Japanese Candlestick Charting Flashcards
(33 cards)
Upper and lower shadow
Upper shadow is the difference between the high and the real body. Lower shadow is the difference between the low and the real body
Takuri
Testing the water- when a lower shadow tests where the critical support level is or the upper shadow tests where the critical resistance is
What is the significance of the length of the shadow
The longer the shadow, the more important the level
Standard line candlestick
Strong real body and small shadows indicates trend continuation
Spinning top candlestick
Small body with long shadows top and bottom. Indicates neutral pattern with no directional conviction
Types of doji
Long legged
Gravestone
Dragonfly
Star
What are doji
Candlesticks that open and close at the same level
Long legged doji
No real body, long upper and lower shadows. Potential turning point, shows indecision
Gravestone doji
No real body, long upper shadow, no lower shadow. Signals the end of a bullish attack. Market rejects the top of the shadow with strong selling pressure
Dragonfly doji
No real body, no upper shadow, long lower shadow. Signals the end of a bearish attack, found at market bottoms. Strong buying at the bottom of the lower shadow
Star doji
No real body, small upper and lower shadows. Strong reversal pattern found at tops and bottoms of markets. A gap between the real body of the previous candlestick and the star increases the significance of it.
Morning star
Bullish reversal
Evening star
Bearish reversal
Types of Umbrellas
Hanging man
Hammer
What does an umbrella look like
Small real body with little or no upper shadow, lower shadow 2-3 times longer than length of real body.
What does the umbrella tell us?
Potential reversal but confirmation is required. Colour of real body not so important. Pay attention to the direction of the closing
Hanging man
Umbrella with prior up-trend. Market shows signs of weakness but closes well above low. Confirmation if there’s a close below support in next 2 periods or a break of a trend line or support level
Hammer
Umbrella with prior downtrend. Strong buying off a low and and close near the high. Long shadow illustrates sentiment shift. Real body colour less important for hanging man
Inverted hammer and shooting star are…
Opposite of umbrellas. They have small real body, small or no lower shadow and a large upper shadow.
Shooting star
Upside down umbrella. Powerful reversal signal in an uptrend but only on a new high.
Inverted hammer
Upside down umbrellas. Indicates potential support in downtrend but needs confirmation.
Marubozu
A candle with no upper or lower shadow. Very strong continuation pattern, most common in short term charts
What does a Bearish engulfing line look like?
Prior upward trend. Next period gaps up but then closes below the real body of the previous candlestick. Shadows aren’t considered.
What does a bearish engulfing line mean for the market.
Strongest reversal pattern, huge sentiment shift.
