High Probability Candlestick Patterns

& Set ups

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Utilize easy mechanical trades that remove the guess-work from trading. Opportunities to profit in Breakout Gaps and how to handle Bad News Gaps. See the difference between healthy profit-taking and a full-scale reversal ahead.

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Fry Pan bottom patterns Dumpling Top Cradle pattern

Jay-hook pattern Scoop pattern

Belthold patterns Gaps

Fry Pan Bottom

• The downtrend starts waning with the appearance of small trading bodies.

• As the trend starts slowly curling up, a gap up in price indicates that strong buying sentiment has now returned.

Fry Pan Bottom Measuring Point

A dimple usually marks the Halfway point

Classic

What is expected coming out of a Fry Pan Bottom?

Fry Pan Bottom

A slow build up of Investor sentiment

PRXI

Fry Pan Bottom

MBI Fry Pan Bottom

The Breakout is the signal

PRXI

Fry Pan Bottom

Fry Pan Bottom Breakouts

OCZ – J-Hook

J-Hook

Looking For the Big Moves

J-Hook Set Up

AFFY- Long Legged Doji

Long Legged Doji shows major Indecision

AXP Kicker

A Kicker signal that sets up a J-hook

SSH Kicker

Expected results

•www.candlestickforum.com

Common Price Movements

Easy to spot support & resistance price targets

T-Line EA Breakout

Breakout Steady Eddy Best Friend

Blue Ice Failure Left/Right Combo

Slow Curve

EA Breakout

CS make pattern break out Identification easy

Blue Ice Failure

HERO 3 wave

Where are the big money investors watching for a support?

Support

Candlestick Signals provide a visual advantage

CBI BO steady eddie

T-line provides a comfort

BF down and up

Candlestick Signals and gaps = your best friend

Support

Morning Star signal

Bidu Short ? ! Obvious Resistance

Doji on 50, sandwich

Rule of the Doji

Series of Doji’s

This is telling you something

What are the signals and patterns looking for?

What Are We Looking For?

Big Gains %80

Left/Right Combo

Stay Short

Slow Curve

Exit strategy

INVN RB

Doji Rule

EA FP

What is this telling us?

Fry Pan Bottom Breakouts

Simple entry strategy, Set buy stop

DANG

A Breakout is obvious

Expected Results

BONT 100% plus gain

Fry Pan Bottom – minutes, days, months

The indecisive rounding bottom is the predominant factor

TSPT FP

•www.candlestickforum.com

Rounding Bottom or

Slow Curve

Slow Curve

T-line Crunch

Slow Curve

A build up of investor Bullish sentiment

SPWR

Bought this week

Sold 1/2

?

Jan 8, 2013

Slow Curve

Strong Option Trade set ups

FSL RB

High probability results

BIOL Slow Curve

Obvious Break Out Level

Slow Curves

DEPO RB now what?

What is possibly setting up?

Slow Curve

Slow Curve

Buy Entry

Rounded Bottom BO

IMUC Rounding Bottom

The pattern sets up with signals

JKHY Rounding bottom

When to Buy

Excellent for option trades Closed option position at $8.70

Bought Jan 75 calls @ $2.40

FOE Rounding Bottom

Buy Here

T-line Crunch

Classic

KKR Classic

What is expected after a Fry Pan Break out?

LOW Classic Set Up

Dumpling Top

AMED – Short with the Market

Dumpling Top

FRAN – Short to a Target

FRAN- Breaking thru support Where is likely target?

Cradle Pattern • The Cradle Pattern is a symmetric

bottom pattern that is easy to identify.

– A downtrend becomes obvious with a large black candle at the bottom.

– A series of small or indecisive trading days trade in a flat area.

– A bullish candle, more powerful with a Bullish Engulfing signal, is formed of approximately the same magnitude as a Bearish candle at the end of the downtrend.

• This signifies that the Bulls have come out of the indecisive trading area with decisive force.

Cradle Pattern

Cradle Pattern

NSM Cradle

Cradle and a close above the T-line

Cradle Pattern

Cradle Pattern

How to identify pullbacks versus reversals

•www.candlestickforum.com www.stephenbigalow.com

Helps to differentiate between profit taking and a full-scale reversal

Jay Hook Pattern

Jay Hook Pattern

• The first move of the uptrend is very strong.

• A candlestick sell signal

indicates a pullback about to occur.

• After a few days, small indecisive candles start to appear – Doji, small Hammers,

Bullish Engulfing signals

Jay Hook Pattern • The first test becomes the

recent high

• Indecision as found in candlestick sell signals at the recent high becomes a quick indicator to get out of the position

• A Bullish candle breaching the recent high illustrates that investor sentiment is taking prices up

J Hook

What do the candle formations say on The pull back?

J Hook

Buy Points

FOSL Spread Strategy

J Hook great for option Spread trades

Best F – J Hook

Why is a J Hook anticipated?

J Hook

J Hook

Gap up to resistance

J Hook Break out

Scoop Pattern

• An extended flat trading area – Followed by a pullback

• Buy signals bring price back up to flat trading range

• Once price breaks above flat range, look for strong uptrend

Scoop has expected results

Scoop Pattern- Completed

Scoop pattern - Do not scan for a Scoop

Scoop Pattern use it to Analyze

Scoop Pattern - What should happen upon confirming?

Scoop Pattern - A strong trend to potential targets

Scoop

TSPT Scoop

DWA Inverted Scoop

15 22 31 5November

12 19 26 3December

10 17 24 312013

7 14 22 28 4February

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23.5Dreamworks Animation SKG Inc (16.2900, 16.3900, 16.1600, 16.2301, -0.07990)

Belt Hold Pattern • Strong prevailing trend • The candlestick body

should be the opposite color of the prevailing trend

• Gap on the open, continuing the trend

• The open is the high or low of that trend

• The length of the body should be a long body.

Belt Hold

15 22 31 5November

12 19 26 3December

10 17 24 312013

7 14 22 28 4February

11

10002000300040005000

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4.354.404.454.504.554.604.654.704.754.804.854.904.955.005.055.105.155.205.255.305.355.405.455.505.555.605.655.705.755.805.855.905.956.006.056.106.156.206.256.306.356.406.45

4.354.404.454.504.554.604.654.704.754.804.854.904.955.005.055.105.155.205.255.305.355.405.455.505.555.605.655.705.755.805.855.905.956.006.056.106.156.206.256.306.356.406.45

Kite Realty Group Trust (6.34000, 6.34000, 6.10000, 6.26000, +0.06000)

The Deeper the open…

KCAP Belt Hold

15 22 31 5November

12 19 26 3December

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7 14 22 28 4February

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Kohlberg Capital Corp (10.1600, 10.2500, 10.0400, 10.1960, +0.07600)

Belt Hold

2 19 26 3December

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7 14 22 28 4February

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57Herbalife Ltd (36.0100, 36.4100, 35.4600, 35.7900, -0.13000)

ESI Belt Hold

15 22 31 5November

12 19 26 3December

10 17 24 312013

7 14 22 28 4February

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22.5ITT Educational Services Inc (17.8000, 17.8000, 16.9600, 17.1900, -0.62000)

BECN

15 22 31 5November

12 19 26 3December

10 17 24 312013

7 14 22 28 4February

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38.0Beacon Roofing Supply Inc (34.7500, 37.8000, 34.1900, 36.8487, -0.02130)

Belt Hold

When to take profits

What Pattern set up?

EOX J Hook?

What should we be looking for?

Belt Hold

Belt Hold - Adds strength to existing trends

Belt Hold – shows the sellers are flushed out

Belt Hold – gets rid of the last of the sellers

Belt Hold

The bigger the Signal!

•www.candlestickforum.com

Easy Trend Analysis

Dow

15 22 31 5November

12 19 26 3December

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7 14 22 28 4February

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Dow Jones Industrial Average (13,944.05, 14,022.62, 13,944.05, 13,991.54, +47.4902)

?

Looking for the Big Moves

J Hook Set Up

Hitting the Big Ones

15 22 31 5November

12 19 26 3December

10 17 24 312013

7 14 22 28 4February

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10.5Keryx Biopharmaceuticals Inc (6.75000, 6.90000, 6.57000, 6.65000, -0.04000)

KERX - two weeks ago

Trading Gaps

Gaps represent enthusiasm to get into a

position to the point that investors will pay prices away from any of the previous day's trading range. Great for identifying panic selling at the

bottom and exuberant buying at the top.

TRADING GAPS What is the definition of a GAP?

• Gap or ‘window’ occurs when there is a ‘gap’ in price within a specific time frame.

• In a rising chart, it illustrates prices opening higher than previous trading range. The buyers have stepped in with great enthusiasm.

• In a declining chart, it illustrates prices opening lower than previous trading range. The sellers are getting out at any cost.

Four Basic Gaps

Gap Up at Top

Gap Down at Top

Gap Up at Bottom

Gap Down at Bottom

Two show EXHAUSTION

Gap Up at Top

Gap Down at Bottom

A Gap at bottom get in, a Gap at top get out

Gap Up at Top

FSYS, -exuberance

Gap up at Top, Start looking for selling

AFFY – Doji after gap up at top

A gap up in overbought conditions make it time to watch for a sell signal.

EXHAUSTION

AGEN Gap up Doji at top

A Gap up in the overbought area, start watching for a candlestick sell signal

Spinning Top = WHERE?

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