TECHNICAL ANALYSIS

CANDLESTICK

Japanese rice traders developed candlesticks centuries ago to visually display price activity over a defined trading period. Each candlestick represents the trading activity for one period. The lines of a candlestick represent the opening, high, low and closing values for the period.

Japanese candlesticks offer a better visual perspective to predict future market action than bars. Intraday charts with clear japanese candlestick pattern are invaluable for entry and exit strategies.

In order to create a candlestick chart, you must have a data set that contains open, high, low and close values for each time period you want to display. The hollow or filled portion of the candlestick is called "body" . The long thin lines above and below the body represent the high/low range and are called "shadows" (also referred to as "wicks" and "tails"). The high is marked by the top of the upper shadow and the low by the bottom of the lower shadow. If the stock closes higher than its opening price, a hollow candlestick is drawn with the bottom of the body representing the opening price and the top of the body representing the closing price. If the stock closes lower than its opening price, a filled candlestick is drawn with the top of the body representing the opening price and the bottom of the body representing the closing price

CANDLESTICK FORMATION

Bearish 3
Pattern : A long black body followed by several small bodys and ending in another long black body. The small bodys are usually contained within the first black body's range.
Interpretation : A bearish continuation pattern.

 

Bearish Harami
Pattern : A very large white body followed by a small black body that is contained within the previous bar.
Interpretation : A bearish pattern when preceded by an uptrend.

 

 

Bearish Harami Cross
Pattern : A Doji contained within a large white body.
Interpretation : A top reversal signal

 

 

Bullish 3
Pattern : A long white body followed by three small bodies, ending in another long white body. The three small bodies are contained within the first white body.
Interpretation : A bullish continuation pattern

 

 

Bullish Harami
Pattern : A very large black body is followed by a small white body and is contained within the black body.
Interpretation : A bullish pattern when preceded by a downtrend.

 

 

Bullish Harami Cross
Pattern : A Doji contained within a large black body.
Interpretation : A bottom reversal pattern.

 

 

Doji
Pattern : The open and close are the same.
Interpretation: Dojis are usually components of many candlestick patterns. This candlestick assumes more importance the longer the verticle line.

 

 

Doji Star
Pattern : A Doji which gaps above or below a white or black candlestick.
Interpretation : A reversal signal confirmed by the next candlestick (eg. a long white candlestick would confirm a reversal up).

 

 

Dark Cloud Cover
Pattern : A long white body followed by a black body. The following black candlestick opens higher than the white candlestick's high and closes at least 50% into the white candlestick's body.
Interpretation : A bearish reversal signal during an uptrend.

 

 

Engulfing Bullish Line
Pattern : A small black body followed by and contained within a large white body.
Interpretation : A bottom reversal signal.

 

 

Engulfing Bearish Line
Pattern : A small white body followed by and contained within a large black body.
Interpretation : A top reversal signal.

 

 

Evening Doji Star
Pattern : A large white body followed by a Doji that gaps above the white body. The third candlestick is a black body that closes 50% or more into the white body.
Interpretation : A top reversal signal, more bearish than the regular evening star pattern.

 

 

Evening Star
Pattern : A large white body followed by a small body that gaps above the white body. The third candlestick is a black body that closes 50% or more into the white body.
Interpretation : A top reversal signal.

 

 

Falling Window
Pattern : A gap or "window" between the low of the first candlestick and the high of the second candlestick.
Interpretation : A rally to the gap is highly probable. The gap should provide resistance.

 

 

Gravestone Doji
Pattern : The open and close are at the low of the bar.
Interpretation : A top reversal signal. The longer the upper wick, the more bearish the signal