Candles Flashcards
1
Q
A
Stick Sandwich
- A bullish reversal pattern with two black bodies surrounding a white body.
- The closing prices of the two black bodies must be equal. A support price is apparent and the opportunity for prices to reverse is quite good.
Note: Acts as a bearish continuation 62% of the time.
2
Q
A
Three Black Crows
- A bearish reversal pattern consisting of three or more consecutive long black bodies where each day opens within the body of the previous day and closes at or near its low or lower.
- Leads to a reversal 78 % of the time.
3
Q
A
Bearish Engulfing
- In an up swing occurs when a large black candle “engulfs” the former day’s white candle
- The entire former day’s candle must be engulfed for the pattern to be true
- This is a very strong reversal signal, particularly when occurring at a support or resistance
3
Q
A
Bearish Harami
- This pattern is the reverse image of an engulfing pattern
- In an up swing a good sized white candle, followed by a black spinning top totally within the previous day
- This pattern is technically a reversal pattern, though it is a weaker pattern
- Very often the trend changes to a sideways move rather than a reversal with this pattern
- It is a good signal that the preceding move has stalled, and may signal a reversal
- The “inside” candle reveals a loss of momentum from the preceding
3
Q
A
Bearish Counter Attack
- In an up swing, this occurs when a black candle comes against a long day bullish candle, but fails to push into the former day’s price range
This is a strong reversal signal, particularly when occurring at a support or resistance
3
Q
A
Abandoned Baby
- A rare reversal pattern characterized by a gapfollowed by a Doji, which is then followed byanother gap in the opposite direction.
The shadows on the Doji must completely gap below or above the shadows of the first and third day.
3
Q
A
Bearish Harami
- In an upswing a good sized white candle is followed by a black spinning top totally within the previous day
- Harami indicate the trend has lost steam (verify with other indicators.) Very often the trend changes to a sideways move rather than a reversal with this pattern. The “inside” candle reveals a loss of momentum from the preceding swing.
4
Q
A
Bearish Harami Cross
- This pattern is the reverse image of an engulfing pattern
- In an up swing a good sized white candle, followed by a black spinning top totally within the previous day
- This pattern is technically a reversal pattern, though it is a weaker pattern
- Very often the trend changes to a sideways move rather than a reversal with this pattern
- It is a good signal that the preceding move has stalled, and may signal a reversal
- The “inside” candle reveals a loss of momentum from the preceding swingIf the second candle is a
- Doji the Harami becomes a Harami Cross - it is a bit stronger
6
Q
A
Bullish Counter Attack
- In a down swing, this occurs when a white candle comes against a long day bearish candle but fails to push into the former day’s price range
- This is a strong reversal signal, particularly when occurring at a support or resistance*
7
Q
A
Bullish Engulfing
- In a down swing occurs when a large white candle “engulfs” the former day’s dark candle
- The entire former day’s candle must be engulfed for the pattern to be true
- This is a very strong reversal signal, particularly when occurring at a support or resistance
8
Q
A
Bullish Harami
- In an downswing a good sized black candle is followed by a white spinning top totally within the previous day
- Harami indicate the trend has lost steam (verify
- with other indicators.) Very often the trend changes to a sideways move rather than a reversal with this pattern. The “inside” candle reveals a loss of momentum from the preceding swing.
9
Q
A
Bullish Harami
- This pattern is the reverse image of an engulfing pattern
- In an down swing a good sized black candle, followed by a white spinning top totally within the previous day
- This pattern is technically a reversal pattern, though it is a weaker pattern
- Very often the trend changes to a sideways move rather than a reversal with this pattern
- It is a good signal that the preceding move has stalled, and may signal a reversal
- The “inside” candle reveals a loss of momentum from the preceding swing
- If the second candle is a Doji the Harami becomes a Harami Cross - it is a bit stronger
11
Q
A
Bullish Harami
- This pattern is the reverse image of an engulfing pattern
- In an down swing a good sized black candle, followed by a white spinning top totally within the previous day
- This pattern is technically a reversal pattern, though it is a weaker pattern
- Very often the trend changes to a sideways move rather than a reversal with this pattern
- It is a good signal that the preceding move has stalled, and may signal a reversal
- The “inside” candle reveals a loss of momentum from the preceding swing
- If the second candle is a Doji the Harami becomes a Harami Cross - it is a bit stronger
12
Q
A
Dark Cloud Cover
- A bearish reversal pattern that continues theuptrend with a long white body.The next day opens at a new high then closesbelow the midpoint of the body of the first day.
- The white candle should be better than averagesize.
13
Q
A
Doji
- Doji form when a security’s open and close are virtually equal. The length of the upper and lower shadows can vary, and the resulting candlestick looks like, either, a cross, inverted cross, or plus sign.
- Doji convey a sense of indecision or tug-of-war between buyers and sellers.
- All Doji candles are fairly strong as an early reversal signal.
- Normally appear at pivot points.
14
Q
A
Downside Tasuki Gap
- A continuation pattern with a long, blackbody followed by another black body that hasgapped below the first one.
- The third day is white and opens within thebody of the second day, then closes in the gapbetween the first two days, but does not closethe gap.
15
Q
A
Dragonfly Doji
- A Doji where the open and close price are at the high of the day.
- Like other Doji day this one normally appear at pivot points.
16
Q
A
Evening Doji Star
- A three day bearish reversal pattern similar to the Evening Star.
- The uptrend continues with a large white body.
- The next day opens higher, trades in a smallrange, then closes at its open (Doji).
- The next day closes below the midpoint of thebody of the first day.
16
Q
A
Evening Star
- A bearish reversal pattern that continues an uptrend with a long white body day followed by a gapped up small body day, then a down close with the close below the midpoint of the body of the first day.
- Small body candle can be bullish or bearish
- This is a very strong bearish reversal pattern.
17
Q
A
Bullish Harami
- This pattern is the reverse image of an engulfing pattern
- In an down swing a good sized black candle, followed by a white spinning top totally within the previous day
- This pattern is technically a reversal pattern, though it is a weaker pattern
- Very often the trend changes to a sideways move rather than a reversal with this pattern
- It is a good signal that the preceding move has stalled, and may signal a reversal
- The “inside” candle reveals a loss of momentum from the preceding swing
- If the second candle is a Doji the Harami becomes a Harami Cross - it is a bit stronger
18
Q
A
Evening Star Pattern
- Occurs in an up swing
- At or near a resistance level
➡ Above average white candle
➡ Small gap up on day 2, with a spinning top
➡ Day three is a good size black candle which moves at least half way in to the first day’s candle
- This is a very strong bearish reversal pattern
21
Q
A
Falling Three Methods
- A Continuation Pattern
- A long black body is followed by three small body days, each fully contained within the range of the high and low of the first day.
- The fifth day closes at a new low.
- If the candles have wicks you still want the 3 small bodies to be within the big candle bodies.
- First and last candle do not necessarily have to be even.
22
Q
A
Gravestone Doji
- A doji line that develops when the Doji is at, or very near, the low of the day
- Reversal Pattern
23
Q
A
Hammer
- Hammer candlesticks form when a security moves significantly lower after the open, but rallies to close well above the intraday low. Forms during a decline. Reveals a strong change in sentiment.
- Small body (spinning top), long lower shadow that is at least 2x the size of the body with little or no upper shadow.
- May be black or white
- Precedes a bullish reversal
- If you find a hammer that is bearish wait until the trend closes below the hammer tail before jumping in.
- A very strong bullish reversal signal. Reliability of the trend changing is
increased slightly when the wick of the candle is 3 times the size of the body.
24
Q
A
Hanging Man
- Hanging Man candlesticks form when a security moves significantly lower after the open, but rallies to close well above the intraday low. Hanging man occurs at the top of an upswing. Reveals a change in sentiment. Can precede a bearish reversal.
- Small body (spinning top), long lower shadow 2-3x the size of the body with little or no upper shadow
- May be black or white
- Wait for more confirmation before turning bearish with this signal
- The reliability of this signal is drastically improved when the price of the stock decreases the day after the hanging man.
- A fairly weak reversal signal. Reliability of the trend changing is increased
slightly when the wick of the candle is 3 times the size of the body.
25
Q
A
High Wave
- A spinning top with an extra long upper and lower shadow. Shows confusion in the market.
- Indicates extreme buying pressure mixed with extreme selling pressure.
- Generic spinning top or high wave top candles can occur in either up or down swings
- Mean the most during a trend, at a pivot point Mean very little during a market rest (such as a flag or pennant pattern)
- If seen at a pivot point, caution is needed as a reversal could be very close
26
Q
A
Inverted Hammer
- A one day bullish reversal pattern. In a downtrend, the open is lower, then it trades higher, but closes near its open, therefore looking like an inverted lollipop
27
Q
A
Long Day Candle
- Long days are abnormally long in reference to other candles in the CURRENT chart.
- A long day represents a large price move from open to close, where the length of the candle body is long.
- Long day white candles act as continuation 58% of the time.
- Long day black candles act as continuation 53% of the time.
- Long days are abnormally long in reference to other candles in the CURRENT chart.
28
Q
A
Long Legged Doji
This candlestick has long upper and lower shadows with the Doji in the middle of the day’s trading range, clearly reflecting the indecision of traders.
29
Q
A
Long Shadows
- Candlesticks with a long upper shadow and short lower shadow indicate that buyers dominated during the first part of the session, bidding prices higher.
- Candlesticks with long lower shadows and short upper shadows indicate that sellers dominated during the first part of the session, driving prices lower.
30
Q
A
Marubozu
- A candlestick with no shadow extending from the body at either the open, the close or at both.
- The name means close-cropped or close-cut in Japanese, though other interpretations refer to it as Bald or Shaven Head
31
Q
A
Morning Star
- A three day bullish reversal pattern consisting of three candlesticks at or near a support level.
Day 1 - above average long-bodied black
candle extending the current downtrend.
Day 2- Small gap down with a spinning top.
Day 3 - A good size long bodied white candle
that gapped up on the open and closed above the midpoint of the body of the first day.
- Bullish reversal 78% of the time.
32
Q
A
Morning Star Doji
- A three day bullish reversal pattern that is very similar to the Morning Star.
Day 1 - Above average long-bodied black
candle extending the current downtrend.
Day 2 - Opens lower with a Doji that has a
small trading range.
Day 3 - A good size long bodied white candle
that gapped up on the open and closed above
the midpoint of the body of the first day.
Bullish reversal 78% of the time
- A morning star doji does not necessarily gap below the shadows of the other candles, just the body.
34
Q
A
Morning Star Pattern
- Occurs in a down swing
- At or near a support level
➡ Above average black candle
➡ Small gap down on day 2, with a spinning top
➡ Day three is a good size white candle which moves at least half way in to the first day’s candle
- This is a very strong bullish reversal pattern
35
Q
A
One Black Crow
- In an up swing, a large white candle appears
- The following day a black candle appears which opens lower than the first day’s close, and closes lower than the first day’s open
- This is a very strong bearish reversal
- Watch for it to appear at a resistance
36
Q
A
One Black Crow
- In an upswing, a large white candle appears.
- The following day a black candle appears which opens lower than the first day’s close, and closes lower than the first day’s open.
- This is a very strong bearish reversal. Watch for it to appear at a resistance.
38
Q
A
One White Soldier
- In a down swing, a large black candle appears
- The following day a white candle appears which opens higher than the first day’s close, and closes higher than the first day’s open
- This is a very strong bullish reversal
- Watch for it to appear at a support
39
Q
A
Rest After Battle
- This is a bullish continuation pattern
- Occurs in an up swing
➡ A large white candle
➡ Followed by two or more small candles which trade basically sideways
➡ Finally a large white candle appears to complete the pattern.
*If the candles have wicks you still want the 2 small bodies to be within the big candle bodies.
First and last candle do not necessarily have to be even.*
40
Q
A
Rising Three
- A very specific Rest After Battle
- In an up swing:
➡ A large white candle
➡ Followed by 3 small candles which do not close below the first candle’s low
➡ Finally completed with another large white candle
- A very strong bullish continuation pattern
41
Q
A
Spinning Top
- Candlesticks that have small bodies with upper and lower shadows that exceed the length of the body.
- Spinning tops signal indecision of traders.
- Often the first candle of a reversal. An early indication of a shift in trading sentiment and a potential change in direction.
- Generic spinning top or high wave candles can occur in either up or down swings
- Mean the most during a trend, at a pivot point
- Mean very little during a market rest (such as a flag or pennant pattern)
- If seen at a pivot point, caution is needed as a reversal could be very close
42
Q
A
Tweezer Bottom
- Consists of two or more candle lines with matching highs or lows
- Candles must alternate appropriately
➡ Tweezer bottom alternates black to white
- Very often turns into a reversal and changes the swing direction
- Tweezer bottoms act as beasrish continuation 52% of the time.*
43
Q
A
Tweezer Top
- Consists of two or more candle lines with matching highs or lows
- Candles must alternate appropriately
➡ Tweezer top alternates white to black
- Very often turns into a reversal and changes the swing direction
Tweezer tops act as bullish continuation 56% of the time.
44
Q
A
Three White Solders
A bullish reversal pattern consisting of three consecutive or more long white bodies moving up after a downtrend.
Each should open within the previous body and the close should be near the high of the day.
Leads to a reversal 82 % of the time.
Strong Bullish Reversal Indicator
45
Q
A
Upside Gap Two Crows
- A three day bearish pattern that only happens in an uptrend.
- *Day 1** - A long white body
- *Day 2** - A gapped open with the small black body remaining gapped above the first day.
- *Day 3** - is also a black day whose body is larger than the second day and engulfs it. The close of the last day is still above the first long white day.
46
Q
A
Upside Tasuki Gap
- A continuation pattern with a long white body followed by another white body that has gapped above the first one.
- The third day is black and opens within the body of the second day, then closes in the gap between the first two days, but does not close the gap.
Bullish continuation 57% of the time
47
Q
A
Long Wick Candlesticks (Bullish)
- These have a short body at the top or bottom of the candle with a long wick extending underneath.
- A long tail on the bottom of a candlestick tells us that the market made a significant fall then quickly rose from this price level. This is a bullish signal.
- This pattern clearly demonstrates that prices opened and auctioned much lower before rising to close near where they opened. The market thus “rejected” these lower prices.
48
Q
A
Long Wick Candlesticks (Bearish)
- These have a short body at the top or bottom of the candle with a long wick extending above.
- A long tail on the top of a candlestick tells us that the market made a significant rise then quickly retreated from this price level. This is a bearish signal.
- Candles with long wicks above the body show that a significant number of buyers lost money as prices closed lower.
- This pattern clearly demonstrates that prices opened and auctioned much higher before falling to close near where they opened. The market thus “rejected” these higher prices.
