Patterns Candlestick, Guide Part 4.
已更新
Guide Candles Patterns
Candlestick patterns are usually quite good when trying to finish an analysis as it can help you confirm a trend.
Basic Candles
11- Long White Candle
Description:
When analyzing the situation on the chart, it is always more important to observe what is happening at that moment. Therefore, in order to determine whether the candle appeared as a long or a short line, the last appointments are crucial.
If market volatility is low for a long time, even a small breakout may be enough to form a long white candle. However, in the same chart below, when market volatility is much higher, a candle has to be appropriately larger to recognize it as a valid long white candle.
Many analysts make a mistake when determining whether the candle is a long or a short line, position on historical charts. They forget that by the time a candle is forming, it is not clear what the market will look like in the future. In other words, if we have a candle on the chart today that meets the requirement of a valid long line, it does not mean that the same requirement will be met in the future. What appears to be extremely long today may not be at a later time, when market volatility will grow rapidly.
Some authors (eg Bulkowski) classify Long White Candle as a continuation (bullish) pattern. Let us think for a moment whether this should be regarded as a correct interpretation. First, the candle should appear only in an uptrend; otherwise, we could not call this pattern a bullish continuation. But this is not true, as we can find this candle in an uptrend or a downtrend. Second, Long White Candle is not a pattern in itself, it is a basic candle and can be part of both bullish and bearish patterns. Some people choose to think of this candle as bullish, but in fact it may appear as part of, for example, bearish engulfing patterns or dark clouds. Third, if this candle is formed with a low trading volume, it is recommended to be very suspicious as far as its bullish meaning is respected.
According to Nison, the appearance of a long white candle body (that is, no shadows) after a series of dips, may indicate a change in the current trend. Especially if the closing price is higher than the close of several previous candles. Nison also adds that when the long white candle appears during an uptrend and breaks some major recent resistance level, there is a good indication of the continuation of the trend. The higher the volume when the Long White Candle is forming, the louder the signal will be.
Long white candles, accompanied by a large volume of trades, should also be considered as a support zone. The support level appears within the average and low price of that candle. Others are treating the entire Long White Candle as a support zone.
Building:
• White paste
• Upper and lower shade required
• None of the shadows can be bigger than the body
• The body of the candle is three times higher than the average body of the last 5 or 10 candles.
• Appears as a long row
Example:
NASDAQ,05 Mar, 2021. Long White Candle. Chart 1d.
12- White Marubozu
Description:
Marubozu in Japanese means "bald head" or "shaved head". This is because said candle does not have at least one shadow, which implies that the opening or closing price will be equal to one of the maximum prices of the candle. A Marubozu, which does not have both shadows, indicates that the market opened and closed at the extreme levels of that candle.
The white Marubozu that appears as a long line, like the Long White Candle, has substantial meaning. It indicates the strength of the market, especially if it is forming with high trading volumes. Depending on how it appears on the chart, it can be thought of as a continuation or reversal candle.
White Marubozu that appears in an uptrend may suggest its continuation, especially if it appears after a price gap (Shimizu). As with many other basic candles, White Marubozu can appear within patterns, both bullish and bearish.
In a downtrend, White Marubozu can be part of a bullish reversal pattern, for example in Bullish Engulfing. While occurring during an uptrend, it can form a bearish reversal pattern, for example, the Bearish Tasuki Line.
Building:
• White body
• Lack of shadows
• Appears as a short or long line
Example:
ALCOA INC,31 Jan, 2011. White Marubozu. Chart 1d.
13- Closing White Marubozu
Description:
Closing White Marubozu is a candle belonging to the marubozu group. Depending on its appearance on the chart and how the lower shadow looks, you can predict the continuation of a trend or indicate its reversal. The sail is notable for the absence of the upper shadow, but it must have a body that covers at least 51 percent of the overall height of the sail.
If a closing white Marubozu candle appears in an uptrend, it is a much stronger trend continuation signal than the opening white Marubozu candle. This is because the high price and the closing price are the same (no upper shadow), which means that the market has remained strong until the end of the session (if we consider the daily charts).
Building:
• White paste
• No upper shadow
• Lower shadow smaller than the body
• Appears as a short or long line
Example:
ALCOA INC,15 Jan, 2012. Closing White Marubozu. Chart 1d.
15- Long-Legged Doji
Description:
The literature contains many descriptions of doji candles that provide examples of schematic thinking. It is widely accepted that doji candles are neutral. However, it is an extremely important type of candle that must be interpreted differently for different types of situations.
An example is a basic long-legged Doji candle. The appearance of this type of doji on a chart can be a sign of a reversal, especially if it occurs after a long white candle. Seiki Shimizu writes that traders often take positions in the direction designated by the candle opening after the long-legged Doji (i.e. if the open is lower, take a short position and vice versa). This is very aggressive behavior; It is important to recognize that when the market returns to trend after the doji, it is seen as a sign of defeating momentary weakness.
It is worth remembering how the creation of this candle arises. The opening and closing prices are the same, but during the day (if we use daily candles) we are dealing with extremely rapid growth and decline. Such situations indicate considerable concern among traders. In many cases, these rapid movements take place in a few minutes. It can represent a momentary euphoria causing sharp rises and then a sudden market leak or vice versa. Therefore, the next candle is of great importance for the interpretation of subsequent events.
Building:
• A doji candle
• The opening and closing prices are the same or similar
• The upper and lower shadows are very long
• The body is located in the middle of the candle or almost in the middle range
• Appears as a long line
Example:
Intel INC,18 April, 2002. Long-Legged Doji. Chart 1d.
15- White Spinning Top
Description:
The tops are candles with very small bodies. They are different in nature compared to long candles, which show the strength of the trend. In this case we are facing indecision. The importance of a spinning top depends largely on the current situation on the chart. If one or more spinning tops occur in a stable market, it doesn't mean anything in terms of predicting how prices will evolve. However, when the market is growing rapidly and there is this type of candle - long shadow (s) and a small body - this means that, despite the large fluctuations during the session, the market does not have the strength to continue the current trend. Confirmation of this weakness can be the appearance of black candles after the top.
When the top appears following a clear trend (downtrend or uptrend) its importance is greater, if at the same time we notice a rapid increase in volume - this situation should be considered as a potential sign of the trend change.
In the case of a spinning top, the color of the body, in principle, does not matter, so the interpretation of Black Spinning Top and White Spinning Top is identical.
Building:
• White paste
• At least one shade is required
• At least one shadow must be longer than the body
• Appears as a long and a short line
• If it appears as a long line, none of the shadows can exceed three times the body (otherwise we would have the basic High Wave candle)
Example:
PFE INC,06 April, 2010. White Spinning Top. Chart 1d.
16- Dragonfly Doji
Description:
Dragonfly Doji is a basic candle shaped like a Hanging Man pattern (in an uptrend) or Takuri Line (in a downtrend). Due to the identical opening and closing prices, it is classified as a doji candle. The Japanese name means not only "dragonfly" but also bamboo helicopter or bamboo dragonfly (jap. Taketombo), which is a toy helicopter rotor that flies upward when its shaft rotates rapidly. Shimizu points out that the market after the appearance of the Dragonfly Doji can behave as unpredictably as the toy: both go up and down.
Morris, on the other hand, draws attention to the fact that such a candle can announce a reversal after a long downtrend, especially when the lower shadow is very long, then we have the pattern called the Takuri Line. A little difference between opening and closing is accepted.
Building:
• The opening, closing and maximum prices are the same or very similar
• Long lower shadow
• Appears as a long line
Or
Example:
Intel,14 Sep, 2006. Dragonfly Doji. Chart 1d.
17- Opening Black Marubozu
Description:
The Opening Black Marubozu candle has no upper shadow and its high price is equal to the opening price.
According to Shimizu, Opening Black Marubozu is a bearish candle, either reversal or continuation. In a clear downtrend, the appearance of such a candle preceded by a price gap can predict the acceleration of declines. Another important factor is the length of the lower shadow (note that the shadow cannot be longer than the body of the candle). The shorter the shadow, the more negative the candle's meaning.
The Black Marubozu opening can also occur within bullish patterns, both continuation and reversal.
This candle is very similar to the Bearish Belt Hold pattern, but at the Black Marubozu open the lower shadow can be longer.
Building:
• Black body
• No upper shadow
• Lower shadow smaller than the body
• Appears as a long or short line
Example:
Intel,07 Aug, 2007. Opening Black Marubozu. Chart 1d.
18- Doji
Description:
This candle doesn't really have any trend meaning for the most part. It is usually only a continuation of the current one.
Building:
• A doji candle
• Appears as a long or short line
Example:
Intel,18 Aug, 2006. Doji. Chart 1d.
19- Four-Price Doji
Description:
The Four Price Doji is a basic candle that has all four of the same prices (i.e. Open, Close, Low and High). Usually this means that we are dealing with a very small number of transactions, and in many cases a single transaction. Therefore, its importance is very limited. Note that we can assume, as for all other types of doji candles, that a very small body is acceptable. In the case of the four price Doji, this means that the open, close, high and low prices are not necessarily all the same, but are very similar.
The Four Price Doji often appears in pre-market and after-hours trading. Also, when the candles are low frequency (for example 1 minute candles), the chances of such candles being seen are higher. When such candles occur on a daily chart, it means that the trading volume is likely to be extremely low.
Building:
• A doji candle
• All prices are the same
• Lack of shadows
• Appears as a short line
Example:
NRG Energy INC,31 Mar, 2009. Four Doji. Chart 1d.
20- Opening White Marubozu
Description:
Opening white Marubozu is similar to a long white candle and should be treated similarly, that is, depending on the context, as a reversal or continuation candle. Distinguished by the absence of the lower shadow, the body must be at least 51 percent of the overall height of the sail. The length of the upper shadow and the context in which the candle is forming on the chart (see the bullish belt hold pattern) may be relevant to your interpretation.
The appearance of this basic candle in an uptrend can suggest a continuation of the uptrend, but it can also be part of the bearish reversal pattern (for example, Dark Cloud Cover). In the downtrend, the opening white Marubozu may be part of the bullish reversal pattern.
The White Marubozu basic opening candle is considered a bullish belt hold pattern, but then a downtrend is required before it occurs, and the upper shadow should not be too long.
Building:
• White body
• No lower shadow
• Upper shadow smaller than the body
• Appears as a long or short line
Example:
NRG Energy INC,30 Jul, 2009. Opening White Marubozu. Chart 1d.
Just relax. If you do not master everything it is normal, to be realistic I have not learned all this in its entirety, but with a script and simply knowing how to interpret them you can use them whenever you want. You don't need to know them by heart.
With this we finish the Basic Candles. We will continue with One Line Patterns tomorrow.
Candlestick patterns are usually quite good when trying to finish an analysis as it can help you confirm a trend.
Basic Candles
11- Long White Candle
Description:
When analyzing the situation on the chart, it is always more important to observe what is happening at that moment. Therefore, in order to determine whether the candle appeared as a long or a short line, the last appointments are crucial.
If market volatility is low for a long time, even a small breakout may be enough to form a long white candle. However, in the same chart below, when market volatility is much higher, a candle has to be appropriately larger to recognize it as a valid long white candle.
Many analysts make a mistake when determining whether the candle is a long or a short line, position on historical charts. They forget that by the time a candle is forming, it is not clear what the market will look like in the future. In other words, if we have a candle on the chart today that meets the requirement of a valid long line, it does not mean that the same requirement will be met in the future. What appears to be extremely long today may not be at a later time, when market volatility will grow rapidly.
Some authors (eg Bulkowski) classify Long White Candle as a continuation (bullish) pattern. Let us think for a moment whether this should be regarded as a correct interpretation. First, the candle should appear only in an uptrend; otherwise, we could not call this pattern a bullish continuation. But this is not true, as we can find this candle in an uptrend or a downtrend. Second, Long White Candle is not a pattern in itself, it is a basic candle and can be part of both bullish and bearish patterns. Some people choose to think of this candle as bullish, but in fact it may appear as part of, for example, bearish engulfing patterns or dark clouds. Third, if this candle is formed with a low trading volume, it is recommended to be very suspicious as far as its bullish meaning is respected.
According to Nison, the appearance of a long white candle body (that is, no shadows) after a series of dips, may indicate a change in the current trend. Especially if the closing price is higher than the close of several previous candles. Nison also adds that when the long white candle appears during an uptrend and breaks some major recent resistance level, there is a good indication of the continuation of the trend. The higher the volume when the Long White Candle is forming, the louder the signal will be.
Long white candles, accompanied by a large volume of trades, should also be considered as a support zone. The support level appears within the average and low price of that candle. Others are treating the entire Long White Candle as a support zone.
Building:
• White paste
• Upper and lower shade required
• None of the shadows can be bigger than the body
• The body of the candle is three times higher than the average body of the last 5 or 10 candles.
• Appears as a long row
Example:
NASDAQ,05 Mar, 2021. Long White Candle. Chart 1d.
12- White Marubozu
Description:
Marubozu in Japanese means "bald head" or "shaved head". This is because said candle does not have at least one shadow, which implies that the opening or closing price will be equal to one of the maximum prices of the candle. A Marubozu, which does not have both shadows, indicates that the market opened and closed at the extreme levels of that candle.
The white Marubozu that appears as a long line, like the Long White Candle, has substantial meaning. It indicates the strength of the market, especially if it is forming with high trading volumes. Depending on how it appears on the chart, it can be thought of as a continuation or reversal candle.
White Marubozu that appears in an uptrend may suggest its continuation, especially if it appears after a price gap (Shimizu). As with many other basic candles, White Marubozu can appear within patterns, both bullish and bearish.
In a downtrend, White Marubozu can be part of a bullish reversal pattern, for example in Bullish Engulfing. While occurring during an uptrend, it can form a bearish reversal pattern, for example, the Bearish Tasuki Line.
Building:
• White body
• Lack of shadows
• Appears as a short or long line
Example:
ALCOA INC,31 Jan, 2011. White Marubozu. Chart 1d.
13- Closing White Marubozu
Description:
Closing White Marubozu is a candle belonging to the marubozu group. Depending on its appearance on the chart and how the lower shadow looks, you can predict the continuation of a trend or indicate its reversal. The sail is notable for the absence of the upper shadow, but it must have a body that covers at least 51 percent of the overall height of the sail.
If a closing white Marubozu candle appears in an uptrend, it is a much stronger trend continuation signal than the opening white Marubozu candle. This is because the high price and the closing price are the same (no upper shadow), which means that the market has remained strong until the end of the session (if we consider the daily charts).
Building:
• White paste
• No upper shadow
• Lower shadow smaller than the body
• Appears as a short or long line
Example:
ALCOA INC,15 Jan, 2012. Closing White Marubozu. Chart 1d.
15- Long-Legged Doji
Description:
The literature contains many descriptions of doji candles that provide examples of schematic thinking. It is widely accepted that doji candles are neutral. However, it is an extremely important type of candle that must be interpreted differently for different types of situations.
An example is a basic long-legged Doji candle. The appearance of this type of doji on a chart can be a sign of a reversal, especially if it occurs after a long white candle. Seiki Shimizu writes that traders often take positions in the direction designated by the candle opening after the long-legged Doji (i.e. if the open is lower, take a short position and vice versa). This is very aggressive behavior; It is important to recognize that when the market returns to trend after the doji, it is seen as a sign of defeating momentary weakness.
It is worth remembering how the creation of this candle arises. The opening and closing prices are the same, but during the day (if we use daily candles) we are dealing with extremely rapid growth and decline. Such situations indicate considerable concern among traders. In many cases, these rapid movements take place in a few minutes. It can represent a momentary euphoria causing sharp rises and then a sudden market leak or vice versa. Therefore, the next candle is of great importance for the interpretation of subsequent events.
Building:
• A doji candle
• The opening and closing prices are the same or similar
• The upper and lower shadows are very long
• The body is located in the middle of the candle or almost in the middle range
• Appears as a long line
Example:
Intel INC,18 April, 2002. Long-Legged Doji. Chart 1d.
15- White Spinning Top
Description:
The tops are candles with very small bodies. They are different in nature compared to long candles, which show the strength of the trend. In this case we are facing indecision. The importance of a spinning top depends largely on the current situation on the chart. If one or more spinning tops occur in a stable market, it doesn't mean anything in terms of predicting how prices will evolve. However, when the market is growing rapidly and there is this type of candle - long shadow (s) and a small body - this means that, despite the large fluctuations during the session, the market does not have the strength to continue the current trend. Confirmation of this weakness can be the appearance of black candles after the top.
When the top appears following a clear trend (downtrend or uptrend) its importance is greater, if at the same time we notice a rapid increase in volume - this situation should be considered as a potential sign of the trend change.
In the case of a spinning top, the color of the body, in principle, does not matter, so the interpretation of Black Spinning Top and White Spinning Top is identical.
Building:
• White paste
• At least one shade is required
• At least one shadow must be longer than the body
• Appears as a long and a short line
• If it appears as a long line, none of the shadows can exceed three times the body (otherwise we would have the basic High Wave candle)
Example:
PFE INC,06 April, 2010. White Spinning Top. Chart 1d.
16- Dragonfly Doji
Description:
Dragonfly Doji is a basic candle shaped like a Hanging Man pattern (in an uptrend) or Takuri Line (in a downtrend). Due to the identical opening and closing prices, it is classified as a doji candle. The Japanese name means not only "dragonfly" but also bamboo helicopter or bamboo dragonfly (jap. Taketombo), which is a toy helicopter rotor that flies upward when its shaft rotates rapidly. Shimizu points out that the market after the appearance of the Dragonfly Doji can behave as unpredictably as the toy: both go up and down.
Morris, on the other hand, draws attention to the fact that such a candle can announce a reversal after a long downtrend, especially when the lower shadow is very long, then we have the pattern called the Takuri Line. A little difference between opening and closing is accepted.
Building:
• The opening, closing and maximum prices are the same or very similar
• Long lower shadow
• Appears as a long line
Or
Example:
Intel,14 Sep, 2006. Dragonfly Doji. Chart 1d.
17- Opening Black Marubozu
Description:
The Opening Black Marubozu candle has no upper shadow and its high price is equal to the opening price.
According to Shimizu, Opening Black Marubozu is a bearish candle, either reversal or continuation. In a clear downtrend, the appearance of such a candle preceded by a price gap can predict the acceleration of declines. Another important factor is the length of the lower shadow (note that the shadow cannot be longer than the body of the candle). The shorter the shadow, the more negative the candle's meaning.
The Black Marubozu opening can also occur within bullish patterns, both continuation and reversal.
This candle is very similar to the Bearish Belt Hold pattern, but at the Black Marubozu open the lower shadow can be longer.
Building:
• Black body
• No upper shadow
• Lower shadow smaller than the body
• Appears as a long or short line
Example:
Intel,07 Aug, 2007. Opening Black Marubozu. Chart 1d.
18- Doji
Description:
This candle doesn't really have any trend meaning for the most part. It is usually only a continuation of the current one.
Building:
• A doji candle
• Appears as a long or short line
Example:
Intel,18 Aug, 2006. Doji. Chart 1d.
19- Four-Price Doji
Description:
The Four Price Doji is a basic candle that has all four of the same prices (i.e. Open, Close, Low and High). Usually this means that we are dealing with a very small number of transactions, and in many cases a single transaction. Therefore, its importance is very limited. Note that we can assume, as for all other types of doji candles, that a very small body is acceptable. In the case of the four price Doji, this means that the open, close, high and low prices are not necessarily all the same, but are very similar.
The Four Price Doji often appears in pre-market and after-hours trading. Also, when the candles are low frequency (for example 1 minute candles), the chances of such candles being seen are higher. When such candles occur on a daily chart, it means that the trading volume is likely to be extremely low.
Building:
• A doji candle
• All prices are the same
• Lack of shadows
• Appears as a short line
Example:
NRG Energy INC,31 Mar, 2009. Four Doji. Chart 1d.
20- Opening White Marubozu
Description:
Opening white Marubozu is similar to a long white candle and should be treated similarly, that is, depending on the context, as a reversal or continuation candle. Distinguished by the absence of the lower shadow, the body must be at least 51 percent of the overall height of the sail. The length of the upper shadow and the context in which the candle is forming on the chart (see the bullish belt hold pattern) may be relevant to your interpretation.
The appearance of this basic candle in an uptrend can suggest a continuation of the uptrend, but it can also be part of the bearish reversal pattern (for example, Dark Cloud Cover). In the downtrend, the opening white Marubozu may be part of the bullish reversal pattern.
The White Marubozu basic opening candle is considered a bullish belt hold pattern, but then a downtrend is required before it occurs, and the upper shadow should not be too long.
Building:
• White body
• No lower shadow
• Upper shadow smaller than the body
• Appears as a long or short line
Example:
NRG Energy INC,30 Jul, 2009. Opening White Marubozu. Chart 1d.
Just relax. If you do not master everything it is normal, to be realistic I have not learned all this in its entirety, but with a script and simply knowing how to interpret them you can use them whenever you want. You don't need to know them by heart.
With this we finish the Basic Candles. We will continue with One Line Patterns tomorrow.
註釋
Candles Guide All Parts:註釋
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