Let’s talk about Fibonacci retracement levels. Fibonacci retracement levels are horizontal lines that indicate the possible support and resistance levels where price could potentially reverse direction. The first thing you should know about the Fibonacci tool is that it works best when the market is trending. The idea is to go long (or buy) on a retracement at…
We will be using Fibonacci ratios a lot in our trading so you better learn it and love it like your mother’s home cooking. Fibonacci is a huge subject and there are many different Fibonacci studies with weird-sounding names but we’re going to stick to two: retracement and extension. Let us first start by introducing you to the Fib…
We’ve covered a lot about Japanese candlesticks. Hopefully, you’re not at wick’s end but are actually now fired up about candlestick charts. Maybe we’ve even ignited a flame that becomes a lifelong passion for Japanese candlesticks. Let’s summarize what you’ve learned about Japanese candlesticks: If the close is above the open, then a hollow candlestick (usually displayed as white) is…
Here are some common mistakes that new traders often make when using Japanese candlesticks. 1. You try to find meaning in EVERY candlestick that appears on the chart. A lot of the time, markets are “noisy.” Not every candlestick useful when thinking about future price movements. Instead of looking at every candlestick, focus on the ones where…
In this lesson, we will be looking at the basic Japanese candlestick patterns that were discussed in the previous lessons to make sound trading decisions. Remember, candlesticks are useless on their own, and you must always consider the market environment and what the price is telling you. But before we begin, just a few…
Did you click here first? If you did, stop reading right now and go through the entire Japanese Candlesticks Lesson first! If you’re REALLY done with those, here’s a quick one-page reference cheat sheet for single, dual, and triple Japanese candlestick formations. This cheat sheet will help you to easily identify what kind of candlestick…
What’s better than dual candlestick patterns? TRIPLE candlestick patterns! To identify triple Japanese candlestick patterns, you need to look for specific formations that consist of three candlesticks in total. These candlestick formations help traders determine how the price is likely to behave next. Some three candlestick patterns are reversal patterns, which signal the end of the current trend and…
What’s better than single candlestick patterns? DUAL candlestick patterns! To identify dual Japanese candlestick patterns, you need to look for specific formations that consist of TWO candlesticks in total. Engulfing Candles There are two types of Engulfing candles: Bullish Engulfing and Bearish Engulfing. The Bullish Engulfing pattern is a two candlestick reversal pattern that signals a strong up move may occur. …
Now that you’re familiar with basic candlestick patterns like spinning tops, marubozus, and dojis, let’s learn how to recognize single candlestick patterns. When these types of candlesticks appear on a chart, they can signal potential market reversals. Here are the four basic single Japanese candlestick patterns: Hammer and Hanging Man The Hammer and Hanging Man look exactly alike but have totally different meanings depending on…
What do spinning tops, marubozus, and dojis have in common? They’re all the basic types of Japanese candlesticks! Let’s take a look at each type of candlestick and what they mean in terms of price action. Spinning Tops Japanese candlesticks with a long upper shadow, long lower shadow, and small real bodies are called spinning tops….