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The Candlestick EXPRESS Class with Steve Nison

© candlecharts.com 1

With Steve Nison, CMTPresident: Candlecharts.com

& the first to reveal candlesticks to theWestern world

CandlestickCharting

Techniques

Candles +WesternCharting

Tools

Candles for Trade Management

1

• Early reversals

• “Safety First” Trading

• Quickly reading themarket’s message

Candlestick Charts



2

• Enhance winning %s

• Price targets

Candles withWestern

Technicals

3

• Protective Stops

• Price Targets

• Risk/Reward

• Prevailing Trend

• If … Then Principle

•Market Chameleon

Candles for TradeManagement

CandlestickCharting

Techniques

Candles +WesternCharting

Tools

Candles for Trade Management



open close

open

RealBody

high

low

Shadow

Real Bodies / Shadows

close

www.candlecharts.com


The longer the realbody the strongerthe momentum.

The relative sizeand position of theshadow displaysthe extent of pricerejection.




Who’s in control?

“The Real Body is the Essence of the Price Movement”

• The Doji• The High Wave Candle


Where open and close are the same(or nearly the same)

Who’s in control?



These have the sameclosing prices, but what arethe candles telling us?

CANDLES REVEAL THE FORCE BEHIND THE MOVE:HOW DOES THIS KNOWLEDGE IMPROVE YOUR TRADING?


Doji

www.activeinvestorblueprint.com




Candles and Momentum Trading


Session with long upper and lowershadows compared to real body(which is in the middle of the range)


High Wave Candle




High wave Doji

The

• The Hammer• The Inverted Hammer• Bull Counter Attack• Piercing Pattern• Bullish Engulfing Pattern• Bull Harami• Bull Separating Line• Tweezers Bottom• Rising Window• Morning Star• Rising Three Methods• Three Advancing White Soldiers

Black or white candle with long lowershadow (2x or more) compared to realbody.





Candles for getting in early on a new trend

Extra $25 pershare profit

Extra $30 pershare profit


Hammers

Scenario 1 – buy at hammerMkt @ $395: 400 call @ $11.30

Exit at doji ( red arrow 13 daysafter hammer) mkt @ 447: 400call @ $47.50 (320 % return)

Scenario 2 – buy based on MACDMkt @ $418 : 420 call @ $13.45

Exit at doji (5 days later) mkt @447: 420 call @ $31.20 (132%return)

Result: Nison candlesticksgenerated over 2x the profit!

Nison Candlestick strategies for long calls




Nison Power Concept

Is it a valid Nison candle?

Not hammers!


Upside down hammer and market ina downtrend.





Negative Selection

Don’t sell short


confirmed

Inverted Hammer with candle confirmation


Black real body followed by a white realbody that gaps lower on the open andthen closes at, or near, black candleclose.




Bull Counter Attack

White real body that wraps aroundprior session black real body or doji.


Bullish Engulfing Patterns

www.activeinvestorblueprint.com



Bullish Engulfing Pattern


This is interesting: I recently purchased atechnical analysis package from a “WELLKNOWN” technical analysis guru. Duringhis charting presentation he made severalreferences to candlestick patterns, and eachreferences that he made was absolutelywrong! …During a strong uptrend, he calleda large white real body after a small blackreal body a bullish engulfing pattern. If Ihadn’t bought and studied your education , Iwould never would have known that andwould have assumed that he was right. Andcould have lost a lot of money!

Thanks again for your great work!

-Carl

Nison Candlesticks for FXNison Candlesticks for FX



closeopen

Criteria:• White real body wraps aroundpreceding black real body

• Market in down trend

•Implication: Market bottoming out

Non FX Bullish Engulfing Pattern

close

open

Criteria:• White real body wraps aroundpreceding black real body

• Market in down trend

•Implication: Market bottoming out

FX (or intraday) Bullish Engulfing Pattern

Small real body inside an unusuallylong black real body.





Bullish Harami

White candle that opens lower and thencloses more than halfway into priorblack real body.



Piercing Pattern Confirms Support




Black candle followed by white candlethat opens within black real body andcloses over prior open.


Bull Sash Pattern

Bull Sash


Black candle followed by white candlethat opens at (or above) prior open. Thencloses over black candle open.




Bull Separating line

While at resistancethis is a new high

close for move

TWEEZERS BOTTOMTWEEZERS BOTTOM


Two candles that have the same lows.First candle large black.


Tweezers and Harami




Same as a gap in Western technicals. Thecurrent session’s low is higher than theprior session’s high.

A rising window issupport

Corrections stop at the window

SupportZone

How education saves you money

Bearish engulfingpattern, but you mustnot sell here. Why?




Large rising window

Bottom of risingwindow as themajor support


Small Window

2 cents

First candle long black, second candlesmall real body, third candle is whitethat gets deeply into first real body.

white orblack





Morning Star


How Education helps MAKE you money

Morning star variation

Entered themarket here

RISING THREE METHODS


A series of small candles inside therange of a tall white candle. The lastcandle is another tall white.



RISING THREE METHODS



Three consecutive white candles,each with a higher close.

The

• 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




Black or white candle with long uppershadow (2x or more) compared to real body.


“A crack has entered the market”

If I had only known this! Icould have made a quick 25%



What iswrong withthis so called“shootingstar?”

Hint: look at upper shadow


Same shape as a hammer, butmarket in an uptrend.

Hammer and Hanging Man LinesHammer and Hanging Man Lines

Hammer

Hanging Man

bottom reversal

top reversal

whiteorblack

whiteorblack

The difference between these is the preceding trend




Hanging Man

confirmation


White real body followed by a black realbody that gaps higher on the open andthen closes at, or near, white candleclose.


Bear Counter Attack




Black real body wraps around priorsession white real body or doji.

Bullish Bearish

Dual Bearish Engulfing Patterns




How Education MAKES you money

These areNOT bearishengulfingpatterns!

This is a bullishengulfingpattern


Black real body wraps around priorsession white real body or doji.

close open

FX or Intraday

Bearish Engulfing Pattern



Small real body inside an unusuallylong white real body.

Harami

Not a harami pattern

Bearish Harami


Black candle that opens higher and thencloses more than halfway into priorwhite real body.




Dark Cloud Cover

Bulls have beenconstrained


White candle followed by black candlethat opens within white real body andcloses under prior open.


Bull and Bear Sash




White candle followed by black candlethat opens at (or above) prior open. Thencloses under black candle open.


Bear Separating Line

TWEEZERS TOPTWEEZERS TOP


Two candles that have the same highs.First candle large white.




Tweezers top


Tweezers Top


Same as a gap in Western technicals. Thecurrent session’s high is under the priorsession’s low.



A falling window isresistance

Corrections stop at the window

ResistanceZone


Falling window with extra confirmation

The small real bodieshelped confirm theimportance of thefalling window’sresistance

Falling window

white orblack

First candle long white, second candlesmall real body, and third candle isblack that gets deeply into first realbody.





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 therange of a long black candle. The lastcandle is another long black.




FALLING THREE METHODS

Why about this fallingthree gives you extrabearish confidence?



Three consecutive black candles,each with a lower close.

Three Black Crows

18 25 2

July

9 16 23 30

August

6 13 20 27 4

September

10 24

25

26

27

28

29

30

31

32

33

34

35

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49

50PULTE CORP (44.8600, 45.6600, 43.7600, 43.9000, -0.95000)



NCS Special - $400 off coupon code (NCS400) + free upgrade to lifetime access forthe same price as annual: www.nisoncandlescanner.com/special

NOTE: this is a limited time offer

To upgrade for lifetime access for $49 (if you haven’t done so already) :www.candlechartsacademy.com

IMPORTANT- you must log into your account for access to this recording

Contact [email protected]



CandlestickCharting

Techniques

Candlesticks +Western

Indicators

Candlesticks + Trade Management



The Multiplier Effect

Where a Nison candle signal confirms another indicator

Congratulations –you bought at

support!

Congratulations?– you bought at

support?




SupportSupport

ResistanceResistance


Trading Ultra Shorts

Support or resistance linesusing longer term charts (slide 1 of 2)

Long Term Chart

Long term support once broken becomes…. New resistance



And adding them to a Shorter Term Chart (slide 2 of 2)

Daily Chart

New resistance


How Education SAVES you money

Snap

Crack

Target

Stop

Buy




Crack and Snap


Crack and Snap


Sell

Target

Stop




Falling off the Roof


Bloomberg TV Interview - S&P at 996

hammer

DojiShooting star

Priorresistancebecomes newsupport

target

“Major support near 960.My upside target is 1160”

Examine how the market acts at supportor resistance

Two questions to ask:

1) Is the market at support orresistance?

2) Is there a of themarket losing force at that support orresistance?



Scenario1

Scenario2



East + West = Higher Confidence

Do the oddsfavor a holding, orbreaking ofsupport?


Does Candle Confirm a Key Level? 1 of 3

Is this a candle signalshowing the bears are losing force?If so then consider reversal trade





Is this a candle signalshowing the bears arelosing force?




Momentum – Candle confirmation

can sell here

At support but any signs ofbears’ losing force?

What is another negative?



Candles and Trend lines


How Education Saves You Big $$$

Major resistance 2.00-2.01


Long term resistance zone

How Education Saves You Big $$$




Candles and Volume

Light volumebreakout


And then!

Candles and Volume

Higher volume on white candlecompared to black on this bullishengulfing pattern magnifies thelikelihood of a reversal



Bull Harami

PotentialSellingclimax



Volume Confirming the Candle Signal


Candles And Volume: High Volume Doji



Bollinger Bands

•Developed by John Bollinger

•2 trading bands are placed around a movingaverage (typically a 20-day moving average)

•Bands are placed (typically) 2 standarddeviations above and below moving average

•Touch of upper band: overbought

•Touch of lower band: oversold



Doji in context


The East and the West

⌫

⌫

The Candlesticks and then add ….





Traditional Western toolslike Bollinger Bands



Buy on thebullish engulfingand exit on thebearish engulfing

Head and ShouldersHead and Shoulders

Neckline

Left ShoulderRightShoulder

Head

Head and Shoulders Top

Sellsignal



Three Buddha Pattern

© Steve Nison’s Candlecharts.com

H&S neckline

Spotting the Early Reversals



neckline Interview

Head andShoulder top

TASC Interview - Jan. 24, 2003 S&P at 860

“… the heads and shoulders top on theS&P gives a target to near 775. A closeover 870 would void this.” Hammer

1) Once the neckline’ssupport is broken, itshould becomeresistance.

2) To get a target with thehead and shoulders topwe measure from the topof the head to theneckline.


Box ranges



East for reversal and West for target

Doji

Bearish engulfingpatterns

target

East & West = Profits





CandlestickCharting

Techniques

Candlesticks +Western

Indicators

Candlesticks + Trade Management


Hammer as buy at $166.50

EDUCATION = CONFIDENCE = $UCCESS

Doji as exitat $169.30




CANDLES TO EXIT

Times to Exit


Hammer as buy at $166.92

Shooting staras exit at $168.12

EDUCATION = CONFIDENCE = $UCCESS

Market Chameleon -adapt to changingmarket conditions




Market Chameleon

Buy on these back to back hammers.Original target is resistance at 1 asdefined by recent high and fallingwindow. With new resistance anddecline at area 1,that zone nowbecomes the area to take profits.

Fallingwindow

Buy

target

new target1


Adapting to the Market

Closed overWindow’sResistance

?


Adapting to the Market

target

Trend is down




The low of thebullish engulfingpattern assupport. Oncehammer is formed(at the arrow) wethen adjust oursupport

Adapting


Hammer, but?

Candles in Context

“To know where you stand is asimportant as

candle pattern recognition.”



www.candlecharts.com157

Candles in ContextCandles 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?


Candles in Context

This is ashooting star,but why notsell short?

Hint, look at July-early Aug. highs

Change of Polaritywhere formerresistancebecomes newsupport


Candles in Context




If…Then Rules

1) If the market does not act as forecasted thenexit the position

2)Initiate a position when the market justifiesyour potential trade (i.e. if near resistance, If themarket breaks above resistance, Then one canbuy.


If….Then Rule (slide 1 of 2)

Head and shoulders top?


If….Then Rule (slide 2 of 2)

Head and shoulders top NOT confirmed




If….Then Rule

The bullish ascendingtriangle and the new highclose for the move stronglyhints that the market willbreak out. But resistanceheld.

Protective Stops




Candles as Support

Candlesticks for entering a new trade




Candles as support and NCS

1) NCS (or you) find ahammer on this session

2) Set up an alert for whenthe market gets near thelow of the hammer to buy

Don’t try to catch a falling Dagger

First sign ofa bottom Extra Confirmation


Testing candles’ support



Stops

www.candlecharts.comwww.candlecharts.com

PROTECTIVE STOPS

X

There are three reasons for considering a sell at line X:1) The top of the falling window2) The bearish engulfing pattern3) Line X is a doji

However, once the market breaks resistance, shorts shouldbe covered.


Shorted at 91.61



A candlestick line or patternrequires 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 anddead crosses



Prevailing Trend

20 day m.a over50 day m.a and bothsloping up

Longer Term Trend


Candles in Context:

Which is a better sale?

Scenario 1 Scenario 2




Scenario 1 Scenario 2

Candles in Context:



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

Risk

reward




How Education saves you $$$

Risk

Potential


Dark Cloud Cover and Risk/Reward

PatternCompleted

Here


Risk-reward

1

2

Two hammers at 1 and 2. Butdue to falling windows onlyhammer 2 presents a buyingopportunity due to the r/r.




Risk/Reward

Why I went long:

1) Bullish engulfing at support

2) Other spinning tops confirmingsupport

3) Trend line breakout of price

Was this a good trade that just didn'twork out or did I make a mistake injudgment that I can't see?

Thank you,Gary B

Why I went long:

1) Bullish engulfing at support

2) Other spinning tops confirmingsupport

3) Trend line breakout of price

Was this a good trade that just didn'twork out or did I make a mistake injudgment that I can't see?

Thank you,Gary B

1

2

34

5

Which are hammers and why?

Nison Chart Challenge 1

1. What pattern is highlighted?

2. When would you sell short based on this pattern?




Market gaps down to $18 on open atarrow.

1) What are two reasons to considershorting on the open?

2) What is a potential concern?

3) What if the market gets over 18.50-what is that called?

4) If it got back over 18.50 and you areflat, what would you do and why?

5) Assume holds under 18.50 how canyou get a target? Hint - look atresistance made with two dojiOpens at $18


Doji at A and B made new closesfor the move. Questions 1 and 2relate to these doji

1) If you were long, what would youdo with each of these doji andwhy?

2) If you were flat (no position)what would you do with each ofthese doji and why?

3) What pattern is in the rectangle?4) If you buy on the signal in

question 3 where is your stopand why?

5) Name three potential resistanceareas once the market moves upfrom the pattern at question 3.

6) Which of these three resistanceareas do you think would bemost important and why?

Doji A

Doji B


2.What two candle signals formed here?3.Are these confirming something else?

1.Is this a piercing pattern?

4. Whatwould you dohere andwhy?




1 2 3

What candle signals at 1 to 4 reflecttrouble near 1.9550?

4



1.Name 4 reasons to consider this a bottom2. Would you buy on the last candle signal? why or whynot3. If you didn’t buy when would you and why.

What 4 signals here hint of areversal? (purple lines are Bollinger

Bands)




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 andwhy on this candle at thearrow?

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 forthe same price as annual: www.nisoncandlescanner.com/special

NOTE: this is a limited time offer

To upgrade for lifetime access for $49 (if you haven’t done so already) :www.candlechartsacademy.com

IMPORTANT- you must log into your account for access to this recording

Contact [email protected]

express class handouts - amazon s3class+handouts... · inverted hammer with candle confirmation ...

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