introduction to candlestick reversal signals...• highly visual price bars that illustrate the...
TRANSCRIPT
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Introduction to Candlestick Reversal Signals
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DisclaimerThe VectorVest Program (“the System”) which we promote is not intended to provide you with specific or personalized advice. In all circumstances where you are looking to apply the System to your own personal needs you should consider whether you should first seek advice from a suitably qualified investment professional.Figures and information provided refer to the past and past performance and are not a reliable indicator of future results. Where stocks are quoted in foreign currencies, returns may increase or decrease as a result of currency fluctuations. In the event that you, as a recipient of this presentation, have any doubts as to the suitability of the investments or services promoted you should seek advice from a suitably qualified investment professional.You should be aware that the value of shares and other stocks may rise or fall. The rules on tax can change, and these changes may have an influence on the effectiveness of the System in the future. It is for you, as the tax payer, to assess the System’s effectiveness throughout the process. Some assets are more readily realizable than others, and you should bear in mind that it may be difficult to deal in or obtain reliable information about their value. You should always take account of dealing charges. In addition to any initial charge quoted there may also be a bid/offer spread or dilution. Investments in options and other forms of derivatives may exposeyou to a higher degree of risk given market circumstances relative to other forms of quoted investments.The System even if used in its entirety, cannot be guaranteed to provide specific returns in the short, medium or long term and you should bear in mind that individual securities may and can fluctuate considerably in value from day to day. The System has been designed without any reference to the specific interests of a particular investor. We reiterate, when using the System, you must take into account your own specific needs and liabilities.
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More on Candlesticks
What are Candlesticks?
• Highly visual price bars that illustrate the psychology between bulls and bears.
• Provides short-term reversal and continuation chart patterns.• We will focus on reversal patterns
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Candlestick Structure• Price – Candelstick (Green candle = Higher close than previous day)
• Range – the difference between the high and the low prices
Close
High
Open
Low
High
Open
Close
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Candlestick Structure• Price – Candlestick (Red candle = Lower close than previous day)
• Range – the difference between the high and the low prices
High
Low
Open
Close
High
Close
Open
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Identify Changes in Sentiment
Though single candlesticks convey valuable information about the changes in a market’s supply and demand balance, a succession of
candlesticks taken together, is more pertinent as they form a pattern.
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Candlestick Reversal Signals
Harami Patterns
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Bullish Harami
• The market is characterized by a prevailing downtrend.
• A filled red candle is observed on the first day.
• The unfilled green body that is formed on the second day is completely engulfed by the body of the first day.
• The confirmation level is defined as the last close or the midpoint of the filled red body, whichever is higher. Prices should cross above this level for confirmation.
• The stop loss level is defined as the lower of the last two lows.
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Confirmation and Stop Loss
Buy Level
Stop LossSource: VectorVest
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Bullish Harami Example
Confirmation Level
Initial Stop Loss
ResistanceBearish Harami
Source: VectorVest
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Bullish Harami Example
Confirmation Level
Initial Stop Loss
Bearish Engulfing
Source: VectorVest
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Bullish Harami Example
Confirmation Level
Initial Stop Loss
ResistanceBearish Harami
Support
Source: VectorVest
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Bullish Harami Example
Confirmation Level
Initial Stop Loss
Bearish Engulfing
1 Black Crow
Source: VectorVest
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Bullish Harami Example
Confirmation Level
Initial Stop Loss
Resistance
Bearish Harami / Dragonfly Doji
Source: VectorVest
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Bullish Harami Example
Confirmation Level
Initial Stop Loss
Resistance
Support
Confirmation Level
Initial Stop Loss
Bearish HaramiShooting Star
Source: VectorVest
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Bearish Harami
• The market is characterized by a prevailing uptrend.
• An unfilled green body is observed on the first day.
• The filled red body that is formed on the second day is completely engulfed by the body of the first day.
• The confirmation level is defined as the last close or the midpoint of the unfilled green body, whichever is lower. Prices should cross below this level for confirmation.
• The stop loss level is defined as the higher of the last two highs.
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Confirmation and Stop Loss
Sell Level
Stop Loss
Source: VectorVest
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Bearish Harami Example
Confirmation LevelInitial Stop Loss
Bullish Harami
Source: VectorVest
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Bearish Harami Example
Hammer
Confirmation Level
Initial Stop Loss
Source: VectorVest
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Bearish Harami Example
Confirmation Level
Initial Stop Loss
Bullish Harami
Source: VectorVest
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Bearish Harami Example
Confirmation Level
Initial Stop LossResistance
Gravestone Doji
Dragonfly Doji/Bullish Harami
Source: VectorVest
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Module 6
White Soldiers and Black Crows
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One White Soldier (Bullish)
• The market is characterized by a prevailing downtrend.
• A filled red candle is observed on the first day.
• The unfilled green body that is formed on the second day opens higher than the prior day’s close and closes higher than the prior day’s open.
• The confirmation level is defined as the last close. Prices should cross above this level for confirmation.
• The stop loss level is defined as the last low.
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Confirmation and Stop Loss
Buy Level
Stop Loss
Source: VectorVest
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One White Soldier Example
Confirmation Level
Initial Stop Loss
Bearish Engulfing
Gravestone Doji
Source: VectorVest
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One White Soldier Example
Confirmation LevelInitial Stop Loss
Bearish Harami
Source: VectorVest
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One White Soldier Example
Confirmation LevelInitial Stop Loss
Bearish Engulfing (UnConf)
Dark Cloud (UnConf)
Bearish Engulfing
Source: VectorVest
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One White Soldier Example
Confirmation Level
Initial Stop Loss
Bearish Harami
Shooting Star
Source: VectorVest
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One White Soldier Example
Confirmation Level
Initial Stop Loss
Bullish Engulfing
Dark Cloud
Bullish Harami
Source: VectorVest
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One White Soldier Example
Confirmation Level
Initial Stop Loss
Bearish Engulfing
Dark Clouds
Bullish Harami
Source: VectorVest
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One Black Crow (Bearish)
Sell Level
Stop Loss• The market is characterized by a prevailing uptrend.
• An unfilled green candle is observed on the first day.
• The filled red body that is formed on the second day opens lower than the first day’s close and closes lower than the first day’s open.
• The confirmation level is defined as the last close. Prices should cross below this level for confirmation.
• The stop loss level is defined as the last high.
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Confirmation and Stop LossStop Loss
Sell Level
Source: VectorVest
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One Black Crow
Confirmation Level
Initial Stop Loss
Shooting Star
Hammer
Doji
Source: VectorVest
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One Black Crow
Confirmation Level
Initial Stop Loss
Hanging Man
1 White Soldier
Piercing Pattern
Hanging Man
Shooting Star
Source: VectorVest
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One Black Crow
Confirmation LevelInitial Stop LossHanging Man
Bullish Engulfing
Shooting Star
Source: VectorVest
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One Black Crow
Confirmation LevelInitial Stop Loss
Bullish Harami
Piercing Pattern
One Black Crow
Bullish Harami
Confirmation LevelInitial Stop Loss
One Black Crow
Source: VectorVest