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65 Cards in this Set

  • Front
  • Back
What part of single candle line helps "guage" the FORCE of the Trend?
REAL BODY
What part of candle is the "essense of the price movement"?
REAL BODY
Psychology: What do the following "tell us"?
1. Tall White Real Body
2. Tall Black Real Body
1. Reflects a session when the bulls are dominant. Whereas...

2. Shows that the bears have greater control
When a Real Body "shrinks," what is the psychology behind that? What does this TELL YOU?
(Real body can be either Black or White)
Is a strong hint that the prior trend may be LOSING STEAM
What is the market psychology behind a candle with a SMALL REAL BODY?
Whether ALONE or INTEGRATED into a 2 or 3 candle patter, indicates as to whether a higher price will be paid for this security
What is the important identifying trait of a SPINNING TOP?
SMALL Real body
For a small real body, is color important? Why or why not?
NO.

The small size of the real body sends out the warning signal, NOT the color
What does a small real body SHOW US about the psychology of the market?
Bulls and Bears are battling it out in a tug-of-war, neither (bulls or bears) have been able to take dominant control.
What must a spinning top have to qualify as a high wave?
Not only must these lines have small real bodies (ST), BUT ALSO

LONG UPPER and LOWER shadows
In a High wave, do the shadows have to be the same size?
NO.

But both the UPPER and LOWER shadows HAVE TO BE "unusually" LONG
What one word describes what spinning tops translate into?

High Wave?
INDECISION

DOWNRIGHT CONFUSION
What is the STORY of the formation of a HIGH WAVE?
The long upper shadows mean that sometime after the sessions open, buying pressure thrust the security's price to an extended high. During the same session, selling pressure drove the price to a protracted low. Yet, by the sessions close, the price returned almost to the opening price. That's confusion!
How did high wave get its name?
Japs compared the very extended upper and lower shadow to large ocean waves
In a solid uptrend, what gives us an important clue about the sustainability of the advance?

WHY?
SHAPE OF THE CANDLE during the ASCENT!

This is because the small real bodies imply that the bulls have LESS than FULL CONTROL - INSPITE of the advancing prices
In a solid uptrend, what does the shape of the candles during the advance tell us?
Long white real bodies are like a green light showing that the prior rally is going strongly.

However, if there are small real bodies (either black or white) during the ascent, CAUTION is warrented from the long side
In what market do spinning tops become more consequential?

What "may be in the offing"?
In a market that is becoming overextended and perhaps nearing resistance

Trend shift or reversal
In a sideways consolidation or box range, are spinning tops and high wave patterns signaling a reversal or shift?
What are the trading implications?

What is the market doing?
NO! NO trading implications!

The market is simply resting until it breaks up, or down, from the price zone.
What 3 candles contain spinning tops?
Hammer, hanging man and shooting star
What is an "Umbrella Line?"
Japs "all-encompassing" description for candle lines that form with long lower shadows and small real bodies at the top of their trading range.
A LONG UPPER shadow on any candle means what?
SELLING PRESSURE
A LONG LOWER shadow on any candle means what?
BUYING PRESSURE
What STORE do the following tell:
1. Small real bodies
2. Long real bodies
3. Long upper and lower shadows
1. INDECISION

2. DEFINITE OPINION

3. Buying and Selling Pressure
What candlestick pattern is more "menacing" than a shooting star in the context of an extended rally?
Gravestone doji
What candlestick "in general" broadcasts extremely important signals?
GRAVESTONE DOJI
What do candle charts illustrate?
ACTION between the bulls and bears during that SESSION
Explain the "market action" behind a long lower shadow on a daily chart.

What does this mean?
the market sold off during the session. By the end of the session, however, it bounced off the lows.

This means:
1 of 2 scenarios unfolded:
Either the bears retreated OR
The bulls came back into the market with enough force to OVERCOME the bears
What does a spinning top "warn" us of?
the market may be losing momentum
If a market is at, or near a new high, -especially after a steep advance..what does the emergence of a spinning top signal us of?

Cautions us that the prior move may be doing what?
Could be a signal that the bulls are having trouble continuing their ascent.

STALLING!
Does one session's small real body turn the trend from up or down?
NO
A series of Spinning tops in the same support area shows what? (This could lay a foundation for a potential what?)

Would the same concept be true with a series of spinning tops at a resistance area? EXPLAIN
Bears were unable to sustain those lows into the end of the sessions. (RALLY)

YES. Such a scenario would show that each time the market climbed to the price resistance, the bulls were unable to maintain the highs into the close. Thus, would be a warning to signal those holding long positions.
What part of single candle line helps "guage" the FORCE of the Trend?
REAL BODY
What part of candle is the "essense of the price movement"?
REAL BODY
Psychology: What do the following "tell us"?
1. Tall White Real Body
2. Tall Black Real Body
1. Reflects a session when the bulls are dominant. Whereas...

2. Shows that the bears have greater control
When a Real Body "shrinks," what is the psychology behind that? What does this TELL YOU?
(Real body can be either Black or White)
Is a strong hint that the prior trend may be LOSING STEAM
What is the market psychology behind a candle with a SMALL REAL BODY?
Whether ALONE or INTEGRATED into a 2 or 3 candle patter, indicates as to whether a higher price will be paid for this security
What is the important identifying trait of a SPINNING TOP?
SMALL Real body
For a small real body, is color important? Why or why not?
NO.

The small size of the real body sends out the warning signal, NOT the color
What does a small real body SHOW US about the psychology of the market? (As far as control)
Bulls and Bears are battling it out in a tug-of-war, neither (bulls or bears) have been able to take dominant control.
What must a spinning top have to qualify as a high wave?
Not only must these lines have small real bodies (ST), BUT ALSO

LONG UPPER and LOWER shadows
In a High wave, do the shadows have to be the same size?
NO.

But both the UPPER and LOWER shadows HAVE TO BE "unusually" LONG
What one word describes what spinning tops translate into?

High Wave?
INDECISION

DOWNRIGHT CONFUSION
What is the STORY of the formation of a HIGH WAVE?
The long upper shadows mean that sometime after the sessions open, buying pressure thrust the security's price to an extended high. During the same session, selling pressure drove the price to a protracted low. Yet, by the sessions close, the price returned almost to the opening price. That's confusion!
How did high wave get its name?
Japs compared the very extended upper and lower shadow to large ocean waves
In a solid uptrend, what gives us an important clue about the sustainability of the advance?

WHY?
SHAPE OF THE CANDLE during the ASCENT!

This is because the small real bodies imply that the bulls have LESS than FULL CONTROL - INSPITE of the advancing prices
In a solid uptrend, what does the shape of the candles during the advance tell us?
Long white real bodies are like a green light showing that the prior rally is going strongly.

However, if there are small real bodies (either black or white) during the ascent, CAUTION is warrented from the long side
When a high wave candle emerges after a downtrend or an uptrend, the Japanese say what? (quote)

What does this mean?
"Market has lost its SENSE OF DIRECTION"

This lack of market orientation means that the prior trend is in jeopardy
When the market "loses its sense of direction" or "orientation" what does this mean?
PRIOR trend is in JEOPARDY
When does a hammer give a POTENT signal?

In other words, the hammer is a potential, what, "indicator"?
When it appears after a significant downturn or in an oversold market

BOTTOM REVERSAL
Since a hammer is most useful after a significant downtrend, what should be noted?
That there may be some selling on a rally from this hammer.

Therefore, the first bounce after the hammer may fail, and the market may return to TEST the hammer's support
What does the hammer SHOW about the market?
That it initially sold off during the session, then BOUNCED BACK by that session's end
What 3 aspects differentiate a hanging man from a hammer?
1. TREND
2. Extent of the move before the candle line
3. CONFIRMATION
Hammer can be recognized by what 4 criteria? Is color important?
1. REAL BODY is at the UPPER end of the trading range. Color of the real body is not important
2. LONG LOWER SHADOW that should be at least TWICE the height of the real body
3. Should have NO or very short upper shadow
4. Market should be in a downtrend
Shooting star can be recognized by what 4 criteria? is color imp?
1. real body is at the bottom end of the trading range. color not important.
2. long upper shadow that should be at least twice the height of the real body
3. should have no or very little lower shadow
4. market should be in an uptrend
What does the hanging man SHOW us about the market?
That the market sold off during the session buy by the end of the session had bounced back to close at or near the highs.
Why do we need bearish confirmation before turning negative on the hanging man?
Although the small real body of the hanging man could give a little hint that the bulls are losing momentum, its long lower shadow nonetheless keeps the trend pointing north.
What is the confirmation for the hanging man?

What is the reason behind this?

Explain how this is the reason behind a particular placement for the HM.
CLOSE BENEATH the hanging man's REAL BODY = Cuz if the market closes lower the next day, those who bought on the close of the HM (and many trades occur at the close) are now left "hanging" with a losing position.

This is why he likes to see the HM at an ALL TIME HIGH, or at least a high in the context of a significant move
What does this scenario mean (as far as market action).

Hanging man at all time high, or at least at the high in context of a significant trend
The longs entering on the hanging man session are in their position at new highs, thus making them more nervous. Consequently, those longs might decide to buy out of their losing position. That could cascade into more selling
what do multiple hammers after a downtrend reflect?
that the market is rejecting low price levels as it descents.
why is the best strategy to "stand aside" after we see 3 hammers in a row after a downtrend?
the market's downtrend keeps us from buying, but the potentially bullish applications of the hammer keeps us from selling.
when you see potential hanging man lines, what should you do?
Look for CONFIRMATION!

Confirmation = CLOSE UNDER the hanging man's real body
Let's say it's midday and you're focusing on a daily chart. Your view of the market is that it may be ready to rally. What must you wait for to confirm your outlook? What ELSE can you do?
1)Wait for end of the daily session to see if a bullish C signal is confirming your outlook.

2) Can switch to an hourly chart and see if any bullish C patterns formed in the morning on the 60min chart.
Although the bullish shadow of a hanging man is positive, explain what warrents our hesitation?

What does the long lower shadow tell us?
the hanging a man's SMALL REAL BODY shows there's some hesitation.

while it's a plus, it shows that at some time during the session the market had SOLD OFF
In the Scenario of a ST:
What keeps a spinning top from becoming a long white candle?
(Explain the market action)
Demand is stepping in but supply is counter-attacking and, in doing so, keeps the market from forming a tall white candle.
In the Scenario of a ST:
What keeps a spinning top from becoming a long black real body? (Explain the market action)
Selling Pressure (bears) pushes the real body down, but buying pressure (bulls) keeps it from being a long black real body.
Because C charts use OHLC, we need to wait for the closing price to confirm the C's signal. However, what is a valuable technique you can use to obtain a shorter signal? Explain how you would do this using the Daily charts as ex.
Look at a shorter TF! On a daily chart, we would have to wait for the close of the day to complete the candle line, or signal. If we shift to an intraday candle chart, only need to wait for the close of that intraday session to get the candle signal!