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70 Cards in this Set
- Front
- Back
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As the RB gets SMALLER, it implies that what?
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PRIOR TREND is LOSING STEAM
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What candlestick formation implies that the prior trend is losing steam?
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As the REAL BODIES get SMALLER
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The larger the RB, the greater that what?
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FORCE underpinning the move
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What candlestick formation implies greater force underpinning the move?
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As the REAL BODIES get LARGER
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What improves your chances for a bounce from support or decline from resistance?
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MORE TECHNICAL SIGNALS - Whether Eastern (candles) or Western, that:
CONFIRM THE SAME S or R level! |
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As far as DOJIs, which type are more significant than the other?
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NORTHERN Doji are MORE SIGNIFICANT than SOUTHERN Doji
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______ Doji are MORE significant than ______ Doji.
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NORTHERN
SOUTHERN |
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What implies that the Bulls DO not have full control? (As far as candle formations in general)
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SERIES of LONG UPPER shadows as the market is ASCENDING
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A series of long lower shadows as the market is ascending implies that what?
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BULLS DO NOT have full control
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A series of long upper shadows as the market is falling implies that what?
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BEARS DO NOT have full control
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What "hints" that the Bears DO not have full control? (As far as candle formations in general)
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SERIES of LONG LOWER shadows as the market is FALLING
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A series of long _____ shadows as the market is _______ implies that the BULLS DO NOT have FULL CONTROL
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UPPER
ASCENDING |
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A series of long ______ shadows as the market is _____ hits that the BEARS DO NOT have FULL CONTROL
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LOWER
FALLING |
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As far as "Rising and Falling Windows"...
1. How are they DIFFERENT? 2. How are they SIMILAR? |
1.
RISING W = BULLISH FALLING W = BEARISH 2. BOTH are CONTINUATION patterns |
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"N.Doji are normally more significant than S.Doji"...
While this is generally true, give an example of when a S.Doji would be deemed significant. |
If there's a S.Doji CONFIRMING a MAJOR S area, you can be assured that I would pay close attention to that S.Doji!
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If there's a S.Doji confirming a major S area, should you pay close attention to that S.Doji?
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YES! Even though N.Doji are generally more sig, in this case, pay close attention to that S.Doji!
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"N.Dojis are normally more significant than S.Dojis. But when an S.Doji confirms a major S area, you want to pay close attention!"
What important concept does this bring up? |
IMPORTANCE of looking at ALL candles and trading guidelines in the CONTEXT of the MARKET ENVIRONMENT
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While there are general guidelines and trading implications, it's important to look at all candles and trading guidelines in the context of what?
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MARKET ENVIRONMENT!
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Are Doji in the middle of a box range a trading signal?
Why or why not? |
NO! NOT a trading signal!
Cuz there is NO TREND to REVERSE! |
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Candle charts are best used as a ____, not a _____
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TOOL
SYSTEM |
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R or S is not considered "BROKEN" unless by a what?
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CLOSE
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When is S or R considered "broken"?
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If it is done so by a CLOSE!
Shadows DO NOT break S or R! |
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Never place a trade with a candle signal (or any signal) until you have 1st considered the what?
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RISK/REWARD POTENTIAL of the trade!
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Candles can denote areas of ______ and/or _____
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SUPPORT AND RESISTANCE!
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Can candles denote areas of S and R?
What about price targets? |
YES!
NO! |
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What should you WAIT FOR to CONFIRM a candle signal?
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Session's CLOSE!
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What does a Hanging Man need?
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BEARISH CONFIRMATION -
CLOSE under the hanging man's REAL BODY |
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Does a Hanging Man need confirmation?
Explain what that may or may not be. |
YES!
Bearish confirmation for HM = CLOSE UNDER the HM's RB |
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When analyzing a single candle line, one should consider what?
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BOTH the RB's AND the SHADOWS
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In the case of a rising window, what is the support area?
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ENTIRE SPACE of the rising window!
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In the case of the falling window, what is the resistance area?
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ENTIRE SPACE of the falling window!
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While the entire space of the rising/falling window is considered S/R, what is the most important area?
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RISING W (Support) = BOTTOM
FALLING W (Resistance) = TOP |
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When you see that the Mkt is trading in a TIGHT RANGE (for S&R), what should you do?
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Be on the lookout for a B/O one way or another in a day or 2
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When you see that there are SIMILAR LOWS in a ROW on a chart, what does this give you a "sense" of?
How is this "further enhanced"? (give an example) |
Sense that BULLS are TRYING TO BUILD A BASE.
Esp. "enhanced further" by Candle signals like BULLISH ENGULF |
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When you see that there are SIMILAR HIGHS in a ROW on a chart, what does this give you a "sense" of?
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Sense that BEARS are TRYING TO BUILD A BASE
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Why should you always be AWARE of potential S/R even if they're not confirmed yet?
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So that when they ARE CONFIRMED, you will be able to RECOGNIZE them!
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Once a Window's S level is BREACHED, what happens to the validity of that Window?
Explain with an example. |
Window is now VOID! So if Mkt rallies after break of W's S & comes back down to that BROKEN W's OLD S, that W can NO LONGER BE VIEWED AS S!
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Why should you CAUTIOUS when you see on a chart that the price action is trading in a TIGHT RANGE?
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TIGHT BOX means that it's going to B/O ONE WAY OR ANOTHER!
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When are DOJI the MOST significant? When are they LESS significant?
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DOJI more significant @ RALLY!
Doji is better at CALLING TOPS (Northern) than it is at CALLING BOTTOMS (Southern)! |
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What should you ask yourself when you see a HIGH WAVE Candle?
Explain why you should ask yourself this question. |
"Is there a MAJOR TREND to REVERSE?"
-If NOT, this LESSENS the "reversal implications" of PRIOR TREND. -Unless its a STRONG REVERSAL signal, then the PRIOR TREND may NOT be "vunerable" |
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Steve Nison suggests that when you look at a candle signal day by day, you should be asking yourself what question(s)?
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1. WHAT C's do I see? - WHAT are the market applications of that signal?
2. How is that signal related to prior price action? (TREND) 3. What other aspects of recent or prior price action that are imp? |
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Using the "drop-down" technique, give an example of how you would apply this for trading on larger (Ex. Weekly) and smaller (Ex. Daily charts.
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1) Use LONGER TF to get S level
2) Drop down to SHORTER TF for SIGNAL: See if any Bullish C's on chart as the stock gets to THIS S level! |
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Let's say you're trading on a DAILY chart and you see a POTENTIAL BUY signal - Maybe you see it bounce back down to a S level that's already been previously CONFIRMED (ex.low of hammer) What can you do?
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1)OBTAIN S level from Daily Chart
2) DROP DOWN to 5 MIN chart and see if you can identify a SIG C Signal - As the PRICE DIP from this level (ex.shooting star on 5 min) |
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Let's say you see the LOW of a hammer on a Daily chart as a sig. S level that's already been previously tested and was successful. Should you BUY right away? What should you do?
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TURN TO 5 min chart for BUY signal confirmation from hammer. We can buy on that hammer based on this 5 min chart cuz it CONFIRMED a S level DERIVED from the LONGER TIME FRAME
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What is the general rule of thumb for DROPPING DOWN for confirmation?
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If we see a Sig. S/R level on a LONGER TF, then we can turn to SHORTER TF for Entry Signal - Cuz it CONFIRMED the S/R level DERIVED from the LONGER TF
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Why is it that we can drop down to CONFIRM a signal on a LONGER TF?
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Cuz the Entry signal on the SHORTER TF was DERIVED from the LONGER TF.
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What INCREASES the chances of a TURN - as far as CANDLES ONLY? (other than applying Western charting techniques)
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The more C's CONFIRM a S&R area!
=BETTER Chances of a turn! |
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Let's say you're LONG and a HUGE Marubozu candle BREAKS THRU your resistance. Then you see a DOJI.
1) What does the DOJI "hint"? (what does it NOT hint) 2) What should you DO? |
1) Hints that bulls have lost full control of the market (However, it does NOT mean that the bears have taken control!)
2) With this DOJI, one should consider TAKING PROFITS, MOVING UP SL, or SELLING CALLS against your LONG stock position |
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What is "CONVERGENCE"?
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A KEY CONCEPT that means the more technical signals that emerge at the SAME S/R level, the HIGHER the likelihood of a REVERSAL
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With WINDOWS, does SIZE MATTER?
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NO
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Other than the STRENGTH of the PRIOR TREND, where else does a doji, or HIGH WAVE CANDLE have slightly more ominous implications?
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When it appears at a RESISTANCE area
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WHERE on the chart are Dark Cloud Covers and Engulfing MORE significant?
What about PIERCING patterns or ENGULING? |
AT RESISTANCE
SUPPORT |
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Let's say you see 2 RISING W's in a short term uptrend. THen there's a big black candle that closes UNDER the 2nd RISING W's S. What can you gather?
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NEW S is NOW @ the 1st RISING W!
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What does an ASCENDING TRIANGLE pattern (short term, just candles) shows you about the BUYERS?
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MORE EAGER to BUY on price dips!
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Let's say there's a RISING S line, and a HIGH WAVE C appears with a NEW HIGH CLOSE. What does the HW C give us a "sense" of?
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That the UPSIDE DRIVE MIGHT be LOSING some MOMENTUM.
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Let's say there's a RISING S line, and a HIGH WAVE C appears with a NEW HIGH CLOSE.
What does the new high close mean for the short term trend? |
That it's STILL MOSTLY positive, in spite of the HW C.
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Let's say there's a RISING S line, and a HIGH WAVE C appears with a NEW HIGH CLOSE.
Do we need confirmation? If so what should it be? |
YES. There should be a CLOSE UNDER the RB fo the C to CONFIRM that the bears have taken over
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You see a CLASSIC Evening Star pattern , should you sell short immediately? What should you check for?
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RR PROFILE! Be aware and make sure that there is no ASCENDING SUPPORT LINE! If you sell at the close of the black RB of Morning Star, you are selling at support!
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You see a FALLING W. The bottom of the Falling W is confirmed as R by the tops of 5 prior candles (with ascending S), ending with a huge White Marubozu close at bottom of window. Then a DOJI that closes inside the W, without breaching the top. Should you sell at the 3rd session of the Evening Star?
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NO! You'd be selling at POTENTIAL SUPPORT AREA!
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Tall Black C gaps down to a Falling W, then R area is confirmed by a candle line that has the same configuration of a Shooting Star that closes near the LOW of the session. Does this mean it is one? Why or why not? What are its implications?
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NO. SS must come after an UPTREND. This candle came after a short downtrend and thus would NOT be a SS. However, it's long upper shadow and close near the lower end of the session DOES have bearish implications
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After a Falling W, big black candles push the trend down. Then there's a rally after a counterattack pattern is staling at the falling W's R level. What do we need?
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CLOSE ABOVE the TOP of the FALLING WINDOW to SHOW the BULLS are in CONTROL.
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The price action retreats from a potential R area. Then Lows of the past few sessions are nearly the same. What "sense" do you get?
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MARKET was trying to BUILD A BASE for a potential RALLy
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Harami pattern "reinforces" the sig. of a falling R line. Then the market gaps over the R area set by the falling R line. What just formed? What does the action mean?
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RISING WINDOW! - with the action, any of the potential bearish applications of the Harami are NEGATED!
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Small uptrend ending with a BIG White Candle that blows thru prior R area. If there is an upper shadow on this big RB white candle, what does this mean?
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UPPER SHADOW of Big white candle SLIGHTLY OFFSETS some of its bullish impact.
This could be a very small sign of the warning that the mkt might have trouble as it approaches the next major R area |
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A black candle breaches a Rising W's S level. What does this mean for the window?
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The W is VOIDED. W should NO LONGER be VIEWED AS S.
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Another Falling W and a new low close for the move does what?
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Puts bears in control.
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We have a bearish engulfing pattern that formed at the potential S of a bullish rising W. Based on the theory that a Rising W should be S, should be buy immediately?
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NO! We would have to WAIT FOR A CLOSE UNDER this rising W to CONFIRM the bearish implications of the Bearish Engul. pattern.
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What's "Characteristic" of a Market Top?
(According to Steve Nison) |
The Mkt "Tops out" AT OR NEAR the SAME PRICE RANGE at which it PULLED BACK at a PREVIOUS TIME.
It may also FALL to a PRIOR LOW price, then BOUNCE off that S Level |
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What's "Characteristic" of a Market Bottom?
(According to Steve Nison + Anne) |
The Mkt "Bottoms out" AT OR NEAR the SAME PRICE RANGE at which ROLLED DOWN FROM at a PREVIOUS TIME.
It may also RISE to a PRIOR HIGH price, then ROLLDOWN off that R level |
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Let's say you're Long in a Bullish Up-Trend, then a ST appears. Does one session's small RB turn the trend from up to down? What does this "tell us"? What do we need to see in C's to be "convinced" the trend changed?
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NO. This signal simply CAUTIONS that the PRIOR MOVE is STALLING.
ST "warns" that the Mkt maybe losing its MOMENTUM, which is synonymous with indecision. The NEXT CANDLE will tell us if the Trend has CHANGED! |
