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 A long SHADOW can show support or resistance
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 The open and close must be equal or very close
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
Gravestones and Dragonflys could have small tails on one end

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
Umbrellas can have tails and color doesn’t matter
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
Confirmations must be above the high of the hammer’s range
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
Confirmations must be above the high of the hammer’s range

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
Use good overbought/oversold indicators such as RSI and Stochastic
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
Use good overbought/oversold indicators such as RSI and Stochastic
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 Morning Star is at the bottom of the move and the Evening Star is at the top
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 SELL BELOW
GAP
GAP
SELL BELOW
Very powerful move
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