This document discusses candlestick charting basics and spotting early reversal signals using candlestick patterns. It introduces candlestick charts, how they are constructed with open, high, low, and close prices, and examples of common patterns like doji, hammers, shooting stars, and engulfing patterns. It emphasizes that candlestick patterns can provide signals of potential reversals in trends and that volume analysis can help confirm these signals. Contact information is provided for getting additional information on candlestick charting.

1. Candlestick Charting Basics:
Spotting the Early Reversals Signals
By
Steve Nison, CMT
President, Candlecharts.com Inc.
555 Route 18 South PMB 2000 East Brunswick, NJ 08816 USA
Telephone: 732-254-8660 Facsimile: 732-390-6625
Web site: www.candlecharts.com E–mail: nison@candlecharts.com

2. Media Comments
“Japan's Candlesticks Light Traders' Path”
--- Wall Street Journal
“Whether you day trade or hold positions candlesticks are a
must” --- Investors Library
“Candlesticks: A New Light in Technical Analysis” --- Barron’s

3. Constructing the Candle Line
open
Real
Body
high
close
open close
low
Shadow
Real Bodies / Shadows Doji

4. Drawing Candle Lines
session open high low close 28
27
26
25
24
23
22
21
1 23 26 21 25
2 26 28 23 27
3 23 27 22 22
4 25 28 22 25
5 27 27 25 25
1 2 3 4 5

5. Drawing Candle Lines
session open high low close 28
27
26
25
24
23
22
21
1 23 26 21 25
2 26 28 23 27
3 23 27 22 22
4 25 28 22 25
5 27 27 25 25
1 2 3 4 5

6. Small Real Bodies
(spinning tops)

7. Candle(stick) Chart - spinning tops

8. Small Real Bodies

9. Doji

10. Doji after tall white candle

11. Doji after tall white

12. Doji as Resistance

13. Gravestone Doji

14. Shadows

15. Long Upper (Bearish ) Shadows

16. Long Upper Shadows

17. Long Lower (Bullish) Shadows

18. Hammer
black or white
18

19. Hammers

20. Shoottiing Sttaarr
black or white

21. Shooting Star
?

23. High Wave Candles

24. High Wave Candle
new high
close, but??

25. High Wave Candle

26. High Wave Candle
Who’s in Charge?
Who’s in Charge Now?

27. Convergence of Candles Define Support
1
2 3
4

28. Engulfing Patterns
Bearish
Engulfing
Pattern
Bullish
Engulfing
Pattern
28

29. Engulfing Patterns
Bearish
Bullish

30. Bullish Engulfing Pattern
How many black candles did
this wrap around?

31. Bearish Engulfing Pattern

32. The Trading Triad?
Candlle Charrtts
Capital
Westterrn Preservation
32

33. Volume confirms signal
High
Volume
Hammer
33

34. STOPS
Shooting
star
Bearish
Engulfing
Pattern

35. Shooting Star (convergence)
Shooting Star

36. ?Web site: www. candlecharts.com
?E-mail: nison@candlecharts.com
?Telephone: 732.254.8660