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Monster Guide To Candlestick Pattern 210324 130607 1

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822 views43 pages

Monster Guide To Candlestick Pattern 210324 130607 1

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Guillaume Capdor
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61572020 ‘The Monster Gude to Canclestck Pattems Search this website Blog Academy Telegram Premium May 3, 2018 By Rayner — 235 Comments The Monster Guide to Candlestick Patterns Last Updated on May 22, 2020 Here's the thing: ‘There are many ways to read a chart. You can use Japanese Candlestick Patterns, Renko, Bar, Line, Heikin Ashi, Point & Figure, and etc You're probably wondering: “Which one should | use?” htps:iwwa radingwithrayner comicandestick patterns! sma 61572020 ‘The Monster Gude to Canclestck Pattems Well... Ifyou ask me, the most popular approach is... Candlestick Patterns. Why? Because it's easy to learn — and it works. That's why I've created this monster guide to teach you everything you need to know about candlestick patterns (and how to trade it like a pro). Here’s what you'll learn: * What is a candlestick pattern and how to read it correctly ¢ Bullish reversal candlestick patterns * How to find high probability bullish reversal setups * Bearish reversal candlestick patterns © How to find high probability bearish reversal setups © Indecision candlestick patterns * Trend continuation candlestick patterns © How to find high probability trend continuation setups * Candlestick cheat sheet: How to understand any candlestick pattern without memorizing a single one Now. This is an extensive guide on candlestick patterns (with 3781 words). So, take your time to digest the materials and come back to it whenever you need a refresher. Now let's begin! sro Tane htps:iwwa radingwithrayner comicandestick patterns! 2143 61572020 ‘The Monster Gude to Canclestck Pattems What is a candlestick pattern? Japanese candlestick patterns originated from a Japanese rice trader called, Munehisa Homma during the 1700s. Almost 300 years later: It was introduced to the western world by Steve Nison, in his book called, Japanese Candlestick Charting Techniques. Now, it's likely the original ideas have been modified which now results in the candlestick patterns you use today. Anyway, that's the brief history behind Japanese candlestick patterns. Moving on Let's learn how to read a candlestick chart... So, how do you read a Japanese candlestick chart? Now, every candlestick pattern has 4 data points: Open - The opening price High - The highest price over a fixed time period Low - The lowest price over a fixed time period Close - The closing price Here's what | mean: htps:iwwa radingwithrayner comicandestick patterns! 43 61572020 ‘The Monster Gude to Canclestck Pattems HIGH HIGH -.-UPPER ... SHADOW (WICK) CLOSE: ---BODY-~ OPEN==+=* ++0sCLOSE Once = LOW Remember. For a Bullish candle, the open is always BELOW the close. For a Bearish candle, the open is always ABOVE the close. Bullish reversal candlestick patterns Bullish reversal candlestick patterns signify that buyers are momentarily in control However, it doesn’t mean you should go long immediately when you spot such a pattern because it doesn’t offer you an “edge” in the markets. Instead, you want to combine candlestick patterns with other tools so you can find a high probability trading setup (more on that later) For now, these are 5 bullish reversal candlestick patterns you should know: Poona htps:iwwa radingwithrayner comicandestick patterns! ies ‘2020 ‘Te Monster Gude to CondostekPatems Hammer * Bullish Engulfing Pattern * Piercing Pattern * Tweezer Bottom * Morning Star Let me explain.. Hammer AHammeris a (1- candle) bullish reversal pattern that forms after a decline in price. Here's how to recognize it * Little to no upper shadow The price closes at the top ¥4 of the range * The lower shadow is about 2 or 3 times the length of the body And this is what a Hammer means. 1. When the market opens, the sellers took control and pushed price lower 2. At the selling climax, huge buying pressure stepped in and pushed price higher 3, The buying pressure is so strong that it closed above the opening price htps:iwwa radingwithrayner comicandestick patterns! 543 61572020 ‘The Monster Gude to Canclestck Pattems In short, a hammer is a bullish reversal candlestick pattern that shows rejection of lower prices. Now, just because you see a Hammer doesn’t mean the trend will reverse immediately. You'll need more “confirmation” to increase the odds of the trade working out and I'll cover that in details later. Moving on Bullish Engulfing Pattern A Bullish Engulfing Pattern is a (2-candle) bullish reversal candlestick pattern that forms after a decline in price. Here's how to recognize it: © The first candle has a bearish close * The body of the second candle completely “covers” the body first candle {without taking into consideration the shadow) * The second candle closes bullish And this is what a Bullish Engulfing Pattern means... a htps:iwwa radingwithrayner comicandestick patterns! eas 61572020 ‘The Monster Gude to Canclestck Pattems 1. On the first candle, the sellers are in control as they closed lower for the period 2, On the second candle, strong buying pressure stepped in and closed above the previous candle’s high — which tells you the buyers have won the battle for now In essence, a Bullish Engulfing Pattern tells you the buyers have overwhelmed the sellers and are now in control. And lastly, a Hammer is usually a Bullish Engulfing Pattern on the lower timeframe because of the way candlesticks are formed on multiple timeframes. If you’re not sure how it works, then go watch this video below... Candlestick Pattern Trading #13: How to Combine ... Next, Piercing Pattern htps:iwwa radingwithrayner comicandestick patterns! mas 61572020 ‘The Monster Gude to Canclestck Pattems A Piercing Pattern is a (2-candle) reversal candlestick pattern that forms after a decline in price, Unlike the Bullish Engulfing Pattern which closes above the previous open, the Piercing Pattern closes within the body of the previous candle. Thus in terms of strength, the Piercing Pattern isn’t as strong as the Bullish Engulfing pattern, Here’s how to recognize it: © The first candle has a bearish close * The body of the second candle closes beyond the halfway mark of the first candle * The second candle closes bullish And this is what a Piercing Pattern means. 1. On the first candle, the sellers are in control as they closed lower for the period 2. On the second candle, buying pressure stepped in and it closed bullishly (more than 50% of the previous body) — which tells you there are buying pressure around Next, htps:iwwa radingwithrayner comicandestick patterns! aes ‘192020 ‘The Monster Guide to Candlestick Patter Tweezer Bottom When I mean Tweezer, | don’t mean the tool you use to pick your nose hair (although it sure looks like it). Instead.. ATweezer Bottom is a (2-candle) reversal candlestick pattern that occurs after a decline in price, Here's how to recognize it: * The first candle shows rejection of lower prices * The second candle re-tests the low of the previous candle and closes higher And this is what a Tweezer Bottom means. 1.On the first candle, the sellers pushed price lower and were met with some buying pressure 2. On the second candle, the sellers again tried to push price lower but failed, and was finally overwhelmed by strong buying pressure In short, a Tweezer Bottom tells you the market has difficulty trading lower (after two attempts) and it's likely to head higher. Morning Star eyes htps:iwwa radingwithrayner comicandestick patterns! ies 61572020 ‘The Monster Gude to Canclestck Pattems + A Morning Star is a (3-candle) bullish reversal candlestick pattern that forms after a decline in price. Here’s how to recognize it: * The first candle has a bearish close * The second candle has a small range * The third candle closes aggressively higher (more than 50% of the first candle) And this is what a Morning Star means. 1. On the first candle shows, the sellers are in control as the price closes lower 2. On the second candle, there is indecision in the markets as both the selling and buying pressure are in equilibrium (that’s why the range of the candle is small) 3. On the third candle, the buyers won the battle and the price closes higher In short, a Morning Star tells you the sellers are exhausted and the buyers are momentarily in control, Moving on How to find high probability bullish reversal setups Great! htps:iwwa radingwithrayner comicandestick patterns! 1043 61572020 ‘The Monster Gude to Canclestck Pattems You've learned the different bullish reversal candlestick patterns. Now, let’ take ita step further and learn how to identify high probability trading setups with it. Recall: You don’t want to trade any candlestick patterns in isolation because it doesn’t offer an “edge” in the markets. So here’s how you do it.. 1. Ifthe market is trending higher, then wait for a pullback towards Support 2. If the price makes a pullback towards Support, then wait for a bullish reversal candlestick pattern 3. If there's a bullish reversal candlestick pattern, then make sure the size of itis larger than the earlier candles (signalling strong rejection) Here are a few cherry-picked examples: Morning Star: Morning Star htps:iwwa radingwithrayner comicandestick patterns! ss 61572020 ‘The Monster Gude to Canclestck Pattems Bullish Engulfing Pattern: ‘ea, cy sgt Mtg Bullish Enguifing Pattern hy Wha, [E rs My ital Bullish Engulfing Pattern fat’ , att ly wh fm Note: There will be losing trades as well and this is not the “holy grail’ Now, let’s move on. Bearish reversal candlestick patterns Bearish reversal candlestick patterns signify that sellers are momentarily in control. htps:iwwa radingwithrayner comicandestick patterns! ras sz020 ‘The Monster Gute to Condlostck Pans Likewise, it doesn’t mean you should go short immediately when you spot such a pattern because it doesn't offer you an “edge” in the markets. Instead, you want to combine candlestick patterns with other tools so you can find a high probability trading setup. For now, these are 5 bearish reversal candlestick patterns you should know: * Shooting Star * Bearish Engulfing Pattern * Dark Cloud Cover * Tweezer Top * Evening Star Let me explain.. Shooting Star A Shooting Star is a (1- candle) bearish reversal pattern that forms after an advanced in price Here's how to recognize it * Little to no lower shadow htps:iwwa radingwithrayner comicandestick patterns! a3 ‘2020 ‘Te Monster Gude to CondostekPatems * The price closes at the bottom % of the range * The upper shadow is about 2 or 3 times the length of the body And this is what a Shooting Star means... 1. When the market opens, the buyers took control and pushed price higher 2, At the buying climax, huge selling pressure stepped in and pushed price lower 3, The selling pressure is so strong that it closed below the opening price In short, a Shooting Star is a bearish reversal candlestick pattern that shows rejection of higher prices. Now, just because you see a Shooting Star doesn't mean the trend will reverse immediately, You'll need more “confirmation” to increase the odds of the trade working out and Ill cover that in details later. Moving on Bearish Engulfing Pattern A Bearish Engulfing Pattern is a (2-candle) bearish reversal candlestick pattern that forms after an advanced in price. ony htps:iwwa radingwithrayner comicandestick patterns! aes 61572020 ‘The Monster Gude to Canclestck Pattems Here’s how to recognize it: # The first candle has a bullish close * The body of the second candle completely “covers” the body first candle {without taking into consideration the shadow) ‘* The second candle closes bearish And this is what a Bearish Engulfing Pattern means. .. 3. On the first candle, the buyers are in control as they closed higher for the period 4, On the second candle, strong selling pressure stepped in and closed below the previous candle’s low — which tells you the sellers have won the battle fornow In essence, a Bearish Engulfing Pattern tells you the sellers have overwhelmed the buyers and are nowin control. Dark Cloud Cover A Dark Cloud Coveris a (2-candle) reversal candlestick pattern that forms after an advanced in price Unlike the Bearish Engulfing Pattern which closes below the previous open, the Dark Cloud Cover closes within the body of the previous candle. htps:iwwa radingwithrayner comicandestick patterns! 1543 ‘2020 ‘Te Monster Gude to CondostekPatems Thus in terms of strength, the Dark Cloud Cover isn’t as strong as the Bearish Engulfing pattern Here's how to recognize it * The first candle has a bullish close * The body of the second candle closes beyond the halfway mark of the first candle * The second candle closes bearish And this is what a Dark Cloud Cover means... 1. On the first candle, the buyers are in control as they closed higher for the period 2. On the second candle, selling pressure stepped in and it closed bearishly (more than 50% of the previous body) — which tells you there are selling pressure around Next, Tweezer Top A Tweezer Top is a (2-candle) reversal candlestick pattern that occurs after an advanced in price. htps:iwwa radingwithrayner comicandestick patterns! 649 61572020 ‘The Monster Gude to Canclestck Pattems Here’s how to recognize it: * The first candle shows rejection of higher prices * The second candle re-tests the high of the previous candle and closes lower And this is what a Tweezer Top means. 1. On the first candle, the buyers pushed the price higher and were met with some selling pressure 2. On the second candle, the buyers again tried to push the price higher but failed, and was finally overwhelmed by strong selling pressure In short, a Tweezer Top tells you the market has difficulty trading higher (after two attempts) and it's likely to head lower. Evening Star + An Evening Staris a (3-candle) bearish reversal candlestick pattern that forms after an advanced in price. Here’s how to recognize it: © The first candle has a bullish close * The second candle has a small range * The third candle closes aggressively lower (more than 50% of the first candle) htps:iwwa radingwithrayner comicandestick patterns! area 61572020 ‘The Monster Gude to Canclestck Pattems And this is what an Evening Star means, 1. On the first candle, it shows the buyers are in control as the price closes higher 2. On the second candle, there is indecision in the markets as both the selling and buying pressure are in equilibrium {that’s why the range of the candle is small) 3. On the third candle, the sellers won the battle and the price closes lower In short, an Evening Star tells you the buyers are exhausted and the sellers are momentarily in control Moving on How to find high probability bearish reversal setups Awesome! You've just learned the different bearish reversal candlestick patterns. Now, let’s take ita step further and learn how to identify high probability trading setups with it. Here's how you doit. 1. If the market is trending lower, then wait for a pullback towards Resistance 2. If the price pullback towards Resistance, then wait for a bearish reversa candlestick patti 3. If there’s a bearish reversal candlestick pattern, then make sure the size of it is n larger than the earlier candles (signalling strong rejection) 4, If there's a strong price rejection, then go short on next candle’s open 5, And vice versa for long setups htps:iwwa radingwithrayner comicandestick patterns! a3 61572020 ‘The Monster Gude to Canclestck Pattems Here are a few cherry-picked examples: Bearish Engulfing Pattern: Bearish Enguifing Pattern Bearish Engulfing Pattern: Bearish Engulfing Pattern at i ok nf Shooting Star: htps:iwwa radingwithrayner comicandestick patterns! 19143 61572020 ‘The Monster Gude to Canclestck Pattems Shooting Star Note: There will be losing trades as well and this is not the “holy grail’: Indecision candlestick patterns Indecision candlestick patterns signify that both buying and selling pressure is in equilibrium, And these are 2 indecision candlestick patterns you should know: * Spinning top * Doji Let me explain. Spinning top htps:iwwa radingwithrayner comicandestick patterns! 20143 61572020 ‘The Monster Gude to Canclestck Pattems A spinning top is an indecision candlestick pattern that where both buying and selling pressure is fighting for control. Here's how to recognize it: * The candle has long upper and lower shadow * The candle has 2 small body And here's what a Spinning top means... 1, When the market opens, both the buyers and sellers aggressively tried to gain control (which results in upper and lower shadows) 2, At the end of the session, neither has gained the upper hand (which results in a small body) In short, a spinning top shows significant volatility in the market but with no clear winner. And yes, it looks like the toy you played when you were young. htps:iwwa radingwithrayner comicandestick patterns! 2a 61572020 ‘The Monster Gude to Canclestck Pattems Moving on Doji A Doji represents indecision in the markets as both buying and selling pressure are in equilibrium, Here's how to recognize it * The candle's open and close are around the middle of the range * The upper and lower shadows are short and about the same length Although Doji is an indecision candlestick pattern, there are variations with different significance. They are: 1. Dragonfly Doji 2. Gravestone Doji FlLexplain 1. Dragonfly Doji htps:iwwa radingwithrayner comicandestick patterns! 24a 61372020 ‘The Monster Gude to Canclestck Pattems Unlike a regular Doji which open and close near the middle of the range, the Dragonfly Doji open and close near the highs of the range with long lower shadow. This tells you there is a rejection of lower prices as buying pressure stepped in and pushed the market higher towards the opening price, 2. Gravestone Doji htps:iwwa radingwithrayner comicandestick patterns! 24a 61572020 ‘The Monster Gute to Condlostck Pans Unlike a regular Doji which open and close near the middle of the range, the Gravestone Doji closes open and close near the lows of the range with long upper shadow. This tells you there is a rejection of higher prices as selling pressure stepped in and pushed the market lower towards the opening price. Moving on Continuation candlestick patterns Continuation candlestick patterns signify the market is likely to continue trading in the same direction, And if you're a trend trader, these candlestick patterns present some of the best trading opportunities out there. So here are 4 continuation patterns you should know: * Rising Three Method * Falling Three Method * Bullish Harami * Bearish Harami Let me explain ing Three Method htps:iwwa radingwithrayner comicandestick patterns! 2043 61572020 ‘The Monster Gude to Canclestck Pattoms nl The Rising Three Method is a bullish trend continuation pattern that signals the market is likely to continue trending higher. Here's how to recognize it The first candle is a large bullish candle The second, third and fourth candle has a smaller range and body The fifth candle is a large-bodied candle that closes above the highs of the first candle ‘And here’s what a Rising Three Method means... 1. On the first candle, it shows the buyers are in domination as they closed the session strongly 2. On the second, third, and fourth candle, buyers are taking profits which led to a slight decline. However, it’s not a strong selloff as there are new buyers entering long at these prices 3. On the fifth candle, the buyers regain control and pushed the price to new highs Note: If you're familiar with western charting, you'd realized the Bullish Flag and Rising Three Method pretty much mean the same thing. htps:iwwa radingwithrayner comicandestick patterns! 2543 61572020 ‘The Monster Gude to Canclestck Pattems Falling Three Method Lt ‘The Falling Three Method is a bearish trend continuation pattern that signals the market is likely to continue trending lower. Here's how to recognize it * The first candle is a large bearish candle * The second, third and fourth candle has a smaller range and body * The fifth candle is a large-bodied candle that closes below the lows of the first candle And here's what a Falling Three Method means... 1. On the first candle, it shows the sellers are in domination as they closed the session strongly lower 2. On the second, third, and fourth candle, sellers are taking profits which led toa slight advanced. However, i's not a strong rally as there are new sellers entering shortat these prices 3. On the fifth candle, the sellers regain control and pushed the price to new lows Next. htps:iwwa radingwithrayner comicandestick patterns! 26143 61572020 ‘The Monster Gude to Canclestck Pattems Bullish Harami Here's the deal: Most trading websites or books will tell you the Bullish Harami occurs after a decline in price, But | can't agree. This is one of those things you must use common sense to filter out the BS out there. Think about this: Adowntrend is created using the prices of the few hundred candlesticks. Do you think it will reverse because a Bullish Harami is formed? Unlikely. Instead, the Bullish Harami works best asa continuation pattern in an uptrend, Itsignals the buyers are “taking a break’ and the price is likely to trade higher. ny htps:iwwa radingwithrayner comicandestick patterns! amg 61572020 ‘The Monster Gude to Canclestck Pattems Moving on Here's how you recognize a Bullish Haram © The first candle is bullish and larger than the second candle * The second candle has a small body and range {it can be bullish or bearish) And here’s what a Bullish Harami means. 1. On the first candle, it shows strong buying pressure as the candle closes bullishly 2. On the second candle, it shows indecision as both buying and selling pressure is similar (likely because of traders taking profits and new traders entering long, positions) Note: You can treat the Harami as an Inside Bar. They mean the same thing and can be traded in a similar context. Bearish Harami ‘A bearish Harami works best as a continuation pattern in a downtrend htps:iwwa radingwithrayner comicandestick patterns! 2a 61572020 ‘The Monster Gude to Canclestck Pattems It signals the sellers are “taking a break” and the price is likely to trade lower. Here's how you recognize a Bearish Harami: © The first candle is bearish and larger than the second candle * The second candle has a small body and range {it can be bullish or bearish) And here’s what a Bearish Haran 1, On the first candle, it shows strong selling pressure as the candle closes bearishly 2. On the second candle, it shows indecision as both buying and selling pressure is similar (likely because of traders taking profits and new traders entering short positions) Let's move on... How to find high probability trend continuation setups So, You've learned what are continuation candlestick patterns and how it looks like. Now, I'll teach you how to identify high probability trading setups with these patterns. Here’s how to do it. 1. Ifthe market is in a range, then wait for it to breakout out of Resistance 2. If the market breaks out of Resistance, then wait for it to form a continuation candlestick pattern (like Rising Three Method or Bullish Harami) 3. Ifthe market forms a continuation candlestick pattern, then go long on the break of the highs htps:iwwa radingwithrayner comicandestick patterns! 20163 61572020 ‘The Monster Gude to Canclestck Pattems 4, And vice versa for short setups Here are a few cherry-picked examples: Avariation of the Falling Three Method on USD/ZAR: a \ a MM, ad’ We : et A variation of the Falling Three Method Rising Three Method and Bullish Harami on EUR/USD: Rising Three Method a “i Bullish Harami This is powerful stuff, right? htps:iwwa radingwithrayner comicandestick patterns! 013 61372020 ‘The Monster Gude to Canclestck Pattems Great! Let's move on. Candlestick patterns cheat sheet: How to understand any candlestick pattern without memorizing a single one “There are so many candlestick patterns. How do | reme Well, you don’t have to, Because if you understand the 2 things I'm about to share with you, then you read any candlestick patterns like a pro (think of it like a candlestick pattern cheat sheet) Here's what you must know. 1, Where did the price close relative to the range? 2. What's the size of the pattern relative to the other candlestick patterns? 1. Where did the price close relative to the range? This question lets you know who's in control momentarily Look at this candlestick pattern. htps:iwwa radingwithrayner comicandestick patterns! aa s1a00 Te Mortr Guide to Candestek Paters WEAK PRICE 4 REIECTION W > STRONG BUYERS IN CONTROL Let me ask you Who's in control? Well, the price closed the near highs of the range which tells you the buyers are in control. Now, look at this candlestick pattern... ee REIRCTION

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