Strategies for Profiting With Japanese Candlestick Charts

The fundamentals gauge the rational part of your investing decisions, but they don’t account for the emotional or psychological reasons that prices change in the short term. Jesse Livermore, the famous trader from the early 1900s, said that human nature never changes; the pockets change and the technology changes, but the market never changes. How can it? Human emotion drives the market—not reason, not economics, and certainly not logic.

The Basics: Candlestick Construction

The Candle Line

Gaps

Small Real Bodies and Long Sessions

Spinning Tops

Interpreting Doji Sessions

Support and Resistance Levels

Long White Bodies as Support (Or Long Black as Resistance)

Analysis Based on Shadows

Trends and Reversals

Single-Session Signals

Shooting Stars and High Waves

Shooting Stars

High Wave Candles

Engulfing Patterns

Support and Resistance Levels

Trends

More Two-Candlestick Patterns

Dark Cloud Cover

Doji Development

Blending

Piercing Pattern

The Harami and Morning or Evening Star

Harami

Morning Star

Morning Doji Star

False Signals

Evening Star

Looking Through the Window

A Window

Mysteries of Support and Resistance

Trend Lines

Change of Polarity

More Support and Resistance Insight

Springs and Upthrusts

Moving Average

Volume Spike

Retracement and Divergence

Retracement

Oscillators

Head and Shoulders Analysis

Candlesticks in Context

Market Context

Confluence

Conclusion