Professional Documents
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1
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Bullish Engulfing
patterns as support
Bear Stearns Collapse
Helping you
overcoming
your trading
challenges
Trading Challenges:
• Entering trades too late
• Knowing when to exit
• Preserving trading capital
• Quickly recognizing the candle signals
• Paralysis by analysis
• Quickly recognizing candle signals
• Correctly using candlesticks
When to pull trigger
When to ignore
• Lack of confidence pulling the trigger
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Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Helping you
overcoming
your trading
challenges
• Easy to Understand
• Early Reversals
• “Safety First”
• East + West
• All markets
• All Time Frames
• Accelerates Analysis
3
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Candlestick Western
Charting Charting
Techniques Tools
Trade Management
www.candlecharts.com 10
Seize trading
opportunities before
they become
apparent to others
Information is
Power! Learn how to
avoid losing trades
Pinpoint turning
signals with razor
sharp accuracy
The Result:
What we learned:
12
4
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Candlestick Western
Charting Charting
Techniques Tools
Trade Management
13
Candlestick Charts
• Early reversals
• “Safety First” Trading
• Quickly read the
market’s message
14
The Framework:
Analyzing Real Bodies
and Shadows
15
www.candlecharts.com
5
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
www.candlecharts.com 16
www.candlecharts.com 17
Who’s in control?
www.candlecharts.com 18
6
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Basic Criteria:
Small real body - black or white
Market Implication:
Immediately preceding trend
losing momentum.
Support or Resistance:
Not used
Who’s in control?
www.candlecharts.com 19
www.candlecharts.com 20
www.candlecharts.com 21
7
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Basic Criteria:
• Market in up or down trend
• Open and close prices are the same
(or nearly the same)
Market Implication:
Market at a point of indecision
Support or Resistance:
Highest high of doji and prior
candle for resistance. Not used as
support
www.candlecharts.com 22
Those poor
traders who
got fooled into
buying here.
www.candlecharts.com 23
24
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Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
www.candlecharts.com 24
Doji as Warning
Weekly Weakly
26
www.candlecharts.com 27
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Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
www.candlecharts.com 28
“Market is
tired”
www.candlecharts.com 29
www.candlecharts.com 30
10
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Doji as Resistance
www.candlecharts.com 31
Warning!
www.candlecharts.com 32
Doji as resistance
www.candlecharts.com 33
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Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Doji as Resistance
www.candlecharts.com 34
35
3
2
1 3
1
www.candlecharts.com 36
12
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Shadows
www.candlecharts.com 37
Area of Supply
Area of Demand
www.candlecharts.com 38
Basic Criteria:
• Market in up or down trend
• Very long upper and lower shadow/
small real body towards the middle
of session’s range
Market Implication:
Market “confused”
Support or Resistance:
Not used
www.candlecharts.com 39
13
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Doji = caution
“Market is
Tired”
www.candlecharts.com 40
www.candlecharts.com 41
42
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Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
www.candlecharts.com 43
www.candlecharts.com 44
What we learned:
45
15
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Essentials of Single
Candle Patterns
Reversal Signals
www.candlecharts.com 47
48
www.candlecharts.com
16
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Basic Criteria
• Market in a downtrend
• Small real body (either color) at, or
near, top of range.
• Lower shadow at least 2x height real
body
Market Implication
“A chance to buy at the bottom “
Support or Resistance
Low of hammer as support
49
www.candlecharts.com 50
www.candlecharts.com 51
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Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Hammers
www.candlecharts.com 52
Doji as exit
at $169.30
Result:
almost $3
per share in
less than 10
minutes!
www.candlecharts.com 53
www.candlecharts.com 54
18
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
55
www.candlecharts.com 56
Hammer as Support
Hammer
www.candlecharts.com 57
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Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Hammer as Support
www.candlecharts.com 58
www.candlecharts.com 59
Dragonfly Doji
www.candlecharts.com 60
20
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Dragonfly
www.candlecharts.com 61
Basic Criteria:
Same shape as Hammer but market
in downtrend
Market Implication:
In theory, potential bottom reversal
Support or Resistance:
Not used as support
62
63
www.candlecharts.com
21
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
64
www.candlecharts.com
Basic Criteria:
• Market in up trend
• Small real body (black or white) at,
or near, bottom of session
• Upper shadow at least twice height
of the real body
Market Implication:
Potential top reversal
Support or Resistance:
High of signal as resistance
65
www.candlecharts.com 66
22
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Shooting star
as exit
at $168.12
www.candlecharts.com 67
What is
wrong with
this so called
“shooting
star?”
Hint: look at upper shadow
68
www.candlecharts.com 69
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Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
www.candlecharts.com 70
Shooting Stars
www.candlecharts.com 71
Gravestone Doji
www.candlecharts.com 72
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Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Gravestone
www.candlecharts.com 73
Gravestone
www.candlecharts.com 74
Gravestone Doji
www.candlecharts.com 75
25
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Shooting star
Hammer
76
www.candlecharts.com 77
Basic Criteria
Same shape as Hammer but market
in uptrend
Market Implication
In theory, potential top reversal
Support or Resistance
Not used as resistance
78
26
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
www.candlecharts.com 79
Hanging Man
www.candlecharts.com 80
Hanging Man
confirmation
www.candlecharts.com 81
27
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Who has more control here? Who has more control here?
www.candlecharts.com 82
www.candlecharts.com 83
www.candlecharts.com 84
28
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Hammer
www.candlecharts.com 85
www.candlecharts.com 86
www.candlecharts.com 87
29
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
www.candlecharts.com 88
www.candlecharts.com 89
What we learned:
90
30
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Essentials of Multiple
Candle Lines
92
Basic Criteria
• Market in down trend
• White real body wraps around prior
session black real body
Market Implication
Bottom reversal
Support
The lowest low of the two sessions
of the pattern
93
31
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
94
www.candlecharts.com 95
96
32
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
97
Anything
hinting bears
losing force?
98
open
open
close
99
33
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
100
Shooting stars
101
102
34
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Bullish Engulfing
Patterns
103
Basic Criteria
• Market in down trend
• Opens below prior low (or close)
• White candle closes more than 50%
into prior black real body
Market Implication
Bottom reversal
Support
The lowest low of the two
candlestick lines
104
Piercing Pattern
105
35
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Piercing Pattern
106
107
1 2 3
Patterns 1,2 and 3 are viewed as small, reactionary rallies where the bulls counter drive
is weak. “Selling chase begins” under any of these patterns for momentum traders. 108
36
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Basic Criteria
• Market in down trend
• First candle is an unusually long
black real body
• Second relatively small real body
(either color) within prior real body
Market Implication
Prior trend is “losing its breath”
Support
Not used
109
Bull Harami
Not harami
110
Bull Harami
111
37
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Bull Harami
112
113
Basic Criteria
• Market in up trend
• Black real body wraps around prior
session opposite color real body
Market Implication
Top Reversal
Resistance
The highest high of the two sessions
of the pattern
114
38
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
115
116
117
39
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
118
Top
outside
reversal
Bottom
outside
reversal
119
Top
outside
reversal
120
40
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
121
stops!
122
Basic Criteria
• Market in up trend
• Opens above prior high (or close)
• Black candle closes deeply into
prior long white candle
Market Implication
Top reversal
Support or Resistance
The highest high of the two lines
that make up the pattern
123
41
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
124
125
126
42
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
127
128
Basic Criteria
• Market in up trend
• First candle is an unusually long
white real body
• Second relatively small real body
(either color) within prior real body
Market Implication
Bears losing momentum
Support or Resistance
Not used
129
43
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Bear harami
130
Bear Harami
131
132
44
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
133
Criteria
• Market in downtrend
• First candle is long black
• Second candle small real body that
doesn’t (or slightly) overlaps first real
body
• Third candle is white real body that
gets deeply into first real body
Market Implication
Bulls now in control
134
135
45
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Morning Stars
136
137
138
46
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Morning Star
Variation
139
140
141
47
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Criteria
white or black
• Market in uptrend
• First candle is long white
• Second candle small real body that
doesn’t (or slightly) overlaps first real
body
• Third candle black real body that gets
deeply into first real body
Market Implication
Bears are now in control
Resistance
Highest high of three candle lines
142
Evening Star
143
144
48
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Evening Star
145
Evening Star
146
Evening star
147
49
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
148
149
150
50
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
151
152
153
51
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
154
Criteria
• Market in a downtrend
• Three relatively long white candles
• Last two open within, or over, prior
white real body
• Each candle closes at, or near, its high
Market Implication
Bottom reversal
Support or Resistance
Not used as support
www.candlecharts.com 155
Three Soldiers
www.candlecharts.com 156
52
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Criteria
• Market in uptrend
• Three long black candles
• Open of last two within, or below, prior
black real bodies
• Each candle closes at, or near, its low
Market Implication
Top reversal
Support or Resistance
Not used as resistance
www.candlecharts.com 157
www.candlecharts.com 158
What we learned:
159
53
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Three Methods
Windows
160
161
162
54
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
163
Gap Lower =
Falling Window
Gap Higher =
Rising Window
164
Support
Zone
Most important
support level
www.candlecharts.com 165
55
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Rising Window
166
Rising Windows
167
Broken Windows
168
56
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Candles in Context
Shooting
Star, but…
169
Candles in Context
170
Bearish engulfing
pattern, but you must
not sell here!
171
57
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Rising Window
172
Most important
resistance level
Resistance
Zone
www.candlecharts.com 173
Falling Window
174
58
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
175
Falling Window
176
Falling window
177
59
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Small Windows
2 cents
178
Breakaway Gap
When the market gaps above resistance – or below support
179
Breakaway Gap
180
60
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Breakaway gap
181
Strong candles
182
www.candlecharts.com 183
61
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
www.candlecharts.com 184
185
Dumpling top
186
62
Steve Nison’s Candle Charting Essentials and Beyond
Volume 1 of the Nison Educational Series
Up gap parallel
white lines
187
What we learned:
Continuation candles
Rising and falling three
methods
Window essentials
Large vs. small windows
Windows and rounding
tops/bottoms
Simplifying candle analysis
with windows
188
Oh my goodness! The
market rallied after the
shooting star!
189
63