09-02-2022

Candlesticks  The Soul Of

Chart….

MONEHISA HOMMA
 The Candlestick trading bible is one of the most powerful trading
 systems in history. It was invented by Homma Munehisa. The father of
Candlestick Chart Patterns
 also known as Sokyu Honma or Sokyu Homma, (1724–1803).
 He describes the rotation of Yang (a bull market)
and Yin (a bear market) and claims that within each type of market is
an instance of the other type. He appears to have used weather and
market volume as well as price in adopting trading positions.

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Candlesticks

 1-Candlesticks Anatomy
 Just as humans, candlesticks have different
body sizes, and when it
 comes to trading, it’s important to check out the
bodies of candlesticks
 and understand the psychology behind it.

 2-Candlestick patterns
 Candlestick patterns are an integral part of technical
analysis,
 candlestick patterns emerge because human actions
and reactions are
 patterned and constantly repeated.
 In this section you will learn how to recognize the most
important
 candlestick patterns, the psychology behind it’s
formation, and what
 do they indicate when they form in the market.

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 3-The Market structure

 In this section, you will learn how to identify
trending markets, ranging
 markets, and choppy markets. You will learn
how these markets move
 and how to trade them professionally.
 You will also learn how to draw support and
resistance, and trendlines.

Most Important

 4-Time frames and top down analysis

 Multiple time frame analysis is very important for
you as a price action
 trader, in this section you will learn how to
analyze the market using
 the top down analysis approach.

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Anatomy of Candlesticks

Hammer
The hammer candlestick pattern is formed of a short body
with a long lower wick, and is found at the bottom of a
downward trend.

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Inverse Hammer
A similarly bullish pattern is the inverted hammer. The only
difference being that the upper wick is long, while the lower wick
is short.

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Bullish Harami
The Bullish Harami is multiple candlestick chart pattern which is
formed after a downtrend indicating bullish reversal.

Bearish Harami
The first bullish candle shows the continuation of the bullish trend and the
second candle shows that the bears are back in the market.

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Bullish Engulfing
The bullish engulfing pattern is formed of two candlesticks. The first
candle is a short red body that is completely engulfed by a larger
green candle.

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Piercing Line
The piercing line is also a two-stick pattern, made up of a long red
candle, followed by a long green candle.

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Morning Star
Traditionally, the ‘star’ will have no overlap with the longer bodies, as the
market gaps both on open and close.
It signals that the selling pressure of the first day is subsiding, and a bull market is
on the horizon.

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Three White Soldiers

The three white soldiers pattern occurs over three days. It consists
of consecutive long green (or white) candles with small wicks,
which open and close progressively higher than the previous day.

Hanging Man
The hanging man is the bearish equivalent of a hammer; it has the
same shape but forms at the end of an uptrend.

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Shooting Star
The shooting star is the same shape as the inverted hammer, but is
formed in an uptrend: it has a small lower body, and a long upper
wick.

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Bearish Engulfing
A bearish engulfing pattern occurs at the end of an uptrend. The
first candle has a small green body that is engulfed by a
subsequent long red candle.

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Evening Star
The evening star is a three-candlestick pattern that is the
equivalent of the bullish morning star. It is formed of a short candle
sandwiched between a long green candle and a large red
candlestick.

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Three Black Crows

Each session opens at a similar price to the previous day, but selling pressures
push the price lower and lower with each close.
Traders interpret this pattern as the start of a bearish downtrend, as the sellers
have overtaken the buyers during three successive trading days.

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Dark Cloud Cover

It signals that the bears have taken over the session, pushing the price sharply
lower. If the wicks of the candles are short it suggests that the downtrend was
extremely decisive.

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Doji
This doji’s pattern conveys a struggle between buyers and sellers that results in no
net gain for either side. Alone a Doji is neutral signal, but it can be found in
reversal patterns such as the bullish morning star and bearish evening star.

Spinning Top
On its own the spinning top is a relatively benign signal, but they can be
interpreted as a sign of things to come as it signifies that the current market
pressure is losing control.

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Falling Three Methods

Three-method formation patterns are used to predict the continuation of a
current trend, be it bearish or bullish.

Rising Three Methods

Three-method formation patterns are used to predict the continuation of a
current trend, be it bearish or bullish.

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White Marubozu
This candlestick has a long bullish body with no upper or lower shadows which
shows that the bulls are exerting buying pressure and the markets may turn
bullish.

Tweezer Bottom
Both the candlesticks make almost or the same low.When the Tweezer Bottom
candlestick pattern is formed the prior trend is a downtrend.

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On-Neck Pattern
The pattern is called a neckline because the two closing prices are the same or
almost the same across the two candles, forming a horizontal neckline.

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