The Secret Life of Candles

1,057 views

Published on

Candlestick Signals are a graphical representation of investor (or trader) sentiment for the time frame being observed. My mentor taught me this concept several years ago and it has proven to be one of the most powerful "trading truths" I have learned.

Our Live Trading Room is a place for you to begin your journey as an Emini Futures Trader. We offer a 5 Day Free Trial with no CC required. You will also be able to download our Platform and install our Indicators.

We will teach you in 5 days - ONE SETUP - you can use to trade - ANY MARKET!

Emini Futures? Crude? Gold? Soybeans? Currencies?

YES! - All those and more...

One Setup - One Time Frame - Unlimited Opportunity.

Start your Free Trial Today! http://cfrn.net/apply or call 415-857-5654

Published in: Economy & Finance, Business
0 Comments
5 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,057
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
0
Comments
0
Likes
5
Embeds 0
No embeds

No notes for slide

The Secret Life of Candles

  1. 1. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010
  2. 2. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010Doji StarUpon seeing a Doji in an overbought or oversold condition, anextremely high probability reversal situation becomes evident.Overbought or oversold conditions can be defined using otherindicators such as stochastics, When a Doji appears, it isdemonstrating that there is indecision now occurring at an extremeportion of a trend. This indecision can be portrayed in a fewvariations of the Doji.
  3. 3. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010Long-legged DojiThe Long-legged Doji is composed of long upper and lowershadows. Throughout the time period, the price moved up anddown dramatically before it closed at or very near the openingprice. This reflects the great indecision that exists between thebulls and the bears.
  4. 4. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010The Gravestone Doji is formed when the open and the close occurat the low end of the trading range. The price opens at the low of theday and rallies from there, but by the close the price is beaten backdown to the opening price. The Japanese analogy is that itrepresents those who have died in battle. The victories of the day areall lost by the end of the day. A Gravestone Doji, at the top of thetrend, is a specific version of the Shooting Star. At the bottom, it is avariation of the Inverted Hammer.
  5. 5. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010Dragonfly DojiThe Dragonfly Doji occurs when trading opens, trades lower, thencloses at the open price which is the high of the day. At the top of themarket, it becomes a variation of the Hanging Man. At the bottom ofa trend, it becomes a specific Hammer. An extensively long shadowon a Dragonfly Doji at the bottom of a trend is very bullish.
  6. 6. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010Doji’s that occur in multi-signal patterns make those signals moreconvincing reversal signalsHarami – Doji Evening Star - Abandoned BabyHaving the knowledge of what a Doji represents, indecision, allows theCandlestick analyst to take advantage of reversal moves at the mostopportune levels. Regardless of whether you are trading long-termholds for day trading from the one-minute, five-minute, and fifteen-minute charts, the Doji illustrates indecision in any time frame.
  7. 7. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010Bullish Engulfing SignalA Bullish Engulfing signal is one of the major signals. When theelements out of a Bullish Engulfing signal are broken down, aninvestor can clearly understand what was going on in investorsentiment to cause a reversal. 400 years of observations fromJapanese Rice traders has recognized the Bullish Engulfing signalas a very high probability reversal signal.
  8. 8. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010Bearish Engulfing SignalThe information conveyed in this signal creates an extremely highprobability that the buying is over. It also reveals an opportunityfor establishing a good short position.
  9. 9. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010The Hammer SignalOne of the most visually compelling signals is the Hammersignal. The hammer signal is easily recognized by thelower shadow ( the tail ) protruding to the downside afteran extended downtrend.
  10. 10. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010Hanging ManThe Hanging Man produces some very important attributeswhen analyzing a potential reversal. It is considered one of the12 major signals. Learn how to use a Hanging Man signalcorrectly. The probabilities of being in a correct trade whenutilizing this signal becomes extremely high.
  11. 11. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010The Piercing PatternBeing able to utilize information that has been usedsuccessfully in the past is a much more viable investmentstrategy than taking shots in the dark. Keep in mind, whenyou are given privileged information about stock market tips,where you are in the food chain. Are you one of thoseprivileged few that gets top-notch pertinent information on atimely manner, or you one of the masses that feed into afrenzy and allow the smart money to make the profits?
  12. 12. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010Dark Cloud CoverThe Dark Cloud signal is a signal that tells an obvious reversalof a trend. It is named because it looks like a dark cloud over anice bright sunny uptrend.
  13. 13. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010Bullish HaramiThe Bullish Harami is an example of visual statistical analysis.Upon witnessing a bullish Harami at the end of a downtrend, aninvestor has a good idea of what to expect. This major signalbecomes a vital information packed analytical tool.
  14. 14. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010Bearish HaramiThe Bearish Harami is one of the major signals that exhibitscommon sense into graphic depiction. Candlestick analysisprovides a clear understanding of what happens to investorsentiment at the reversal areas. The elements that create aBearish Harami produce clear insights into what was going on ininvestor minds at a reversal.
  15. 15. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010The Morning Star SignalThe Morning Star is a bottom reversal signal. Like the planetMercury, the morning star, it foretells that brighter things - sunrise, isabout to occur, or that prices are going to go higher. It is formed afteran obvious downtrend.
  16. 16. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010The Evening Star pattern is a top reversal signal. It is exactly theopposite of the Morning Star signal. Like the planet Venice , theevening star, it foretells that darkness is about to set or thatprices are going to go lower. It is formed after an obviousuptrend.
  17. 17. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010The Kicker signal is the most powerful signal of all. Itworks equally well in both directions. Its relevance ismagnified when occurring in the overbought or oversoldarea. It is formed by two candles. This formation isindicative of a dramatic change in investor sentiment.The candlesticks visually depict the magnitude of thechange.
  18. 18. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010The Shooting Star is comprised of one candle. It iseasily identified by the presence of a small body with ashadow at least two times greater than the body. It isfound at the top of an uptrend. The Japanese named thispattern because it looks like a shooting star falling fromthe sky with the tail trailing it.
  19. 19. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010Inverted HammerThe Inverted Hammer produces some very importantattributes when analyzing a potential reversal. It is consideredone of the 12 major signals. Learn how to use an invertedhammer signal correctly. The probabilities of being in a correcttrade when utilizing this signal becomes extremely high.
  20. 20. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 201030 Minute Chart 8/20/10
  21. 21. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 201030 Minute Chart 8/20/1010K Volume Chart - 8/20/10
  22. 22. The Secret Life of CandlesWWW.CFRN.NET / All Rights Reserved 2010

×