The Candlestick EXPRESS Class with Steve Nison

Transcription

1 With Steve Nison, CMT President: Candlecharts.com & the first to reveal candlesticks to the Western world Candlestick Charting Techniques Candles + Western Charting Tools Candles for Trade Management 1 Candlestick Charts Early reversals Safety First Trading Quickly reading the market s message 1

2 2 Candles with Western Technicals Enhance winning %s Price targets 3 Candles for Trade Management Protective Stops Price Targets Risk/Reward Prevailing Trend If Then Principle Market Chameleon Candlestick Charting Techniques Candles + Western Charting Tools Candles for Trade Management 2

3 high Shadow open close Real Body open close low Real Bodies / Shadows The longer the real body the stronger the momentum. The relative size and position of the shadow displays the extent of price rejection. 3

4 The Real Body is the Essence of the Price Movement Who s in control? The Doji The High Wave Candle Where open and close are the same (or nearly the same) Who s in control? 4

5 CANDLES REVEAL THE FORCE BEHIND THE MOVE: HOW DOES THIS KNOWLEDGE IMPROVE YOUR TRADING? These have the same closing prices, but what are the candles telling us? Doji 5

6 Candles and Momentum Trading Session with long upper and lower shadows compared to real body (which is in the middle of the range) High Wave Candle 6

7 High wave Doji The Hammer The Inverted Hammer Bull Counter Attack Piercing Pattern Bullish Engulfing Pattern The Bull Harami Bull Separating Line Tweezers Bottom Rising Window Morning Star Rising Three Methods Three Advancing White Soldiers Black or white candle with long lower shadow (2x or more) compared to real body. 7

8 Candles for getting in early on a new trend Extra $30 per share profit Extra $25 per share profit Hammers Nison Candlestick strategies for long calls Scenario 1 buy at hammer $395: 400 $11.30 Exit at doji ( red arrow 13 days after hammer) 447: 400 $47.50 (320 % return) Scenario 2 buy based on MACD $418 : 420 $13.45 Exit at doji (5 days later) 447: 420 $31.20 (132% return) Result: Nison candlesticks generated over 2x the profit! 8

9 Nison Power Concept Is it a valid Nison candle? Not hammers! Upside down hammer and market in a downtrend. 9

10 Negative Selection Don t sell short Inverted Hammer with candle confirmation confirmed Black real body followed by a white real body that gaps lower on the open and then closes at, or near, black candle close. 10

11 Bull Counter Attack White real body that wraps around prior session black real body or doji. Bullish Engulfing Patterns 11

12 Bullish Engulfing Pattern This is interesting: I recently purchased a technical analysis package from a WELL KNOWN technical analysis guru. During his charting presentation he made several references to candlestick patterns, and each references that he made was absolutely wrong! During a strong uptrend, he called a large white real body after a small black real body a bullish engulfing pattern. If I hadn t bought and studied your education, I would never would have known that and would have assumed that he was right. And could have lost a lot of money! Thanks again for your great work! -Carl Nison Candlesticks for FX 12

13 Non FX Bullish Engulfing Pattern Criteria: White real body wraps around preceding black real body Market in down trend Implication: Market bottoming out open close FX (or intraday) Bullish Engulfing Pattern Criteria: White real body wraps around preceding black real body Market in down trend Implication: Market bottoming out open close Small real body inside an unusually long black real body. 13

14 Bullish Harami White candle that opens lower and then closes more than halfway into prior black real body. Piercing Pattern Confirms Support 14

15 Black candle followed by white candle that opens within black real body and closes over prior open. Bull Sash Pattern Bull Sash Black candle followed by white candle that opens at (or above) prior open. Then closes over black candle open. 15

16 Bull Separating line While at resistance this is a new high close for move T WEEZERS BOTTOM Two candles that have the same lows. First candle large black. Tweezers and Harami 16

17 Same as a gap in Western technicals. The current session s low is higher than the prior session s high. Corrections stop at the window A rising window is support Support Zone How education saves you money Bearish engulfing pattern, but you must not sell here. Why? 17

18 Large rising window Bottom of rising window as the major support Small Window 2 cents First candle long black, second candle small real body, third candle is white that gets deeply into first real body. white or black 18

19 Morning Star How Education helps MAKE you money Entered the market here Morning star variation RISING THREE METHODS A series of small candles inside the range of a tall white candle. The last candle is another tall white. 19

20 RISING THREE METHODS Three consecutive white candles, each with a higher close. The Shooting Star The Hanging Man Bear Counter Attack Dark Cloud Cover Bearish Engulfing Pattern Bear Harami Bear Separating Line Tweezers Top Falling Window Evening Star Falling Three Methods Three Black Crows The 20

21 Black or white candle with long upper shadow (2x or more) compared to real body. A crack has entered the market If I had only known this! I could have made a quick 25% 21

22 What is wrong with this so called shooting star? Hint: look at upper shadow Same shape as a hammer, but market in an uptrend. Hammer and Hanging Man Lines The difference between these is the preceding trend top reversal Hanging Man white or black white or black Hammer bottom reversal 22

23 Hanging Man confirmation White real body followed by a black real body that gaps higher on the open and then closes at, or near, white candle close. Bear Counter Attack 23

24 Black real body wraps around prior session white real body or doji. Bullish Bearish Dual Bearish Engulfing Patterns 24

25 How Education MAKES you money These are NOT bearish engulfing patterns! This is a bullish engulfing pattern Black real body wraps around prior session white real body or doji. FX or Intraday close open Bearish Engulfing Pattern 25

26 Small real body inside an unusually long white real body. Bearish Harami Harami Not a harami pattern Black candle that opens higher and then closes more than halfway into prior white real body. 26

27 Dark Cloud Cover Bulls have been constrained White candle followed by black candle that opens within white real body and closes under prior open. Bull and Bear Sash 27

28 White candle followed by black candle that opens at (or above) prior open. Then closes under black candle open. Bear Separating Line T WEEZERS TOP Two candles that have the same highs. First candle large white. 28

29 Tweezers top Tweezers Top Same as a gap in Western technicals. The current session s high is under the prior session s low. 29

30 Corrections stop at the window A falling window is resistance Resistance Zone Falling window with extra confirmation Falling window The small real bodies helped confirm the importance of the falling window s resistance white or black First candle long white, second candle small real body, and third candle is black that gets deeply into first real body. 30

31 Evening Star as resistance Evening Star Cramer issues a buy On it s way to $2! Falling Three Methods A series of small candles inside the range of a long black candle. The last candle is another long black. 31

32 FALLING THREE METHODS Why about this falling three gives you extra bearish confidence? Three consecutive black candles, each with a lower close. Three Black Crows PULTE CORP ( , , , , ) July August September 24 32

33 NCS Special - $400 off coupon code (NCS400) + free upgrade to lifetime access for the same price as annual: NOTE: this is a limited time offer To upgrade for lifetime access for $49 (if you haven t done so already) : IMPORTANT- you must log into your account for access to this recording Contact Paul@candlecharts.com With Steve Nison, CMT President: Candlecharts.com & the first to reveal candlesticks to the Western world Candlestick Charting Techniques Candlesticks + Western Indicators Candlesticks + Trade Management 33

34 The Multiplier Effect Where a Nison candle signal confirms another indicator Congratulations you bought at support! Congratulations? you bought at support? 34

35 Resistance Resistance Support Support Trading Ultra Shorts Support or resistance lines using longer term charts (slide 1 of 2) Long Term Chart Long term support once broken becomes. New resistance 35

36 And adding them to a Shorter Term Chart (slide 2 of 2) New resistance Daily Chart How Education SAVES you money Target Snap Buy Stop Crack 36

37 Crack and Snap Crack and Snap Stop Sell Target 37

38 Falling off the Roof Bloomberg TV Interview - S&P at 996 target Major support near 960. My upside target is 1160 Shooting star Doji hammer Prior resistance becomes new support Examine how the market acts at support or resistance Two questions to ask: 1) Is the market at support or resistance? 2) Is there a of the market losing force at that support or resistance? 38

39 Scenario 1 Scenario 2 East + West = Higher Confidence Do the odds favor a holding, or breaking of support? Does Candle Confirm a Key Level? 1 of 3 Is this a candle signal showing the bears are losing force? If so then consider reversal trade 39

40 Does Candle Confirm a Key Level? 2 of 3 Is this a candle signal showing the bears are losing force? Does Candle Confirm a Key Level? 3 of 3 Momentum Candle confirmation At support but any signs of bears losing force? What is another negative? can sell here 40

41 Candles and Trend lines How Education Saves You Big $$$ Major resistance How Education Saves You Big $$$ Long term resistance zone 41

42 Candles and Volume Light volume breakout And then! Candles and Volume Higher volume on white candle compared to black on this bullish engulfing pattern magnifies the likelihood of a reversal Bull Harami Potential Selling climax 42

43 Volume Confirming the Candle Signal Candles And Volume: High Volume Doji Bollinger Bands Developed by John Bollinger 2 trading bands are placed around a moving average (typically a 20-day moving average) Bands are placed (typically) 2 standard deviations above and below moving average Touch of upper band: overbought Touch of lower band: oversold 43

44 Doji in context The East and the West The Candlesticks and then add. Bearish Engulfing Pattern Bullish Engulfing Pattern 44

45 Traditional Western tools like Bollinger Bands Bearish Engulfing Pattern Buy on the bullish engulfing and exit on the bearish engulfing Bullish Engulfing Pattern Head and Shoulders Head Left Shoulder Right Shoulder Neckline Sell signal Head and Shoulders Top 45

46 Three Buddha Pattern Spotting the Early Reversals H&S neckline Steve Nison s Candlecharts.com 46

47 TASC Interview - Jan. 24, 2003 S&P at 860 1) Once the neckline s support is broken, it should become resistance. Head and Shoulder top 2) To get a target with the head and shoulders top we measure from the top of the head to the neckline. neckline Interview the heads and shoulders top on the S&P gives a target to near 775. A close over 870 would void this. Hammer Box ranges 47

48 East for reversal and West for target Doji Bearish engulfing patterns target East & West = Profits With Steve Nison, CMT President: Candlecharts.com & the first to reveal candlesticks to the Western world 48

49 Candlestick Charting Techniques Candlesticks + Western Indicators Candlesticks + Trade Management EDUCATION = CONFIDENCE = $UCCESS Doji as exit at $ Hammer as buy at $

50 CANDLES TO EXIT Times to Exit EDUCATION = CONFIDENCE = $UCCESS Shooting star as exit at $ Hammer as buy at $ Market Chameleon adapt to changing market conditions 50

51 Market Chameleon Falling window Buy on these back to back hammers. Original target is resistance at 1 as defined by recent high and falling window. With new resistance and decline at area 1,that zone now becomes the area to take profits. target 1 new target Buy Adapting to the Market? Closed over Window s Resistance Adapting to the Market Trend is down target 51

52 Adapting The low of the bullish engulfing pattern as support. Once hammer is formed (at the arrow) we then adjust our support Candles in Context To know where you stand is as important as candle pattern recognition. Hammer, but? 52

53 Candles in Context 1- Why is this not an ideal dark cloud cover? 2 Why would you view it as bearish as a classic dark cloud cover? 157 Candles in Context Change of Polarity where former resistance becomes new support This is a shooting star, but why not sell short? Hint, look at July-early Aug. highs 158 Candles in Context 53

54 If Then Rules 1) If the market does not act as forecasted then exit the position 2)Initiate a position when the market justifies your potential trade (i.e. if near resistance, If the market breaks above resistance, Then one can buy. 160 If.Then Rule (slide 1 of 2) Head and shoulders top? If.Then Rule (slide 2 of 2) Head and shoulders top NOT confirmed 54

55 If.Then Rule The bullish ascending triangle and the new high close for the move strongly hints that the market will break out. But resistance held. Protective Stops 55

56 Candles as Support Candlesticks for entering a new trade 56

57 Candles as support and NCS 1) NCS (or you) find a hammer on this session 2) Set up an alert for when the market gets near the low of the hammer to buy Don t try to catch a falling Dagger First sign of a bottom Extra Confirmation Testing candles support 57

58 Stops PROTECTIVE S TOPS There are three reasons for considering a sell at line X: 1) The top of the falling window 2) The bearish engulfing pattern 3) Line X is a doji However, once the market breaks resistance, shorts should be covered. X Shorted at

59 A candlestick line or pattern requires two criteria: The shape of the line or pattern The preceding trend What defines a trend? Higher highs and higher lows (or lower lows) Chart of higher degree Price above a moving average Dual moving averages and use golden and dead crosses 59

60 Prevailing Trend 20 day m.a over 50 day m.a and both sloping up Longer Term Trend Candles in Context: Which is a better sale? Scenario 1 Scenario 2 60

61 Candles in Context: Scenario 1 Scenario 2 61

62 Risk/Reward Buy XYZ at 100 Support at 96 Price target (i.e resistance) at 108 Risking 4 looking to make 8 gives a 1:2 risk/reward Hammer and Risk/Reward reward Risk 62

63 How Education saves you $$$ Potential Risk Dark Cloud Cover and Risk/Reward Pattern Completed Here Risk-reward Two hammers at 1 and 2. But due to falling windows only hammer 2 presents a buying opportunity due to the r/r

64 Risk/Reward Why I went long: 1) Bullish engulfing at support 2) Other spinning tops confirming support 3) Trend line breakout of price Was this a good trade that just didn't work out or did I make a mistake in judgment that I can't see? Thank you, Gary B Nison Chart Challenge 1 2 Which are hammers and why? Nison Chart Challenge 2 1. What pattern is highlighted? 2. When would you sell short based on this pattern? 64

65 Nison Chart Challenge 3 Market gaps down to $18 on open at arrow. 1) What are two reasons to consider shorting on the open? 2) What is a potential concern? 3) What if the market gets over 18.50what is that called? 4) If it got back over and you are flat, what would you do and why? Opens at $18 5) Assume holds under how can you get a target? Hint - look at resistance made with two doji Nison Chart Challenge 4 Doji B Doji at A and B made new closes for the move. Questions 1 and 2 relate to these doji 1) If you were long, what would you do with each of these doji and why? 2) If you were flat (no position) what would you do with each of these doji and why? 3) What pattern is in the rectangle? 4) If you buy on the signal in question 3 where is your stop and why? 5) Name three potential resistance areas once the market moves up from the pattern at question 3. 6) Which of these three resistance areas do you think would be most important and why? Doji A Nison Chart Challenge 5 1.Is this a piercing pattern? 2.What two candle signals formed here? 3.Are these confirming something else? 4. What would you do here and why? 65

66 Nison Chart Challenge What candle signals at 1 to 4 reflect trouble near ? Nison Chart Challenge 7 1.Name 4 reasons to consider this a bottom 2. Would you buy on the last candle signal? why or why not 3. If you didn t buy when would you and why. Nison Chart Challenge 8 What 4 signals here hint of a reversal? (purple lines are Bollinger Bands) 66

67 Nison Chart Challenge #9 At the arrow: 1) What candle pattern is it? 2) What western signal does it also make (hint: look at prior support area)? 3) What is the target and why on this candle at the arrow? Candlestick Express Class Quick Reference Checklist Candlesticks: Use real bodies to gauge market strength A doji turns the trend from up or down to neutral A close over a doji or a candle resistance can be used for a momentum trade Hammers and shooting stars should have shadows 2x the read body Candles are trend dependent Candles for FX and intraday have subtle differences compared to non FX or daily charts (NCS software does take this into account) Candlesticks + Western tools Candles + your favorite western tools = higher success Use old multi-tested support for new resistance and vice versa Failures to hold below support/ our resistance signals a reversal If there is a candle signal showing trend is losing force by support/resistance there is a higher likelihood of a reversal Since candles do not give price targets, we need to use classic western price projections Candlesticks for Managing your Trade or Investment Use candles to not only enter, but to exit Be a market chameleon by adjusting position to new technical developments Never view candle signals in isolation, view within market context If.. Then Rule. Wait for confirmation of your outlook Protect capital by using protective stops (remember you can also use candles to set your stops) Be more aggressive when you are going in the direction of the longer term trend Before doing a trade always remember to look it s risk/reward NCS Special - $400 off coupon code (NCS400) + free upgrade to lifetime access for the same price as annual: NOTE: this is a limited time offer To upgrade for lifetime access for $49 (if you haven t done so already) : IMPORTANT- you must log into your account for access to this recording Contact Paul@candlecharts.com 67