03.1 Candlestick Pattern

Candlesticks Movement


Doji Movement
What is Candlestick Trading?
  • Candlesticks can be used for any time frame, whether it be one day, one hour, 30-minutes – whatever you want! Candlesticks are used to describe the price action during the given time frame.


    Candlesticks are formed using the open, high, low, and close of the chosen time period.

  • If the close is above the open, then a hollow candlestick (usually displayed as white) is drawn or in green
  • If the close is below the open, then a filled candlestick (usually displayed as black) is drawn or in red
  • The hollow or filled section of the candlestick is called the “real body” or body.
  • The thin lines poking above and below the body display the high/low range and are called shadows.
  • The top of the upper shadow is the “high”.
  • The bottom of the lower shadow is the “low”.


Body
  • Short bodies imply very little buying or-selling activity.
  • Long bodies imply very much buying or selling activity.
  • The Bulls mean buyers and Bears mean sellers.
  • Long white candlesticks show strong buying pressure. The longer the white candlestick, the further the close is above the open.
  • Long black (filled) candlesticks show strong selling pressure. The longer the black candlestick, the further the close is below the open.

Mysterious Shadows
  • The upper and lower shadows on candlesticks provide important clues about the trading session.
  • If a candlestick has a long upper shadow and short lower shadow, this means that buyers bid prices higher
  • If a candlestick has a long lower shadow and short upper shadow, this means that sellers forced price lower

Basic Candlestick Patterns
  • Single
  • Double
  • Triple and a group
Spinning Tops
  • Candlesticks with a long upper shadow, long lower shadow and small real bodies are called spinning tops
  • The pattern indicates the indecision between the buyers and sellers



Marubozu
  • Marubozu means there are no shadows from the bodies.
  • Depending on whether the candlestick’s body is filled or hollow, the high and low are the same as its open or close.

White Marubozu
  • Contains a long white body with no shadows.
  • The open price equals the low price and the close price equals the high price.
  • This is a very bullish candle.
  • It usually becomes the first part of a bullish continuation or a bullish reversal pattern.

Black Marubozu
  • Contains a long black body with no shadows.
  • The open price equals the high price and the close price equals the low price.
  • This is a very bearish candle.
  • It usually implies bearish continuation or bearish reversal.

Doji
  • Doji candlesticks have the same open and close price or at least their bodies are extremely short.
  • A doji should have a very small body that appears as a thin line.
  • There are four special types of Doji candlesticks

  • If a Doji forms after a series of candlesticks with long hollow bodies (like White Marubozus), the Doji signals that the buyers are becoming exhausted and weakening.
  • In order for price to continue rising, more buyers are needed but there aren’t anymore!
  • Sellers are licking their chops and are looking to come in and drive the price back down.

  • If a Doji forms after a series of candlesticks with long filled bodies (like Black Marubozus), the Doji signals that sellers are becoming exhausted and weak.
  • In order for price to continue falling, more sellers are needed but sellers are all tapped out!
  • Buyers are foaming in the mouth for a chance to get in cheap price.

  • There are a lot of candlesticks pattern that you need to study!!!


    – The hammer is a bullish reversal pattern that forms during a downtrend.
    – The hanging man is a bearish reversal pattern that can also mark a top or strong resistance level.


  • Inverted Hammer
    – The inverted hammer occurs when price has been falling suggests the possibility of a reversal.
  • Shooting Star
    – The shooting star is a bearish reversal pattern that looks identical to the inverted hammer but occurs when price has been rising.



Single Candlestick
Double Candlestick
Triple Candlestick
Chart pattern
  • You have to know the basic chart patterns and formations
  • When correctly identified, it usually leads to an explosive breakout
  • Our goal is to spot big movements before they happen so that we can ride them out and rake in the cash
Double tops
  • Double top is a reversal pattern that is formed after there is an extended move up
  • The “tops” are peaks which are formed when the price hits a certain level that can’t be broken
  • After hitting this level, the price will bounce off it slightly, but then return back to test the level again.
  • If the price bounces off of that level again, then you have a DOUBLE top!


    • It is telling us that the buying pressure is just about finished.

Double bottoms
  • Double bottom is also a trend reversal formation, but this time we are looking to go long instead of short
  • The “bottoms” are lower peaks which are formed when the price hits a certain level that can’t be broken
  • After the previous downtrend, the price formed two valleys because it wasn’t able to go below a certain level
  • The second bottom wasn’t able to significantly break the first bottom, then you have double bottoms


    • This is a sign that the selling pressure is about finished

Head and Shoulders
  • It is formed by a peak (shoulder), followed by a higher peak (head), and then another lower peak (shoulder).
  • A “neckline” is drawn by connecting the lowest points of the two troughs.

Inverse Head and Shoulders
  • A valley is formed (shoulder), followed by an even lower valley (head), and then another higher valley (shoulder)
  • A “neckline” is drawn by connecting the highest points of the two troughs

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