Visual Guide to Candlestick Charting


  • Format: PDF
  • Pages: 386
  • Published Date: 2012


Visual Guide to Candlestick Charting is highly visual and takes you through all of the information you need in order to master candlestick charting in the broader context of technical analysis. The purpose of setting up the book with these visual aids and in alphabetical order is to explain the meaning of each candlestick indicator, not only by defining the indicator itself and how it appears, but also to provide an analytical context. Knowing the importance of a candlestick indicator as it appears in the price chart helps improve the timing of entry and exit. Every trader needs to rely on analytical signals and patterns to anticipate price movements and to confirm those movements as rapidly as possible. This is where the strength of candlesticks is most important and most valuable.


Today, a majority of chartists and technicians are familiar with candlestick charting patterns. However, many chartists are not certain about how to interpret the dozens of indicators found through candlestick analysis, or how to use candlesticks along with other indicators to confirm reversal and continuation forecasts. This has led to the desire among traders for a consistent, reliable, and powerful system that supplies them with more and better information. As a part of this desire among traders for more and better information, the enthusiasm for candlesticks as informative representations of price movement is due to their many attributes, including:

1.Instant recognition. The significance of a series of candlesticks is recognizable at a glance. A strong upward or downward movement is visible not only because of the direction of price trends, but also because of the color of candlesticks. Th e strength or weakness of momentum is further visible in the evolving height of candles, the volatility of trading range, and the special meaning of exceptionally large or small sessions.

2.Valuable confirmation. Technicians know that any indications of significance (breakout and a new trading range, resistance or support testing, and gapping action, for example) need to be confirmed before entry or exit should occur. But how do you confi rm and then decide before the important and expected price movement takes place? The answer is found in candlesticks. Anticipating price movement rather than following it helps every trader improve the timing of entry and exit through the use of candlesticks to confirm traditional charting patterns and indicators.

3.Variety of indications. Th ere are dozens of candlestick indicators, and each has a specific name. How many?This book defines and illustrates approximately 200 candlesticks and related terms. The distinction between the number of sessions involved with a particular candlestick indicator can be confusing; for this reason, the terms used in this book are “sign” (single candlestick), “move” (two-session indicators), and “pattern” (three sessions). While the time span of sessions may vary from seconds or minutes up to hours, days, or even weeks, the chart examples provided in this book are those of daily charts; and the sessions are described as “days”—however, the observations of indicators and their meaning apply equally to charts of all durations.

4.Applicability for a range of trading purposes. Candlestick signs, moves, and patterns provide valuable price movement insight for a range of purposes. Th ese can be used not only as confirmation tools, but also to augment day trading or swing trading strategies, timing of options trades, identification if current price volatility, and even for timing of purchases as part of a value or growth investing strategy.


  • Types of Charts
  • The History of Candlesticks
  • Candlesticks and Their Attributes
  • Pitfalls of Candlesticks
  • Confirmation
  • The Six Basic Candlesticks
  • Candlestick Alphabetical Entries
  • Noncandlestick Confirmation Indicators and Terms