Candlestick Analysis Flashcards
Explain:
What do candlesticks do?
Depending on the market, it gives us particular signals that let us know how to enter trades and exit trades.
It also tells us the personality of what is happening in the market.
* It explains the emotions of the market.
Answer:
What is the accuracy percentage of proper candlestick analysis?
99%
Explain:
In a candlestick, what does the candle body represent?
Pressure.
* It’s either buying pressure or selling pressure.
Answer:
In a candlestick, what does the wick represent?
Price action.
Explain:
What does the phrase “in the money” mean?
That the closing price was higher than the opening price.
Explain:
What does the term “bullish” mean?
That the closing price was higher than the opening price.
True or False:
“In the money” and “bullish” mean the same thing?
True
True or False:
On a candlestick, the open and the close of the candle body represent the trading time intervals of its respective time chart.
True
Should a trader trade based on the price or the emotion of the candlestick?
The emotion.
* The price and/or the price action of the candlestick is completely irrelevant.
Why are these candles some of the most important in trading?
Because they signify a potential reversal in the market.
Explain:
The difference between Accumulation and Distribution
Accumulation is candlestick movement after liquidation (markdown). Whereas Distribution is candlestick movement after a (markup) breakout.
In terms of support and resistance, what does accumulation signify?
The level of support.
In terms of support and resistance, what does distribution signify?
The level of resistance.
What do we know always happens with accumulation and distribution?
It will eventually break out of its channel. ALWAYS!!!
When pulling up a candlestick chart, what’s the first thing a trader does to see the big picture?
Determine the support and resistance levels to identify where the accumulation and distribution channels are.
