Basics of

Candlesticks
Brought to you by:

FX-ebooks.com

For more Forex ebooks visit: http://fx-ebooks.com

4x-course.com forex4money.com fx-ebooks.com fx-ebrokers.com
 Forex Mentor by Peter Bain
The new Leading Professional Currency Trading System
shows you how to trade currencies like the Pros!
Peter Bain has put together a stunningly comprehensive forex course. He
shows you exactly how the professionals are doing it. All the benefits of a live
trading seminar, but in the comfort of your own armchair. We recommend
checking out the video clips on the website

WHAT YOU WILL LEARN ...

• Indicator that beat out the other 99 as the most successful technical market pointer

• How to use futures data to confirm the currency cash market trends.

• Take money from the Euro which puts an average $US760 on the table everyday!

• How to use hedge your currency trades.

• Learn these never revealed techniques in this seminar video recording.

• Watch and Listen to a topic as many times as you need.

• 150 page detailed trading manual. See Table of Contents at the end of this page, 35
page Getting Started Guide

• Real currency trading examples from the last 8 months designed to further reinforce
every trading concepts

• Access to daily pivots for the 4 major pairs and "News not Noise" Forex news digest
and commentary.

Get on-going support from our members-only mentorship program which includes daily
examples, questions and answers, tips, articles, etc.

View 11 Forex Course Sample Videos Online Now!

For more Forex ebooks visit: http://fx-ebooks.com

4x-course.com forex4money.com fx-ebooks.com fx-ebrokers.com
Basics of Candlesticks

Where do Candlesticks Come From?

In the 1600s, the Japanese developed a method of technical analysis to analyze

the price of rice contracts. This technique is called candlestick charting.
Candlestick charts are simply a new way of looking at price; they don't involve
any calculations.

What do Candlesticks Look Like?

Candlestick charts are much more visually appealing than a standard two-
dimensional bar chart. As in a standard bar chart, there are four elements
necessary to construct a candlestick chart, the OPEN, HIGH, LOW and CLOSING
price for a given time period. Below are examples of candlesticks and a definition
for each candlestick component:

The body of the candlestick is called the real body, and represents the range
between the open and closing prices.

A black or filled-in body represents that the close during that time period was
lower than the open, (normally considered bearish) and when the body is open or
white, that means the close was higher than the open (normally bullish).

The thin vertical line above and/or below the real body is called the upper/lower
shadow, representing the high/low price extremes for the period (one period of
time measures the duration of selling or buying within the market). As a trader,
you can use any time period you want, time intervals may be a tick chart, 1 min,
5min, 10 min, 1 hour, 4 hour, 1 day,…

Candlestick Patterns

For more Forex ebooks visit: http://fx-ebooks.com

4x-course.com forex4money.com fx-ebooks.com fx-ebrokers.com
 Bearish 3 Pattern: Bearish Harami
Pattern:
A long black body
followed by several small A very large white body
bodys and endingin followed by a small black
another long black body. bodythat is contained
The small bodys are within the previous bar.
usually contained within
the first black body's Interpretation: A bearish
range. pattern when preceded
by an uptrend.
Interpretation: A bearish
continuation pattern.

Bearish Harami Cross Big Black Candle

Pattern: Pattern:

A Doji contained within a An unusually long black

large white body. bodywitha wide
range.Prices open near
Interpretation: A top the high and close near
reversal signal the low.

Interpretation: A bearish
pattern.

Big White Candle BlackBody Pattern:

Pattern:
This candlestick is formed
A very long white when the closing price is
bodywitha wide range lower than the opening
between high and price.
low.Prices open near the
low and close near the Interpretation: A bearish
high. signal. More important
when part of a pattern.
Interpretation: A bullish
pattern.

Bullish 3 Pattern: Bullish Harami

Pattern:
A long white body
followed by three small A very large black bodyis
bodies, ending in another followed by a small white
long white body. The body and is contained
three small bodies are within the black body.
contained within the first
white body. Interpretation: A bullish
pattern when preceded
Interpretation: A bullish by a downtrend.
continuation pattern.

For more Forex ebooks visit: http://fx-ebooks.com

4x-course.com forex4money.com fx-ebooks.com fx-ebrokers.com
 Bullish Harami Cross Dark Cloud Cover
Pattern: Pattern:

A Doji contained within a A long white body

large black body. followed by a black
body.The following black
Interpretation: A bottom candlestick opens higher
reversal pattern. than the white
candlestick's highand
closes at least 50% into
the white candlestick's
body.

Interpretation: A bearish
reversal signal during an
uptrend.

Doji Pattern: Doji Star Pattern:

The open and close are A Doji which gaps above

the same. or below a white or black
candlestick.
Interpretation: Dojis are
usually components of Interpretation: A reversal
many candlestick signal confirmed by the
patterns. This candlestick next candlestick (eg. a
assumes more long white candlestick
importance the longer would confirm a reversal
the verticle line. up).

Engulfing Bearish Line Engulfing Bullish Line

Pattern: Pattern:

A small white body A small black body

followed by and followed byand contained
contained within a large within a large white
black body. body.

Interpretation: A top Interpretation: A bottom

reversal signal. reversal signal.

Evening Doji Star Evening Star Pattern:

Pattern:
A large white body
A large white body followed bya small body
followed by a Doji that that gaps above the
gaps above the white white body. The third
body. The third candlestick is a black
candlestick is a black bodythat closes 50% or
body that closes 50% or more intothe white body.
more into the white

For more Forex ebooks visit: http://fx-ebooks.com

4x-course.com forex4money.com fx-ebooks.com fx-ebrokers.com
 body. Interpretation: A top
reversal signal.
Interpretation: A top
reversal signal, more
bearishthan the regular
eveningstar pattern.

Falling Window Grave stone Doji

Pattern: Pattern:

A gap or "window" The open and close are at

between the low of the the low of the bar.
first candlestick and the
high of the second Interpretation: A top
candlestick. reversal signal. The
longer the upper wick,
Interpretation: A rally to the more bearish the
the gap is highly signal.
probable. The gap should
provide resistance.

Hammer Pattern: Hanging Man Pattern:

A small body near the A small body near the

high witha long lower high with a long lower
wick with little or no wick with little or no
upper wick. upper wick. The lower
wick should be several
Interpretation: A bullish times the height of the
pattern during a body.
downtrend.
Interpretation: A bearish
pattern during an
uptrend.

Inverted Black Inverted Hammer

Hammer Pattern: Pattern:

An upside-down hammer An upside-down hammer

witha black body. witha white or black
body.
Interpretation: A bottom
reversal signal with Interpretation: A bottom
confirmation the next reversal signal with
trading bar. confirmation the next
trading bar.

For more Forex ebooks visit: http://fx-ebooks.com

4x-course.com forex4money.com fx-ebooks.com fx-ebrokers.com
 Long Lower Shadow
Pattern:
Long Legged Doji
Pattern:
A candlestick with a long
lower wick with a length
A Doji pattern with long
equal to or longer than
upper and lower wicks.
the range of the
candlestick.
Interpretation: A top
reversal signal.
Interpretation: A bullish
signal.

Long Upper Shadow Morning Doji Star

Pattern: Pattern:

A candlestick withan A large black body

upper wick that has a followed by a Doji that
length equal toor greater gaps below the black
than the range ofthe body. The next
candlestick. candlestick is a white
body that closes 50% or
Interpretation: A bearish more into the black body.
signal.
Interpretation: A bottom
reversal signal.

Morning Star Pattern: On Neck-Line Pattern:

A large black body In a downtrend, a black

followed by a small body candlestick is followed by
that gaps below the black a small white candlestick
body. The following with its close near the
candlestick is a white low of the black
body that closes 50% or candlestick.
more into the black body.
Interpretation: A bearish
Interpretation: A bottom pattern where the market
reversal signal. should move lower when
the white candlestick's
low is penetrated by the
next bar.

Piercing Line Pattern: Rising Window

Pattern:
A black candlestick
followed by a white A gap or "window"
candlestick that opens between the high of the
lower than the black first candlestick and the
candlestick's low, but low of the second
closes 50% or more into candlestick.

For more Forex ebooks visit: http://fx-ebooks.com

4x-course.com forex4money.com fx-ebooks.com fx-ebrokers.com
 the black body. Interpretation: A sell off
to the gap is highly likely.
Interpretation: A bottom The gap should provide
reversal signal. support.

Separating Lines Shaven Bottom

Pattern: Pattern:

In an uptrend, a black A candlestick with no

candlestick is followed by lower wick.
a white candlestick with
the same opening price. Interpretation: A bottom
reversal signal with
Interpretation: A confirmation the next
continuation pattern. The trading bar.
prior trend should
resume.

Shaven Head Pattern: Shooting Star Pattern:

A candlestick with no A candlestick with a small

upper wick. body, long upper wick,
and little or no lower
Interpretation: A bullish wick.
pattern during a
downtrend and a bearish Interpretation: A bearish
pattern duringan pattern during an
uptrend. uptrend.

Spinning Top Pattern: Three Black Crows

Pattern:
A candlestick with a small
body. The size of the Three long black
wicks is not critical. candlesticks with
consecutively lower
Interpretation: A neutral closes that close near
pattern usually their lows.
associated with other
formations. Interpretation: A top
reversal signal.

Three White Soldiers Tweezer Bottoms

Pattern: Pattern:

Three white candlesticks Twoor more candlesticks

with consecutively higher with matching
closes that close near bottoms.The size or color
their highs. of the candlestick does
not matter.
Interpretation: A bottom
reversal signal. Interpretation: A Minor
reversal signal.

For more Forex ebooks visit: http://fx-ebooks.com

4x-course.com forex4money.com fx-ebooks.com fx-ebrokers.com
 Tweezer Tops Pattern: White Body Pattern:

Two or more candlesticks A candlestick formed

with similar tops. when the closing price is
higher than the opening
Interpretation: A reversal price.
signal.
Interpretation: A bullish
signal.

For more Forex ebooks visit: http://fx-ebooks.com

4x-course.com forex4money.com fx-ebooks.com fx-ebrokers.com