line Break charts, Renko charts, and Kagi charts

Candlestick Charting for Dummies $17.54 Want to gain a trading edge with candlestick charts? Find them a little confusing? No worries "Candlestick Charting For Dummies" sheds light on this time-tested method for finding the perfect moment to buy or sell. It demystifies technical and chart analysis and gives you the tools you need to identify trading patterns -- and pounce This friendly, practical, guide explains candlestick charting and technical analysis in plain English. In no time, you'll be working with common candlestick patterns, analyzing trading patterns, predicting market behavior, and making your smartest trades ever. You'll discover the advantages candlestick has over other charting methods and learn the secrets of combining it with other technical indicators. You'll also get familiar with different ways to display and interpret price action, including trend lines, support levels, resistance levels, moving averages, and complex indicators. Discover how to: Construct candlestick charts Identify and interpret basic patterns Trade in bull and bear markets Work with complex patterns and indicators Avoid False signals Understand the components of market activity Deal with bullish or bearish single-stick, two stick, and multistick patterns Identify and interpret complex patterns Use indicators to determine the market Outperform the market in any conditions Don't know whether to grab the bull by the horns or just grin and bear it? Read "Candlestick Charting For Dummies" and get it right the first time.

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