This document discusses candlestick patterns and trading tactics. It provides examples of candlestick signals like hammers, bullish engulfing patterns, and morning doji stars. It explains how these patterns can provide buy and sell signals and be used to determine price targets and stops. Specific trades are analyzed showing how candlestick patterns were used to identify entry and exit points and manage risk and reward.

1. 201
Candles in ContextCandles in Context
Not an ideal dark cloud
cover, but??

2. 202
Trading TacticsTrading Tactics -- Candles in ContextCandles in Context
a) What are the candle lines at
the arrows at 1 and 2 ?
b) Where would you be more
bullish, at 1 or 2, and why?
c) On what candle line would
you buy after the signals at 1
and 2?
d) If you buy at 1 or 2 where
is a potential protective sell
stop?
1
2

3. 203
Nison TradingNison Trading
PrinciplePrinciple
Do not only consider theDo not only consider the
market’s price. Analyze themarket’s price. Analyze the
shape and size of candleshape and size of candle
lines at that price.lines at that price.

4. 204
204
How are new highs are made

5. 205
How are new highs or lows madeHow are new highs or lows made
New High Close
Bulls’ can’t sustain
rallies for more than
one session as shown
my the red arrow.

6. 206
How are new highs made?How are new highs made?

7. 207
How are new highs/lows made?How are new highs/lows made?

8. 208
The water looks fine!The water looks fine!

9. 209
““Those knowing whenThose knowing when
to fight and when notto fight and when not
will be victorious”will be victorious”
Candlecharts.com
Consider risk-reward

10. 210
Nison TradingNison Trading
PrinciplePrinciple
Even a “perfect” candle signalEven a “perfect” candle signal
does not equal a good trade!does not equal a good trade!
YOU MUST ALWAYSYOU MUST ALWAYS
JUDGE THE POTENTIALJUDGE THE POTENTIAL
TRADE’S RISKTRADE’S RISK--REWARD.REWARD.

11. 211
StopsStops

12. 212
StopsStops
Window as support shown
by bullish shadows and
hammers at the arrows.
Once the support is broken
we must readjust our
bullish view.
window

13. 213
Obtaining targetsObtaining targets
Buy on the hammer
during the week of
April 8, an obvious
resistance area would
be towards 615.
hammer

14. 214
Obtaining Price TargetsObtaining Price Targets
Shooting star confirms
resistance at top end of
box range. Sell on the
shooting star with a
potential target at bottom
of the box range near 55.
Shooting
Star

15. 215
Using Western TA for targetUsing Western TA for target
19 25 4
March
11 18 25 1
April
8 15 22 29
May
6
970
975
980
985
990
995
1000
1005
1010
1015
1020
1025
1030
1035
1040
1045
1050
1055
1060
1065
1070
1075
x10
DJ INDU AVERAGE
Bullish engulfing
pattern gives a turning
signal with falling
resistance line as a
target

16. 216
Trading TacticsTrading Tactics-- Case StudyCase Study
15 22 29
May
6 13 20 28
10.9
11.0
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
11.9
12.0
12.1
12.2
12.3
12.4
12.5
12.6
12.7
12.8
12.9
13.0
13.1
13.2
13.3
13.4
13.5
COMVERSE TECH
Bullish shadows at arrows show demand. A hammer is
a potential buy signal. If the trader feels that the
market was to high to buy on the next session’s open,
there is now a window as support. On a correction, we
can buy within the window. A potential target is the
April highs near 13.4. Once there a bearish engulfing
pattern confirms this resistance.
Hammer
Rising
window
Bearish
engulfing
pattern

17. 217
Trading TacticsTrading Tactics-- TargetsTargets
3 20 28 3
June
10 17 24 1
July
8 15
300
400
500
600
700
800
900
1000
x1000
Volume
26.0
26.5
27.0
27.5
28.0
28.5
29.0
29.5
30.0
30.5
31.0
31.5
32.0FIDELITY NATL
1) Buy on first hammer, exit at bearish engulfing
pattern (circled). This bearish engulfing pattern
took on extra significance since it also confirmed
resistance.
Or
2) Sell short at bearish engulfing pattern and exit
at second hammer (which confirmed the first
hammer’s support area).
hammers

18. 218
Trading TacticsTrading Tactics-- TargetsTargets
Use hammer to buy
and window to exit
hammer
Falling window

19. 219
Hammer and Risk/RewardHammer and Risk/Reward
Risk
reward

20. 220
Risk/RewardRisk/Reward
14 22 28 4
February
11 19 25
Ma
60.0
60.5
61.0
61.5
62.0
62.5
63.0
63.5
64.0
64.5
65.0
65.5
66.0
66.5
67.0
67.5
68.0
68.5
69.0
69.5
INTL GAME TECH
Morning doji star as support. Buy on
hammer, target is recent pivot high. This
represents an attrive r/r.
Pivot
high