Japanese Candlestick

Japanese Candlestick

Postby kennynah » Sun Jul 05, 2009 4:47 pm

Admin, please feel free to move this thread to an appropriate location, if this is not the best place to begin a thread in.

Topic : Japanese Candles - A Technical Discussion

These are the various more popular terms used to describe various patterns formed by Candle Bars...

Doji
Piercing Line
Dark Cloud Cover
Engulfing Bullish
Engulfing Bearish
Evening Star
Morning Star
Shooting Star
Spinning Top
Marubozu
Hammer
Inverted Hammer
Harami Bullish
Harami Bearish


I look forward to receive your trading experiences and observations based on Japanese Candles...

Thanks in advance...
Last edited by kennynah on Sun Jul 05, 2009 5:02 pm, edited 1 time in total.
Options Strategies & Discussions .(Trading Discipline : The Science of Constantly Acting on Knowledge Consistently - kennynah).Investment Strategies & Ideas

Image..................................................................<A fool gives full vent to his anger, but a wise man keeps himself under control-Proverbs 29:11>.................................................................Image
User avatar
kennynah
Lord of the Lew Lian
 
Posts: 18582
Joined: Wed May 07, 2008 2:00 am
Location: everywhere.. and nowhere..

Re: Japanese Candles - Technical Discussion

Postby kennynah » Sun Jul 05, 2009 4:59 pm

Doji

There are many sub-categories of Doji candlestick...they are :

Image
The doji appears when opening and closing price are (almost) equal.
Neutral pattern, it often precedes an important price movement.

Image
Long-legged doji have long shadows that are (almost) equal in length.
Long-legged doji represent strong indecision.

Image
Doji with a short upper shadow and long lower shadow
Bull signal if it appears in a bear trend.

Image
Doji with a long upper shadow and short lower shadow
Bear signal if it appears in a bull trend.

Image
Dragon fly Doji
Dragon fly Doji is a potential trend reversal. Strong signal if it appears in a bear trend.

Image
Gravestone Doji
Gravestone Doji is a potential trend reversal. Strong signal if it appears in a bull trend.
Options Strategies & Discussions .(Trading Discipline : The Science of Constantly Acting on Knowledge Consistently - kennynah).Investment Strategies & Ideas

Image..................................................................<A fool gives full vent to his anger, but a wise man keeps himself under control-Proverbs 29:11>.................................................................Image
User avatar
kennynah
Lord of the Lew Lian
 
Posts: 18582
Joined: Wed May 07, 2008 2:00 am
Location: everywhere.. and nowhere..

Re: Japanese Candles - Technical Discussion

Postby winston » Sun Jul 05, 2009 5:11 pm

Thanks for the kind post. I only know how to read simple OHLC charts and am looking toward to your learning Japanese candles from u.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
User avatar
winston
Billionaire Boss
 
Posts: 103845
Joined: Wed May 07, 2008 9:28 am

Re: Japanese Candles - Technical Discussion

Postby Cheng » Sun Jul 05, 2009 9:27 pm

Doji in candlesticks will also look the same in bar charts.

Ken ge, some more please. Good revision! :)
"The really big money tends to be made by investors who are right on qualitative decisions." Warren Buffett

"Risk no more than you can afford to lose, and also risk enough so that a win is meaningful." Ed Seykota

Scan with FA, Time with TA, Volatility is my Friend. :)
User avatar
Cheng
Foreman
 
Posts: 417
Joined: Sat Aug 16, 2008 2:18 pm

Re: Japanese Candles - Technical Discussion

Postby kennynah » Sun Jul 05, 2009 9:34 pm

There are variations to Doji ... as shown above...

japanese candle bars, is but just another TA method... of course, nothing is absolute.

also, due to its popularity over the years, these different japanese candles can become self-fulfilling prophecy....but whether there is any truth to this..i don't care...as long as they continue to be useful... i use it...

an example.. look at SPX MONTHLY bar chart....Jun09 bar, is a very good example of a Doji....
Options Strategies & Discussions .(Trading Discipline : The Science of Constantly Acting on Knowledge Consistently - kennynah).Investment Strategies & Ideas

Image..................................................................<A fool gives full vent to his anger, but a wise man keeps himself under control-Proverbs 29:11>.................................................................Image
User avatar
kennynah
Lord of the Lew Lian
 
Posts: 18582
Joined: Wed May 07, 2008 2:00 am
Location: everywhere.. and nowhere..

Re: Japanese Candles - Technical Discussion

Postby kennynah » Wed Jul 08, 2009 7:30 pm

some terminologies that all japanese candlesticks students must know..

Image
Options Strategies & Discussions .(Trading Discipline : The Science of Constantly Acting on Knowledge Consistently - kennynah).Investment Strategies & Ideas

Image..................................................................<A fool gives full vent to his anger, but a wise man keeps himself under control-Proverbs 29:11>.................................................................Image
User avatar
kennynah
Lord of the Lew Lian
 
Posts: 18582
Joined: Wed May 07, 2008 2:00 am
Location: everywhere.. and nowhere..

Re: Japanese Candles - Technical Discussion

Postby kennynah » Wed Jul 08, 2009 7:34 pm

picture paints a thousand words...

various defining patterns...

Image

Image

Image

Image

Image
1.
Long white candlesticks indicate that the Bulls controlled the ball (trading) for most of the game.
2.
Long black candlesticks indicate that the Bears controlled the ball (trading) for most of the game.
3.
Small candlesticks indicate that neither team could move the ball and prices finished about where they started.
4.
A long lower shadow indicates that the Bears controlled the ball for part of the game, but lost control by the end and the Bulls made an impressive comeback.
5.
A long upper shadow indicates that the Bulls controlled the ball for part of the game, but lost control by the end and the Bears made an impressive comeback.
6.
A long upper and lower shadow indicates that the both the Bears and the Bulls had their moments during the game, but neither could put the other away, resulting in a standoff.

(to be continued....)
Options Strategies & Discussions .(Trading Discipline : The Science of Constantly Acting on Knowledge Consistently - kennynah).Investment Strategies & Ideas

Image..................................................................<A fool gives full vent to his anger, but a wise man keeps himself under control-Proverbs 29:11>.................................................................Image
User avatar
kennynah
Lord of the Lew Lian
 
Posts: 18582
Joined: Wed May 07, 2008 2:00 am
Location: everywhere.. and nowhere..

Re: Japanese Candles - Technical Discussion

Postby BlackCat » Sun Jul 26, 2009 6:37 pm

First, a quick questions, mabye some more experienced forummers can help confirm if what I read in candlestick books is true:
- Candlesticks are only used to predict short term movements (next 1-10 sessions). To pickup a term 'bounce' in the stock. We can call this 'overbrought' or 'oversold' but its not necessarily to signify a change in trend. Correct?
- Generally (to cut a very long thing short), long tails are a potential reversal.

A current example:
Allgreen: If I want to go long on this stock, the last candlestick suggests I will probably get a better price if I wait a few days. The bearish signal would be confirmed if tmr's closing price is below the last closing price (1.23).

Image

My candlestick book suggests taking the halfway mark of the white 'breakout' candle's body as support...ie: the stock is still going upwards (short term) as long as the EOD price is above this halfway mark).....though I've got no idea if this guideline is reliable or not.... seems a bit arbitrary to me.

Any comments?
I wait until there is money lying in the corner, and all I have to do is go over there and pick it up.
Jim Rogers
User avatar
BlackCat
Coolie
 
Posts: 116
Joined: Sun Sep 21, 2008 6:13 pm

Re: Japanese Candles - Technical Discussion

Postby kennynah » Sun Jul 26, 2009 7:55 pm

my only comment is that what TA tool used, it will NOT be very useful on a thinly traded stock.

for candles to be useful, it must embody a meaningfully large number of transactions...

- Candlesticks are only used to predict short term movements (next 1-10 sessions). To pickup a term 'bounce' in the stock. We can call this 'overbrought' or 'oversold' but its not necessarily to signify a change in trend. Correct?


candles can be used for any time frame...

- Generally (to cut a very long thing short), long tails are a potential reversal.


it is possible but its interpretation, like every other TA tools, is subjective and never quite absolute...

My candlestick book suggests taking the halfway mark of the white 'breakout' candle's body as support...ie: the stock is still going upwards (short term) as long as the EOD price is above this halfway mark).....though I've got no idea if this guideline is reliable or not.... seems a bit arbitrary to me.


it is more useful to view several candles as oppose to using 1 candle to form a technical opinion... it is merely ONE form of technical indicator... most TA folks rely on a few indicators that they are proficient in, rather than just one, to decide on trade decisions.
Options Strategies & Discussions .(Trading Discipline : The Science of Constantly Acting on Knowledge Consistently - kennynah).Investment Strategies & Ideas

Image..................................................................<A fool gives full vent to his anger, but a wise man keeps himself under control-Proverbs 29:11>.................................................................Image
User avatar
kennynah
Lord of the Lew Lian
 
Posts: 18582
Joined: Wed May 07, 2008 2:00 am
Location: everywhere.. and nowhere..

Re: Japanese Candles - Technical Discussion

Postby iam802 » Wed Nov 11, 2009 12:48 am

Building up this thread again.

----
Reversal Patterns

1. Umbrella Lines
Why do we called it Umbrella Lines?

Because it looks like an umbrella.
- Long shadow, short body
- Must come after a rally or a decline
- Signals possible reversal

Image

Examples of Umbrella Lines
- Hammer
- Hanging Man

2. Engulfing Pattern

3. Dark Cloud Cover

4. Piercing Pattern
1. Always wait for the setup. NO SETUP; NO TRADE

2. The trend will END but I don't know WHEN.

TA and Options stuffs on InvestIdeas:
The Ichimoku Thread | Option Strategies Thread | Japanese Candlesticks Thread
User avatar
iam802
Big Boss
 
Posts: 7268
Joined: Wed May 07, 2008 1:14 am

Next

Return to Other Investment Instruments & Ideas

Who is online

Users browsing this forum: No registered users and 1 guest