Vol3handoutsopt3 PDF

SteveNisonsCandlesticksReIgnited:
AdvancedCandlestickstoBoostConfidenceandSuccess
Founder and President: Candlecharts.com
Candlestick Western
Charting Charting
Techniques Tools
Steve Nisons
Trading Triad
Success
System
TradeManagement
1
www.candlecharts.com
If you want to see farther,

you have to go higher
Forfreecontinuingeducationandexclusivesupportforthisvideogotowww.nisonu.com
Candlestick Charts
Quicklyreadthe
marketsmessage
k
SafetyFirstTrading
Earlyreversals
www.candlecharts.com 3
Reading the Markets Message Quickly and Accurately
Looksgood
Bear Sterns
collapse
Looksgood?
Looksgood?
Reading the Psychology of the market
Thinkthe$hadtroubleinthisarea?
Bearshadows,eveningstar,bearish
engulfingpatterns,shootingstar..
Negative Selection
Good buy?
Whatisoneofthebestwaystomakemoney?
Those poor traders

who got fooled into
buying here.
10
Owning the Knowledge
Let see what the

candles tell us about
supply/demand
When prices get down
near $62.00-61.50?
Owning the Knowledge
Buying at hammer near $62.00

Target near $63.70 (resistance)
Getintoanew
trendbeforeother
trend before other
tradersseeit
13
Bear Stearns
Collapse
14
Combinations of bullish and bearish

candle lines indicate the direction of the
market and investors psychological
conflicts at important turning points.
15
Itiseasytoseewhois Howaboutnowwiththese
incontrolhere spinningtops?
16
Candles reveal
twice the
information as
a bar chart
17
Candles help us read the markets message
Whatdotheseriesofbullishshadowstell
usaboutsupply/demandnear63.50?
Isitanysurprisewhathappenedafew
weekslateratthatlevel?
Quickly see The Mode of the Market
What candles do and dont do
Whathappen
eachtimethis
getsnear$43?
Candles or
anytechnical
systemcant
forecast
surprises
Founder and President: Candlecharts.com 1

21
INTRODUCING STEVE NISONS 360 CANDLE ANALYSIS
New Strictcriteria
ofacandlesignal
New Nison
Insights New Candlesas
support/resistance
New Pattern New Price

inFXand confirmationofa
nonFX candlesignal
New Momentum New Detailedpsychology

tradingwithcandles behindeachsignal
WWW.CANDLECHARTS.COM 22
BASICCRITERIA
Open and close the same (or within a few cents or
pips)
Market trending up or down
Also called a cross
Doji in a rally called Northern doji
Doji in a decline called Southern doji
A time to wait without a position in the market
PATTERNPSYCHOLOGY
For a sustainable rally, market has to be pushed
up - a doji shows the bullish momentum has now
been curbed. The bulls now become concerned with
this lack of sustained strength.
Markets can sink of their own weight (i.e. dont need
sellers to pull markets lower- lack of buyers will do
that) a doji hints buyers are now starting to absorb
supply.
The market is at a delicate turning period and could
go either way.
123
If early in uptrends/downtrends, or middle of a box range,

doji is not important
Doji and Prior Move
Is the market
overextended
at these doji?
This doji is showing a

shift in psychology since it Is this doji telling us there is something
comes during a rally different about the market?
Doji in a Box Range
If early in uptrends/downtrends, or middle of a box

range doji not important
Spinning tops and doji could be just a pause to a
continuing trend
29
The pause that refreshes?

continuing trend
Doji generally work better at calling tops than
bottoms.

continuing trend
Doji generally work better at calling tops than
bottoms.
Analyze shadows. Interpretation will differ on the type
of upper and lower shadows
shadows.
Center Doji = Equal length shadows

Most classic doji where bulls and bears are in balance
Upper Shadow Doji:

Unsustainable buying strength
Lower Shadow Doji:

Some buying strength left in the market
Source: Kabushiki Keisen no Mikata Tsukaikata

Toshika No Tame No Senryakuzu- Kichitaro
Kisamori
Confirmation is important since market at tipping point.
Depending on the type of

movement on the next day, one can
get completely different readings
readings
Confirmation
TwoKindsofConfirmation
East+West
PriceConfirmation
34
East + West Confirmation
Whereacandle
signalconfirmsa
g
Westerntechnical
signal
35
Price Confirmation
Usingamoveaftertheinitialcandlesignaltovalidatesignal
Canbeaclose(oropen)above(forbull
candlesignal)orbelow(forbearcandle
signal)thecloseofcandlesignal.
LessimportanttohaveEast/West
confirmation
Lessimportantformomentumtrades
Themoreidealthecandlepattern,the
lessimportantthecandleconfirmation
36
37
Candles and Price Confirmation
Plusofpriceconfirmation:
Improveoddsofhammerworking,
But
Price Confirmation Cautions
Considerbuy/sellstoplimits
Rememberrisk/reward!
Dependsonyourtradingstyle
Higherprobabilityatcostof
profitpotential
40
Price confirmation cautions

Considerbuy/sellstoplimits
Rememberrisk/reward!
Dependsonyourtradingstyle
Higherprobabilityatcostof
profitpotential
Confirmed
Hammer
Which of
these two
scenarios is
more
important
to have
bearish
price
confirmation
of the doji?
Note: this will not

happen in FX
Doji and Price Confirmation
New high
close and bull confirmed
shadow. Bear
confirmation thus
more important
Because a doji or
a spinning top in FX will
be near the prior session
close, you may want to
wait for bear confirmation
Forex doji and Price Confirmation
confirmed
Whywouldyounotbetoo
nervousonthisdoji?
www.candlecharts.com 44A
Doji but also a new high close

3
2 confirmed
1
Whataboutthisdoji?
Which of
these two
scenarios is
more
important
to have
bearish
price
confirmation
of the doji?
Doji and Shadows
Equal shadows
B ll shadow
Bull h d
Criteria: Use the highest

high of those two sessions
(top of upper shadow) as
resistance
Implication: Close over that
area: market is refreshed.
That is when we consider
the bull momentum trade
Doji and Momentum
Doji as resistance
Doji and momentum trading
Market refreshed
Doji and momentum trading
Dojiconfirming
resistance
Reviewofcandlebenefits
Whatcandlesdontdo
Ad an ed doji ta ti s and on epts
Advanceddojitacticsandconcepts
Priceconfirmation
53
Founder and President: Candlecharts.com 54
Long Lower (Bullish) Shadows
Although this market is

descending, the long
lower shadows offsets
some of the negative
outlook
55
MoreBullish LessBullish/Bear
1 2 3 4 5 6 7 8 9 10
VeryStrongSessions StrongSessions NeutralSessions BearishSessions
1 2 3 4 5 6 7 8 9 10
# Name Characteristics Nison Notes
Tall white double crew

1 No shadows
cut
1 2 3 4 5 6 7 8 9 10
Lower shadow shows

Tall white closing crew
2 Small lower shadow market can break
cut
under opening price
1 2 3 4 5 6 7 8 9 10
Shadow 2x or more real body. Can have

3 Power line (hammer)
very small upper shadow.
1 2 3 4 5 6 7 8 9 10
Upper shadow shows

Upper shadow 25%
4 Tall White some rejection at
or less real body
higher prices
1 2 3 4 5 6 7 8 9 10
Small white with bull Lower shadow less than 2x real body. Can
5
shadow have very small upper shadow.
1 2 3 4 5 6 7 8 9 10

Maintains the
Medium upper shadow Same as line 4 but upper shadow 25% to Strength but showing
6
Tall white 100% real body increasing price
rejection
1 2 3 4 5 6 7 8 9 10
Long upper shadow tall Same as 4 but upper shadow more than Rare candle Gives
7
white 100% of real body slight fearful feeling
1 2 3 4 5 6 7 8 9 10
Can have upper and lower shadows less A drifting market

8 White spinning top
than 100% of real body
1 2 3 4 5 6 7 8 9 10
Small white with bear Upper shadow from 1 to less than 2x real
9
shadow body. Can have small lower shadow.
1 2 3 4 5 6 7 8 9 10
Upper shadow at least

10 Shooting star 2x real body. Can have small lower
shadow.
More Bearish Less Bearish/Bullish

1 2 3 4 5 6 7
9 10
8
VeryWeakSessions WeakSessions NeutralSessions BullishSessions

2 3 4 6 7
1
5 9
10
8
Long black double crew

1 No shadows
cut
1 2 3 4 5 6 7
9
10
8
Upper shadow shows

Long black closing crew
2 Small Upper shadow market can break
cut
under opening price

1 2 3 4 5 6 7
9
10
8
Shadow 2x or more real body. Can have

3 Shooting Star
very small lower shadow.
1 2 3 4 5 6 7
9
10
8
Lower shadow shows

4 Long black Lower shadow 25% or less real body
demand at lower prices
1 2 3 4 5 6 7
9
10
8
Small black with bear Upper shadow less than 2x real body. Can
5
shadow have very small lower shadow.
1 2 3 4 5 6 7
9
10
8
Showing increasing
Medium lower shadow Same as line 4 but lower shadow 25% to
6 demand and price
long black 100% real body
rejection at lower levels
1 2 3 4 5 6 7
9
10
8
Rare candle Gives

Long lower shadow Same as 4 but lower shadow more than
7 slight fearful feeling to
black 100% of real body
bears
1 2 3 4 5 6 7
9
10
8
Can have upper and lower shadows less A drifting market

8 Black spinning top
than 100% of real body

1 2 3 4 5
9
10
8
Small black with bull Lower shadow from 1 to less than 2x real
9
shadow body. Can have small upper shadow.
1 2 3 4 5 6 7
9
10
8
Lower shadow at least 2x real body. Can

10 Hammer
have small upper shadow.
Reviewedimportanceofrealbodies
andshadows
Whiterealbody/shadowprogressionfrom
White real body/shadow progression from
moretolessbullish
Blackrealbody/shadowprogressionfrom
moretolessbearish
80
Candlesticks
Re-Ignited!
Ad
Advanced d
Single Candle Lines:
One sided shadow
candles

BASICCRITERIA
Market in a downtrend
Real Body White or Black
Small real body at, or near, top of range.
Lower shadow at least 2x height real body
A chance to buy at the bottom
STRICTCRITERIA
White real body
No upper shadow
PATTERNPSYCHOLOGY
After this last burst of selling, new buying
SUPPORT/MOMENTUMTRADING
SUPPORT/MOMENTUMTRADING has started. This rejection of lower prices is
indicating a change in balance between bulls
Low of hammer as support
and bears. The net result: lessening of
Consider shorting under low of bears confidence of sustainability of lower
pattern. price levels (and a reason for bulls to start
getting more optimistic).
White real body hammer is called a

Power Candle
Can have small upper shadow (around
10% of lower shadow)
The more oversold and the longer the
shadow, the higher degree of
confidence
Often a retest of lower shadow
Bullish counterpart of Shooting Star
(not a Hanging Man).
A hammer with a open/high/close at
high is a Dragonfly doji
As a single candle line it is same in FX
as other markets
Acandlesticklineorpattern
requirestwocriteria:
Theshapeofthelineorpattern
Theprecedingtrend
84
Hammer and trend
Notahammer
Powerline
Hammer your way to profits
Dragonflydoji
Retest of hammers shadow
Hammer As Support
Will
often
retest
lower
shadow
Hammer as Support
Marketwilloften
retesthammers
lowershadow
Same Signal- But look at the Difference in Trading

Tactics
Toknowwhere
you
youstandisas
stand is as
importantas
candlepattern
recognition.
Hammer Stops/Momentum
Exit (or short)
Hammers and Stops/Momentum
Hammernearsupport
Protectivestopor
momentumtrade
BASICCRITERIA
Market in a uptrend
Small real body at, or near, top of range.
Must come at new high for move or
significant rally
Lower shadow at least 2x height real body
S
Suggests
t a peak
k iin th
the market
k t
PATTERNPSYCHOLOGY
Although it may seem that the market
SUPPORT/MOMENTUMTRADING still has rising power left, it has shown
Not used as resistance that once the market has fallen, it has
Momentum: Trend is still up with become very fragile.
this signal
Same as the hammer except, market in

an uptrend
Can have small upper shadow (around
Must have bear confirmation with a
lower close, or for those more
aggressive, a lower opening
This is not the bearish counterpart of
Hammer. The Shooting Star is the
bearish counterpart.
Because of the bullish shadow, do not
place much emphasis on this signal.
Importance of Price confirmation
2 3 Pain!
5
1 4
BASICCRITERIA
Market in an uptrend
Black or White real Body
Small real body at, or near, bottom of range.
Upper shadow at least 2x height real body
A crack has entered the market
STRICT CRITERIA
STRICTCRITERIA
Black real body
No lower shadow
PATTERNPSYCHOLOGY
High of shooting star as resistance The strong retreat from higher prices shows either
or/and:
Consider buying above high of 1) bulls stepping back at higher levels
pattern
2) bears getting more aggressive
The result is that the bulls have second thoughts of
their power and bears now have encouragement. 96
Black real body most important.

Can have small lower shadow (around 10%
of upper shadow).
The more overextended the rally and the
longer the shadow, the higher degree of
confidence.
Unlike a hammer, market doesnt often
retest upper shadow.
Bearish counterpart of Hammer (not
Inverted Hammer.)
A Shooting Star with a open/high/close at
low is a Gravestone doji.
As a single candle line this is the same in
FX
97
Shooting Star with Price Confirmation
confirmed
Shooting star but no price confirmation
Price Confirmation
Ifacandlesignalconfirmsawesternsignal,thereis
lessneedforpriceconfirmation
Stops and Momentum Trading

Closeoverhere
wouldbeaplus
forthebulls
Gravestone Doji
Gravestone Doji
Gravestone doji
Closeunder
m.a.support
25day
moving
average
103
BASICCRITERIA
Market in downtrend
Small real body at, or near, bottom of range.
Must come at new low for move or significant
decline
Upper shadow at least 2x height real body
PATTERNPSYCHOLOGY
While the market closes at, or near its
SUPPORT/MOMENTUMTRADING low, it has shown an ability to rise. This
Not used as support may get the bears slightly nervous.
Momentum: Trend is still down with
this signal
Same as the shooting star, except

market in a downtrend
Can have small lower shadow (around
Must have bull confirmation with a
higher
g close,, or for those more
aggressive, a higher opening
This is not the bullish counterpart of
Shooting Star. The Hammer is the
bullish counterpart.
Because of the bearish shadow, do not
place much emphasis on this signal.
Importance of Price Confirmation
Alwaysneedscandle
confirmationwiththissignaland
hangingmancandle.
OnesidedcandleswithNison360 Candle
Analysis:
Reviewofbasiccriteria
StrictCriteria
Usingassupportorresistance
Detailedpsychologybehindeachpattern
Momentumtrading
Nisoninsights
Whyhangingmanandinvertedhammer
lineslessimportant
SinglecandlelinesthesameinFX
Importanceoftrend
Cantbuy/selloneverycandlesignal
107
Candlesticks
Re-Ignited!
Advanced
Candles:
The Blended
Candle Line

Japanese charts have meaning in a

single candle, and when two candles
are combined, the meaning becomes
more significant.
109
A blended candle is a way of compressing combinations

of candle lines into as if they made one candle
Source: KABUSHIKISOUBA NO
TECHNICAL BUNSEKI G.Ikutaro
110
How do we make a Blended Candle?
close 2 =
open 1
1) Use open of the first session for open of blended candle

2) Use close of the last session of pattern for close of
blended candle.
3) Use highest high and lowest close of all sessions for
upper and lower shadows of blended candle.
111
think of Blended candle as a Summary candle of the

pattern analyzed. How does this help?
2 Tocomparevariationsofcandle
1 Todetermineifapattern
patternstodeterminethestrengthof
isnetbullishorbearish
thesignal
Howisthisnonclassicdark
Classicdarkcloud cloudcoverdifferent?What
cover doesitmeantotheoutlook?112
Candlesticks
Re-Ignited!
Advanced
Double Candle
Lines:
Tweezers

CRITERIA
Twocandleswithmatchinghighs(tweezers
top)orlows(tweezersbottom)
Uptrendfortweezerstopanddowntrend
fortweezersbottom.Buttrendnotcritical.
Thefirstcandlemustbealongwhite
(tweezers top) or long black (tweezers
(tweezerstop)orlongblack(tweezers
bottom)
2nd candlemustreflectdiminishingofprior
force
Source: HAJIMETE KABUKA CHATO WO YOMU HITO NO

PATTERNPSYCHOLOGY
HON by K. Hoshi
Thefirstcandleshowsbulls(tweezerstop)
orbears(tweezersbottom)aredominating.
Withthesecondcandleshowinganinability
tocontinuethemoveimpliedbythefirst
candle,wearestartingtoseethepowerof
thepriortrenddissipating. 114
The more the 2nd candle closes into the

first candle, the better the signal.
This is a minor pattern unless there is
a candle reversal signal that also
emerges at the 2nd candle (i.e. piercing
pattern, shooting star).
Not used as support or resistance or
momentum trading unless 2nd candle is
a reversal candle.
If both candles for tweezers top close
at, or near the highs, or tweezers
bottom close at or near the lows, this
Source: HAJIMETE KABUKA CHATO WO YOMU HITO NO
HON by K. Hoshi pattern would have less significance.
Tweezers top
Thinkthismarkethadtroublesnear$8.20?
Tweezerstop
Whyisthisnot
aTweezers
bottom?
Tweezers Bottom
UsingtheBlendedCandletoincreasecandle
insights:
Iscombinationofcandlelinesbullishorbearish?
Isthecandlepatternmore
Is the candle pattern more orless
or less strict?
Tweezerstopsandbottoms correct
interpretation
118
Candlesticks
Re-Ignited!
Advanced
Double Candle
Lines:
The Bull Signals

Bullish Piercing Bullish Bull Bull

Counter Pattern Engulfing Sash Separating
Attack Pattern Pattern Line
Pattern
BASICCRITERIA
Two session pattern
Downtrend but even with no apparent trend,
would be a positive signal
Black real body followed by a long white
real body that gaps lower on the open and
then closes at or near black candle close.
2nd candle tall white
STRICTCRITERIA
Both candles are large (very rare)
PATTERNPSYCHOLOGY
With the gap down, bears are relieved. The
SUPPORT/MOMENTUMTRADING bulls are backed into a corner and came
Not used as support or resistance. out fighting in a heroic fight. Kamikaze
Consider selling on move under low fights are always frightening, so the bears
of pattern. seeing this take to the sidelines and the
bulls may get reinforcements.
No pattern like this for FX since

the market gaps lower.
While the ideal pattern is both large
real bodies, we would still view this
as important even if only the white
candle
dl was large
l
Closes do not have to be exactly
the same
Opposite of bearish counter attack
Bull Counter Attack
Whatdoyouthink
thebearsarethinking
afterthissession?
PS watchyour
language!
Bull
Counter
Attack
BASICCRITERIA
Two session pattern
Market in downtrend
Open of white candle under prior close
White candle closes more than way into
black real body.
STRICTCRITERIA
White candle opens under prior low
Long black and tall white candle
PATTERNPSYCHOLOGY
Bears in control is echoed by long dark
candle. Sharp gap lower means bears have a
strong foothold. But, with sharp bounce back
Lowest low of both candles as by end of the session, the market has
support displayed uneasiness at a low price. The
Consider selling on move under bears now sense danger.
support level 125
For FX, intraday and indexes can have the

same (or within 2 pips for FX) open as prior
close
Long black and then long white shows
extreme shift in psychology
The more the white candle opens under
prior low /close, the better the signal (for
non FX).
Opposite of dark cloud cover
Related patterns which need not be
remembered are on-neck (atekubi), in-
FXPattern neck(irikubi) and thrusting (sashikomi).
Piercing pattern as support
Piercing Pattern
Andthis?
NotPiercingPatterns
Althoughfirstcandlewasnt
longblack,whatpatternisthis?
Piercing Pattern
Notapiercingpattern
Forintradayokayto
haveopenat orvery
close topriorclose
Early clues of shifting supply/demand
BASICCRITERIA
Two session pattern
Market in a downtrend
White real body wraps around dark real
body
STRICTCRITERIA
Small first candle small dark candle or doji
Second candle is tall white that wraps
around high-low range of first candle.
PATTERNPSYCHOLOGY
Small first candle reflects deterioration of
Lowest low of either candle as
bear trend.
support
Tall white candle leaves no doubt the bulls
Consider shorting under low of
now in drivers seat.
pattern.

same open (or within 2 pips for FX) of prior
close
The pattern has less significance if the real
bodies are about the same size.
First candle can be doji
Candles in Engulfing Pattern (large wraps
around small candle) are opposite those in
Harami Pattern (small candle in a large
candle)
If Bullish Engulfing pattern appears during
rally, Japanese call it a last engulfing
pattern, and may be buying climax.
FXPattern Confirmation close under close of white
candle. This is not an important pattern, just
think about not buying.
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 remember right a bullish
engulfing pattern doesnt count during an
uptrend. If I hadnt bought and studied
your package, I never would have known
that and would have assumed that he
was right.
Thanks again for your great work!

Carl
Bullish Engulfing Patterns
Price confirmation
Nopriceconfirmation Whydidnt
afterthisbullish Ihavethis Priceconfirmation
engulfingpattern windowas afterthisbullish
resistance? engulfingpattern,
butriskisstillto
low of pattern
lowofpattern
Price confirmation
Ifyouwaitedfortheclose
ofsessionofthebullengulf
lookatwhatpriceyou
wouldbebuying.
Momentum trade
Whywouldyounot
buyonthispattern? Bearmomentumtrade
BASICCRITERIA
Two session pattern
Market in downtrend, but trend not critical
First candle unusually long dark candle
Second candle is much smaller than 1st candle
(about 25% or less).
2nd candle can be the same- or opposite color-
of first candle
2nd real body is within 1st candles real body
PATTERNPSYCHOLOGY
The long black candle echoes the heaviness of
SUPPORT/MOMENTUMTRADING supply. But, the next sessions gap up, and
Not used as support (unless 2nd lack of downside, follow through results in the
candle is reversal signal (i.e. bears seeing that their drive is becoming
hammer) impeded.
Not used for momentum trading

For FX, intraday and indexes can have

the same (or within 2 pips for FX) open
as prior close
If the 2nd candle is a doji, the pattern is
called a harami cross
The more the 2nd candle gets deeply
into the black candle, the better the
signal.
Because FX, etc, white candle cant get
deeply into black real body, it is best to
wait for bull confirmation by a higher
open or close than the white real body.
FXPattern
In general, the less the 2nd candle gets
into the black candle, the more
confirmation is needed.
Opposite of bearish harami
Bull harami
Thinkthemarketis
differentonthis
session
comparedtoprior
session?
Bull Harami
Potential
Selling
climax
Bull Harami and momentum trading
Momentum
Trade
BASICCRITERIA
Trend not important
Black candle followed by white candle that
opens within black real body and closes over
prior open.
STRICTCRITERIA
Both long real bodies
2nd candle closes over prior high
White real body closes at, or near, its highs
PATTERNPSYCHOLOGY
The surprise gap, higher opening on the
SUPPORT/MOMENTUMTRADING second day after a strong selling session,
may initially be of minor concern. But, with
Lowest low of both candles as
the white candles strong close, the bears
support
sense danger and also gives the bulls cause
Consider selling on move under low for optimism.
of pattern 143
Since the market has to gap higher,

this pattern not applicable to FX.
The higher the market gaps on the
open, and the higher the close on the
white candle, the more meaningful the
pattern
Remember risk/reward since this
pattern is completed after substantial
move has already occurred.
Opposite of Bear Sash pattern
If open of white candle is same (or
higher) as prior open, it is a Bull
Separating Line.
Bull Sash Pattern
BullSash
Risk/Reward
BullSash
BullSash
Bothofthesearepoortradecandidates
BASICCRITERIA
Trend not important
Black candle followed by white candle that opens at
(or above) prior open. Then closes over black candle
open.
STRICTCRITERIA
Both long
g real bodies (rare)
( )
White real body closes at, or near, its highs
PATTERNPSYCHOLOGY
While the bears may be surprised to see the market
gapping sharply higher from a prior weak session,
imagine their fear (and the bulls happiness) as the
SUPPORT/MOMENTUMTRADING market continues its advance without hesitation the
Lowest low of both candles as next session. The tide of the market has changed
support from one to which the bears were in control to one
where the bulls are now calling the shots.
Consider selling on move under low
of pattern 147
Easy way to remember this pattern is

the opens are the about the same (or
the 2nd candle open gaps away from 1st
candles open.)
Since the market has to gap higher,
this pattern not applicable to FX.
FX
Major challenge with this pattern is
since it is completed after substantial
move, it usually means poor
risk/reward.
Opposite of Bear Separating Pattern
If open of white candle is within prior
black real body, it is a Bull Sash
Pattern.
Bull Separating line
Looks good on the outside!
Thisisapoortradecandidate why?
Bullseparatingbutlook
whereitis!
Advanceddoublecandlebullsignalsusingcandle
progressionusingindepthcandleanalysisfor:
Bullcounter attack
PiercingPattern
B ll
Bullsash
h
BullishEngulfingPattern
BullSeparatinglines
BullHaramiandconfirmation
Howsomepatternshavepoorrisk/rewardand
otherNisoninsights
153
Candlesticks
Re-Ignited!
Advanced
Double Candle
Lines:
The Bear Signals

CANDLE PROGRESSION
DESCENDING BLACK REAL BODY
Bearish Dark Bearish Bear Bear

Counter Cloud Engulfing Sash Separating
Attack Cover Pattern Pattern Line
Pattern
155
BASICCRITERIA
Two session pattern
Uptrend but, even with no apparent trend
would be a cautionary signal
White real body followed by a black real
body that gaps up on the open and then
closes at or near white candles' close
STRICTCRITERIA
Both candles are large (very rare)
Large black real body
PATTERNPSYCHOLOGY
SUPPORT/MOMENTUMTRADING With the tall white, and especially with the
Not used as support or resistance. gap higher next session, the bulls are
happy. But then a strong bear counter force
Consider buying on breakout over comes in to drag the market back to the
high of pattern. prior close. The tone of the market now
shifts from bullish optimism to uncertainty. 156
No pattern like this for FX since

the market gaps higher
While the ideal pattern is both large
real bodies, we would still view this
p
as important y the black
even if only
candle was large
Closes do not have to be exactly
the same
Opposite of bullish counter attack
Bear Counter Attack
Bear Counter- Attack
Whilethisisnotabear
counterattacksincethe
closesarenotthesame do
youthinkthereisachangein
psychologyafterthissession?
BullCounterAttack?
BASICCRITERIA
Two session pattern
Market in uptrend
Open of black candle higher than prior close
Black candle closes into white candle
STRICTCRITERIA
Bl
Blackk candle
dl closes
l more than
th 50% iinto
t white
hit
real body
Black candle opens above prior high
Tall white and black candles
PATTERNPSYCHOLOGY
SUPPORT/MOMENTUMTRADING White candle and then gap higher keeps bulls
happy. But, with black candle finishing well
Highest high of both candles as
below white candles close, the upward
resistance
energy has cooled to the extreme causing
Consider buying on breakout over the bulls to become concerned and bears
high of pattern bolder. 160

as prior close
If the black candle doesnt get more
than way into white, it is called an
incomplete
p dark cloud cover and it is
best to wait for bear confirmation.
The more the open on black candle
gaps away from the prior high/close,
the better the pattern (for non FX).
Opposite of piercing pattern
FXPattern
Dark Cloud Cover defines Resistance
Dark Cloud Cover at resistance
Whyisthis
notabullish
t b lli h
engulfing
pattern?
Dark Cloud Cover
164
Dark Cloud Cover and momentum
Dark Cloud Cover
Isthistelling
youthatthere
isashiftin
psychology?
Not dark cloud cover
Chart courtesy of Genesis FT
Dark cloud rains pain for the bulls
Ohcrap!
Thinkthere
istrouble
near$410?
near $410?
Happytimefor
thebulls new
highclose!
BASICCRITERIA
Two session pattern
Market in an uptrend
Black real body wraps around light real
body
STRICTCRITERIA
Small first candle small white or doji
Second candle is long dark that wraps
around high-low range of first candle.
PATTERNPSYCHOLOGY
Small first candle reflects rallying could be
Highest high of either candle as
running out of steam
resistance.
Long black candle visually shows the bears
Consider buying on breakout over
are now the controlling force.
high of pattern.

same (or within 2 pips for FX) open as prior
close
The pattern has less significance if the real
bodies are about the same size.
First candle can be doji
Candles in Engulfing Pattern (large wraps
around small candle)) are opposite
pp those in
Harami Pattern (small candle in a large
candle)
If Bearish Engulfing pattern appears during
selloff, Japanese call it a last engulfing
pattern and may be selling climax.
Confirmation is a close above black candle
FXPattern close. This is not an important pattern- just
think about not selling.
Misinformation can cost you Big $$$
Candles as Support
S1
Momentum Trading
Candles and Momentum trading the breakouts
Price confirmation
Thelessidealthepatternthe
morecandleconfirmation
isneeded.
Whyisthisbearishengulfing
patternlessthanideal?
Confirmation
withlowerclose
butrisk
stilltohighof
pattern
Price confirmation
Sincepatternconfirmedresistancelessreasonforprice
confirmation butitdependsonyoutradingstyle.
BASICCRITERIA
Two session pattern
Market in uptrend, but trend not critical
First candle unusually long white candle
Second candle is much smaller than 1st
candle (about 25% or less).
2nd candle can be the same- or opposite
color- of first candle
2nd real body is within 1st candles real body
PATTERNPSYCHOLOGY
The indications based on the tall white
SUPPORT/MOMENTUMTRADING candles vitality is for the rally to continue.
But, next sessions gap down and then failure
Not used as resistance (unless 2nd to resume the advance to beyond the prior
candle is reversal signal (i.e. session, shows those who had forecast
shooting star) strength are wrong! The rally could now be
Not used for momentum trading running out of fuel.

as prior close
If the 2nd candle is a doji, the pattern is
called a harami cross
The more the 2nd candle gets deeply
into the white candle, the better the
signal.
Because FX, etc, black cant get deeply
into white candle, it is best to wait for
bear confirmation by a lower open or
close than black candles real body.
FXPattern
In general, the less the 2nd candle gets
more into the white candle, the more
confirmation is needed.
Opposite of bullish harami
Bear Harami
Becausethese
arenearthe
highsofthe
NotBear priorcandle
wouldwant
Harami
bearcandle
confirmation
Confirmation important in FX
BASICCRITERIA
Trend not important
White candle followed by black candle that
opens within white real body and closes
under prior open.
STRICTCRITERIA
Both long real bodies
2nd candle closes under prior low
Black real body closes at, or near, its lows
PATTERNPSYCHOLOGY
The white candle means the bulls are running
SUPPORT/MOMENTUMTRADING the show. The next session, the market gaps
lower and is not only unable to make up this
lost ground, but closes under the white
resistance
candle. This shows the bullish energy has
Consider buying on breakout over been sapped out of the market resulting in
high of pattern very scared bulls. 180
Since the market has to gap lower this

pattern not applicable to FX.
The more the market gaps down on the
open, and the lower the close on the
black candle, the more meaningful the
pattern
Keep in mind risk/reward since this
pattern is completed after substantial
move has already occurred.
Opposite of Bull Sash pattern
If open of black candle is same (or
lower) as prior open, it is a Bearish
Separating Line.
Bear Sash
BearSash
Bear Sash
BearSash
Being a Market Chameleon
BearSash
BullSash
BASICCRITERIA
Trend not important
White candle followed by black candle that opens at
(or below) prior open. Then closes under white
candles open.
STRICTCRITERIA
B th long
Both l reall bodies
b di (rare)
( )
Black real body closes at, or near, its lows
PATTERNPSYCHOLOGY
With the gap down on 2nd day, the bulls sense
danger. To make matters worse for them, the
market cant even make up for the ground lost on
SUPPORT/MOMENTUMTRADING the opening. The tide of the market momentum has
now turned down.
resistance
Consider buying on move above
high of pattern 185
Easy way to remember this pattern is

the opens are the about the same (or
the 2nd candle open gaps away from 1st
candles open.)
Since the market has to gap lower this
pattern not applicable to FX.
Major challenge with this pattern is
since it is completed after substantial
move, could mean poor risk/reward.
Opposite of Bull Separating Pattern
If open of black candle is within prior
white real body, it is a Bear Sash
Pattern.
Bear Separating line
Bear Separating Line
Bear Separating line
Advanceddoublecandlebearsignalsusingcandle
progressionusingindepthcandleanalysisfor:
Bearcounter attack
Darkcloudcover
Bearsash
BearishEngulfingPattern
BearSeparatinglines
Howsomepatternspoortradecandidates
BearHaramiandconfirmation
190

Steves
Favorite
Candle pattern
192
A rising window is support
Support
Zone
Mostimportant
supportlevel
A falling window is resistance
Mostimportant
resistancelevel
Resistance
Zone
Small vs. Large windows
Large
Large
window
Small
window
Importance of Windows
ShootingStar
Importance of Windows
Large and Small Windows
S1
S2
Large and Small Windows
R2
R1
200
Change of Polarity
Resistance
Resistance
Support Support
201
202
Windows and Change of Polarity
Themostimportant
aspectisthemany
timesthisresistance
wastested (which
mayhavetodowith
thewindow)
Island Tops and Bottoms and Candles
Island Top
Island Bottom 204
How Windows Give you a Jump on the Competition
Formedan
islandbottomat
thissession
S1?
How Windows Give you a Jump on the Competition
R1?
Formedan
islandtopatthis
session
Windows and Confirmation
Closedunderwindowby2and9
centsandnextdayopenedand
closedoverwindowagain
Three windows-note of caution
Secrets of Using Intraday Candle

Charts to Refine Entries with Windows
Forsmallwindows or
whennearthebottomof
h th b tt f
largerwindows lookfor
intradaycandlereversals
209
Using intraday candles to

confirm a Daily window
Turnsignalat
$31.15onthis30
minutechart
comparedto
$31.60ondaily
chart.
Bottomof
Whilethebottomofthiswindow
rising
(reddashedline)didholdas windowon
support: dailychart
1)Basedonblackcandle,itlooked
dangeroustobuy.
2)Bytheendofthebullengulf
day,itwouldhavebeenapoor
trade why? www.candlecharts.com 210
Advancedwindowtactics:
Reviewofwindowbasics
Largecomparedtosmallwindows
ChangeofPolarityandwindows
h f l i d i d
Islandtops/bottomsandwindows
Confirmationwithintradaycandles
211

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SteveNisonsCandlesticksReIgnited:

Founder and President: Candlecharts.com

If you want to see farther,

Reading the Markets Message Quickly and Accurately

Reading the Markets Message Quickly and Accurately

Reading the Markets Message Quickly and Accurately

Reading the Psychology of the market

Those poor traders

Owning the Knowledge

Let see what the

Owning the Knowledge

Buying at hammer near $62.00

Reading the Markets Message Quickly and Accurately

Combinations of bullish and bearish

Candles help us read the markets message

Quickly see The Mode of the Market

What candles do and dont do

Founder and President: Candlecharts.com 1

INTRODUCING STEVE NISONS 360 CANDLE ANALYSIS

New Pattern New Price

New Momentum New Detailedpsychology

If early in uptrends/downtrends, or middle of a box range,

Doji and Prior Move

This doji is showing a

Doji in a Box Range

If early in uptrends/downtrends, or middle of a box

The pause that refreshes?

If early in uptrends/downtrends, or middle of a box

If early in uptrends/downtrends, or middle of a box

Center Doji = Equal length shadows

Upper Shadow Doji:

Lower Shadow Doji:

Source: Kabushiki Keisen no Mikata Tsukaikata

Depending on the type of

East + West Confirmation

Candles and Price Confirmation

Price Confirmation Cautions

Price confirmation cautions

Note: this will not

Doji and Price Confirmation

Forex doji and Price Confirmation

Doji but also a new high close

Doji and Shadows

Criteria: Use the highest

Doji and Momentum

Doji and momentum trading

Doji and momentum trading

Founder and President: Candlecharts.com 54

Long Lower (Bullish) Shadows

Although this market is

VeryStrongSessions StrongSessions NeutralSessions BearishSessions

VeryStrongSessions StrongSessions NeutralSessions BearishSessions

# Name Characteristics Nison Notes

Tall white double crew

VeryStrongSessions StrongSessions NeutralSessions BearishSessions

# Name Characteristics Nison Notes

Lower shadow shows

VeryStrongSessions StrongSessions NeutralSessions BearishSessions

# Name Characteristics Nison Notes

Shadow 2x or more real body. Can have

VeryStrongSessions StrongSessions NeutralSessions BearishSessions

# Name Characteristics Nison Notes

Upper shadow shows