Candlesticks – the importance of Gaps
Gaps can be very good trading signals OR they can be very powerful in making you lose. When reading this post keep in mind that I still don’t trade for real money myself and all this information is theoretical, but I will at some put all these knowledge’s to test. I do hope however that this post will give you something to think about. If there’s a gap then this means that there’s opening price higher (in a rising market) or lower (in a falling market) than the previous day’s trading range (ca... Continue reading
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Sakata’s Method / method of Munehisa Honma
One of Sakata’s method baselines is that if you feel you could benefit from a certain formation, wait 3 days and if it still looks promising, enter the trade and you can most likely make profits. This method was developed by Munehisa Honma back in 1755 and has formed the bases of Japanese market philosophy.Sakata’s method has its own set of candlestick patterns and they have been developed based on Honma’s 160 rules. The number 3 is important in case of his patterns – eg. Three rivers, three m... Continue reading
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Candlestick Continuation Patterns
To continue the candlesticks topic, lets now talk about candlestick continuation patterns. Upide & Downside Tasuki GapThere’s a gap between two candlestick with the same color (in the direction of the trend). The third candlestick opens within the second body and closes WITHIN the gap.Side by side white linesBullish Side by Side white lines continuation pattern consists of 3 white candlesticks and doesn’t require any confirmation. The second and third candlestick should have about equal op... Continue reading
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Candlestick Reversal Patterns III
Lets go on with candlestick reversal patterns. Three inside up pattern (and three inside down pattern)This pattern is the confirmation for the Harami pattern. Here the first two candlesticks form the Harami and the third candlestick confirms Harami. The third candlestick should be closing higher than the first body. Three inside down pattern is exactly the opposite.Three outside up pattern (and three outside down pattern)This is the confirmation for the Engulfing pattern. Three outside down pa... Continue reading
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Candlestick Reversal Patterns II
Lets go on with candlestick reversal patterns. To see the previously discussed patterns, check this. Abandoned babyGosh, people have really put great names to the patterns, haven’t they? Okay, going on now. This pattern looks pretty much the same as Morning and Evening Doji Stars, but the Doji here must also have a gap from the shadows of the first and third body. So that the Doji sort of looks like .... an abandoned baby, what else can I say :DUpside Gap Two CrowsThis is only a bearish patter... Continue reading
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Candlestick Reversal Patterns I
Candlestick patterns can consist of just one candlestick or couple of them, usually not more than six. Hammer and Hanging Man patternsThis is a one candlestick pattern with small body and long lower shadow (and no upper shadow). The hammer occurs in a downtrend and hanging man in the uptrend. The smaller the body is and the longer the long lower shadow is, the better is the actual signal. Also, hanging man with a black body is more bearish and hammer with white body more bullish.Engulfing patt... Continue reading
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Introduction to Japanese Candlestick Charting
Japanese Candlestick charting has really been with us for a while and that’s part of the technical analysis that, even if it’s some professional don’t use it, so far I have only heard and read good things about it. And I suppose this is due to the fact that it really is a really useful tool in technical analysis. In order to give you a more detailed analysis of Japanese Candlestick charting, how to use it and how to identify patterns on the charts, etc, I will be making my next few posts... Continue reading
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