Candlestick Charts and What They Mean


Candlestick patterns are a form of technical analysis and charting used in the stock market, Forex market and all other financial or commodity markets. And they can be used in all time frames, from those looking for long term investments to those who use swing trading or day trading, The power of candlesticks (also called Japanese candlestick charts) is that they excel at giving market turning points and when used properly can potentially decrease market risk exposure.

You may have of some common candlestick chart patterns or candlestick terms like bullish engulfing pattern, doji, dark cloud cover, hammer and shooting star.

This section discusses only a few of the scores of candlestick chart patterns. There are many important candlestick patterns and trading tactics not discussed in this basic introduction. The goal of this section is to illustrate how candlesticks (and especially Nison candlesticks) can open new and unique tools for technical analysis, but since this is an introduction this will not provide a trading methodology. For example, there are many times candlestick signals should be ignored. This is where experience with candlestick charts comes in.

WHAT ARE CANDLESTICKS?

Japanese candlestick chart analysis, so called because the candlestick lines resemble candles, have been refined by generations of use in the Far East. Candlestick charts are now used internationally by swing traders, day traders, investors and premier financial institutions.

Candlestick charts:

  • Are easy to understand: Anyone, from the person new to technical analysis to the seasoned professional trader can easily harness the power of candlestick charts. This is because, as will be shown later, the same data required to draw a bar chart (high, low, open and close) is used for a candlestick chart.
  • Provide earlier indications of market turning points: candlestick charts can send out reversal signals in a few sessions, rather than the weeks often needed for a bar chart reversal signal. Thus, market turns with candlestick charts will frequently be in advance of traditional indicators. This will help you to enter and exit the market with better timing.
  • Furnish unique market insights: candlestick charts not only show the trend of the move, as does a bar chart, but, unlike bar charts, candlestick charts also show the force underpinning the move.
  • Enhance Western charting analysis: Any Western technical tool you now use can also be used on a candlestick chart. Candlestick charts, however, will give you timing and trading benefits not available with bar charts. This merging of Eastern and Western analysis will give you a jump on those who use only traditional Western charting techniques.
  • Can be used in all markets such as the stock market, forex market, or futures or commodity markets and can be a powerful trading tool for option trading.
  • Are used by those who do day trading, swing trading, active investing and for investing.

CONSTRUCTING THE CANDLESTICK LINE

The broadest part of the candlestick line is the real body. It represents the range between the session’s open and close.

Constructing the Candle Linecandlestick figure constructing

If the close is lower than the open the real body is black. The real body is white if the close is higher than the open. The real body is white if the close is higher than the open.

The thin lines above and below the real body are called the shadows (sometimes called candlestick wicks). The peak of the upper shadow is the high of the session and the bottom of the lower shadow is the low of the session.

The color and length of the real body reveals whether the bulls or the bears are in charge. Note that the candlestick chart lines use the same data as a bar chart (the open, high, low and close). Thus, all Western-charting techniques can be integrated with candlestick chart analysis.

At Candlecharts.com, we have found the candlestick charts are most potent when merged with Western technical analysis. Accordingly, we harness the best charting techniques of the East and West to provide you with uniquely effective trading tools.

USING CANDLESTICK CHARTS

A critical and powerful advantage of candlestick charts is that the size and color of the real body can send out volumes of information.

For example:

    • a long white real body visually displays the bulls are in charge
    • a long black real body signifies the bears are in control.
    • a small real body (white or black) indicates a period in which the bulls and bears are in a “tug of war” and warns the market’s trend may be losing momentum. As the real body gets smaller we ultimately wind up with a doji which is a candlestick line which has an equal open-close and thus no real body.

Constructing the Candle Line

Doji

doji

While the real body is often considered the most important segment of the candlestick, there is also substantial information from the length and position of the shadows. For instance, a tall upper shadow shows the market rejected higher prices while a long lower shadow typifies a market that has tested and rejected lower prices.

Candlestick charts will often provide reversal signals earlier, or not even available with traditional bar charting techniques. Even more valuably, candlestick charts are an excellent method to help you preserve your trading capital. This benefit alone is incredibly important in today’s volatile environment.

Let’s look at an example of how a candlestick chart can help you avoid a potentially losing trade.
Exhibit 1 (below) is a bar chart. In the circled area of Exhibit 1, the stock looks strong since it is making consecutively higher closes. Based on this aspect, it looks like a stock to buy.

What is this bar chart saying?
candlestick chart stock chart 1

The candlestick chart below uses the same data as Exhibit 1 (above), (remember, a candlestick chart uses the same data as a bar chart; open, high, low and close.)

Let’s now look at the circled area on the candlestick chart in Exhibit 2 (below). Note the different perspective we get with the candlestick chart than with the bar chart. On the candlestick chart, in the same circled area, there are a series of small real bodies which the Japanese nickname spinning tops. Small real bodies hint that the prior trend (i.e. the rally) could be losing its breath.

What is this candle chart saying?
candlestick chart stock chart 2

As such, while the bar chart makes it look attractive to buy, the candlestick chartproves there is indeed a reason for caution about going long. The small real bodies illustrate the bulls are losing force. Thus, by using the candlestick chart, a swing trader, day trader or even if you do active investing would likely not buy in the circled area. The result — avoiding a losing trade.

This is but one example of how Japanese candlestick charts will help you preserve capital.

With candlestick charts, one can use candlestick charting techniques, or Western techniques, or a combination of both. This union of Eastern and Western techniques provides our clients with uniquely effective tools to help enhance profits and decrease market risk exposure.

A Japanese proverb says, “His potential is that of the fully drawn bow- – – his timing the release of the trigger.” The timing of the “release of the trigger” depends on many factors not addressed in this pamphlet. However, while this pamphlet provides only a basic introduction to candlestick charts we hope you have discovered how Nison candlestick trading techniques can help enhance profits and decrease market risk.

abandoned baby: A very rare Japanese candlestick top or bottom reversal signal. It is comprised of a doji starthat gaps away (including shadows) from the prior and following sessions’ candlesticks. This is the same as a Western island top or bottom in which the island session is also a doji.

Abandoned Baby
abandoned baby

 

advance block: In candlestick charting a variation of the three white soldiers in which the last two soldiers (i.e., white real bodies) display weaken­ing upside drive. This weakness could be in the form of tall upper shadows or progressively smaller real bodies. It signi­fies a diminution of buying force or an increase in selling pressure.

Advance Block
Advance Block

 

bearish belt-hold: On candlestick there are bullish and bearish belt-holds. A bullish belt-hold is a tall white candlestick that opens on, or near, its low and closes well above the opening price. It is also called a white opening shaven bottom. A bearish belt-hold is a long black candlestick that opens on, or near, its high and closes well off its open. Also referred to as a black opening shaven head.

Belt-Hold Lines
Belt-Hold Lines

 

bearish engulfing pattern: A bullish engulfing candlestick pattern is comprised of a large white real body that engulfs a small black real body in a downtrend. A bearish engulfing candlestick pattern occurs when selling pressure overwhelms buying force as reflected by a long black real body engulfing a small white real body in an uptrend

Engulfing Pattern
Engulfing Pattern

.

belt-hold line: On candlestick there are bullish and bearish belt-holds. A bullish belt-hold is a tall white candlestick that opens on, or near, its low and closes well above the opening price. It is also called a white opening shaven bottom. A bearish belt-hold is a long black candlestick that opens on, or near, its high and closes well off its open. Also referred to as a black opening shaven head.

Belt-Hold Lines
Belt-Hold Lines

 

box range: The Japanese candlestick charting expression for a market in a horizontal trading range.

bullish belt-hold: On candlestick there are bullish and bearish belt-holds. A bullish belt-hold is a tall white candlestick that opens on, or near, its low and closes well above the opening price. It is also called a white opening shaven bottom. A bearish belt-hold is a long black candlestick that opens on, or near, its high and closes well off its open. Also referred to as a black opening shaven head.

bullish engulfing pattern: A bullish engulfing candlestick pattern is comprised of a large white real body that engulfs a small black real body in a downtrend. A bearish engulfing candlestick pattern occurs when selling pressure overwhelms buying force as reflected by a long black real body engulfing a small white real body in an uptrend.

candles: is a shortened term for a Japanese candlestick.

candlestick charts: A method of charting derived by the Japanese in which the open and close range are represented by rectangle called the real body (black for a close under the open, white for a close over the open).  The lines above and below the real body are called shadows. The top of the upper shadow is the session high and the bottom of the lower shadow is the session low. Traditional Japanese candlestick charts whose individual lines look like candles, hence their name. Candlestick charts are also called “candle charts.”

Candlestick Charting
Candlestick Charting

 

candlestick signals: Candlestick reversals or turning points using Japanese candlestick methods.

candlestick pattern: Candlestick turning point such as a hammer or engulfing patterns.

counterattack lines: Following a black (white) candlestick in a downtrend (uptrend), the market gaps sharply lower (higher) on the opening and then closes unchanged from the prior session’s close. A pattern that reflects a stalemate between the bulls and bears and thus lessens the force in place before the emergence of the counterattack line.

Counterattack Lines
Counterattack Lines

 

dark-cloud cover: A bearish reversal signal. In an uptrend a long white candlestick is followed by a black candlestick that opens above the prior white candlestick’s high (or close) and then closes well into the white candlestick’s real body—preferably more than halfway. The bullish counterpart of the dark-cloud cover candlestick pattern is the piercing pattern.

Dark-Cloud Cover
Dark-Cloud Cover

 

dead cross: A bearish signal given when a short-term moving average on a Japanese candlestick chart crosses under a longer-term moving average. Its bullish counterpart is the golden cross.

deliberation pattern: See stalled pattern.

doji: A session in which the open and close on a Japanese candlestick are the same (or almost the same). There are different varieties of doji lines (see gravestone, dragonfly, and long-legged doji) depending on where the opening and closing are in relation to the entire range. Doji lines are among the most important individual candlestick patterns. They are also components of candlestick patterns. Northern doji are doji that appear during a rally. Southern doji are doji during declines.

Doji
Doji

 

downside gap tasuki: A downward (or down­side) gapping tasuki is when the market gaps down with a black candlestick followed by a white candlestick. The two candlesticks of the tasuki should be about the same size. The upward (or upside) gapping tasuki is made of a rising window formed by a white candlestick and then a black candlestick. The black candle opens within the white real body and closes under the white candlestick’s real body. The close on the black candlestick day is the fight point. Both types of tasu­ki are rare on Japanese candlestick charts.

dragonfly doji: A doji with a long lower shadow and where the open, high, and close are at the session’s high. See the illustration under Doji. The opposite version of this candlestick pattern is the gravestone doji.

dumpling tops: A candlestick charting pattern that is similar to the Western rounding top. A window to the downside is needed to confirm this as a top. Its bullish opposite is the frypan bottom.

Dumpling Tops
Doji Star

 

engulfing patterns: A bullish engulfing candlestick pattern is comprised of a large white real body that engulfs a small black real body in a downtrend. A bearish engulfing candlestick pattern occurs when selling pressure overwhelms buying force as reflected by a long black real body engulfing a small white real body in an uptrend.

Engulfing Patterns
Engulfing Patterns

 

evening star: A top reversal pattern formed by three candle lines on a Japanese candlestick chart. The first is a tall white real body, the second is a small real body (white or black) that gaps above the first real body to form a star, and the third is a black candlestick that closes well into the first session’s white real body. If the middle portion of this candlestick pattern is a doji instead of a spinning top, it is an evening doji star. The opposite of the evening star candlestick pattern is the morning star pattern.

falling three methods: There are two types on Japanese candlestick charts. The first is the falling three methods, which is a bearish continuation pattern. It is ideally comprised of five lines. A long black real body is followed by three small, usually white, real bodies that hold within the first session’s high–low range. Then a black candlestick closes at a new low for the move. The rising three methods is a bullish continuation pattern. A tall white candlestick precedes three small, usually black, real bodies that hold within the white candlestick’s range. The fifth line of this pattern is a strong white candlestick that closes at a new high for the move.

falling window: The same as a Western gap. Windows are continua­tion candlestick patterns. When the market opens a window to the upside, it is a rising window. It is a bullish candlestick pattern and the ris­ing window should be support. If a window opens in a sell ­off, it is a falling window. This is a bearish signal. The falling window is resistance.

frypan bottom: This Japanese candlestick pattern is similar to a Western rounding bottom. A win­dow to the upside confirms this pattern. It is the counterpart of the dumpling top.

Frypan Bottom
Frypan Bottom

 

gaps: When there is no price action between two consecutive sessions.  For example, a rising gap on a daily chart is when today’s low is above yesterday’s high. A falling gap is when today’s high is below yesterday’s low.  They are three main gaps, exhaustion, midway, and breakaway.  An exhausting gap is a gap that occurs at the end of an important trend.  A midway gap, also known as measuring gap, occurs in the middle of the move.  A breakaway gap is when the market gaps over a significant resistance area or under a major support area.

gapping plays: There are two kinds of gapping plays: 1. High-price gapping play—After a sharp advance, the market consolidates via a series of small real bodies near the recent highs. If prices gap above this consolidation area, it becomes a high-price gapping play. 2. Low-price gapping play.  After a sharp price decline, the market consolidates via a series of small real bodies near the recent lows. If prices gap under this con­solidation, it is a sell signal in candlestick trading.

Gapping Plays
Gapping Plays

 

golden cross: A bullish signal in which a shorter-term moving average crosses above a longer-term moving average. It is the opposite of the dead cross in candlestick charting.

gravestone doji: A doji in which the opening and closing are at the low of the session. It is a Japanese candlestick reversal signal at tops. See the illustration under Doji. The opposite of this doji is the dragonfly doji.

hammer: An important bottoming candlestick charting pattern. The hammer and the hanging man are both the same lines that are generally called umbrella lines; that is, a small real body (white or black) at the top of the session’s range and a very long lower shadow with little or no upper shadow. When this line appears during a downtrend, it becomes a bullish hammer. For a classic hammer, the lower shadow should be at least twice the height of the real body when candlestick trading.

Hammer
Hammer

 

hanging man: A top candlestick reversal pattern that requires confirmation. The hanging man and thehammer are both the same type of candlestick pattern (i.e., a small real body [white or black], with little or no upper shadow, at the top of the session’s range and a very long lower shadow). But when this line appears dur­ing an uptrend, it becomes a bearish hanging man. It signals the market has become vulnerable, but there should be bear­ish confirmation the next session with an open, and better is a close, under the hanging man’s real body. In principle, the hanging man’s lower shadow should be two or three times the height of the real body.

Hanging Man
Hanging Man

 

harami: A two-candlestick charting pattern in which a small real body holds within the prior session’s unusually large real body. The harami implies the immediately preceding trend is con­cluded, and the bulls and bears are now in a state of truce. The color of the second real body can be white or black. Most often the second real body is the opposite color of the first real body.

harami cross: A harami with a doji on the second session instead of a small real body. An important top (bottom) candlestick charting reversal signal especially after a tall white (black) candlestick line. It is also called a petrifying pattern on candlestick charts.

Harami Cross
Harami Cross

 

high-price gapping play: There are two kinds of gapping plays: 1. High-price gapping play—After a sharp advance, the market consolidates via a series of small real bodies near the recent highs. If prices gap above this consolidation area, it becomes a high-price gapping play. 2. Low-price gapping play.  After a sharp price decline, the market consolidates via a series of small real bodies near the recent lows. If prices gap under this con­solidation, it is a sell signal in candlestick trading.

high-wave candle: A candlestick with very long upper and lower shadows and a small real body on a Japanese candlestick chart. It shows that the market is losing its direction bias that it had before this candle appeared. If the real body is a doji instead of a small real body, it is a long-legged doji.

High-Wave Candle
High-Wave Candle

 

in-neck line: A small white candlestick in a downtrend on a candlestick chart whose close is slightly above the previous black candlestick’s low of the session. After this white candlestick’s low is broken, the downtrend should continue. Compare to on-neck line, thrusting line, and piercing pattern.

In-Neck Line
In-Neck Line

 

inverted hammer: Following a downtrend, this is a Japanese candlestick line that has a long upper shadowand a small real body at the lower end of the session. There should be no, or very little, lower shadow. It has the same shape as the bearish shooting star, but when this line occurs in a downtrend, it is a bullish bottom reversal signal with confirmation the next session when candlestick trading (i.e., a candlestick with a higher open and especially a higher close compared to the inverted hammer’s close).

Inverted Hammer
Inverted Hammer

 

inverted three Buddha pattern: A candlestick charting three Buddha top is the same as the Western head and shoulders top. In Japanese candlestick terms, the three Buddha top is a three mountain top in which the central moun­tain is the tallest. An inverted three Buddha is the same as the Western inverted head and shoulders. In Japanese charting terminology, it is a three river bottom in which the middle river is the longest.

long-legged doji: A doji with very long shadows on a candlestick chart. If the opening and closing of a long-legged doji session are in the middle of the session’s range, the line is called a rickshaw man.

low-price gapping play:There are two kinds of gapping plays: 1. High-price gapping play—After a sharp advance, the market consolidates via a series of small real bodies near the recent highs. If prices gap above this consolidation area, it becomes a high-price gapping play. 2. Low-price gapping play.  After a sharp price decline, the market consolidates via a series of small real bodies near the recent lows. If prices gap under this con­solidation, it is a sell signal in candlestick trading.

lower shadow: The difference between the session low and the open on a white candle or the close on a black candle.

morning attack: The Japanese candlestick trading expression for a large buy or sell order on the opening that is designed to significantly move the market

 

morning star: A bottom reversal pattern formed by three candlesticks. The first is a long black real body, the second is a small real body (white or black) that gaps lower to form a star, and the third is a white candlestick that closes well into the first session’s black real body. Its opposite is the evening star candlestick pattern.

Morning Star
Morning Star

 

night attack: The Japanese candlestick trading expression for a large order placed at the close to try to affect the market.

Nison candlesticks: There are a lot of so-called teachers out there who have good intentions when it comes to explaining candles. But the truth is they haven’t done the work, or done the years of research, it takes to become The Expert at candles.Remember Nison Candlestick patterns were refined by generations of use.  These are the accurate time tested patterns.

northern doji: A session in which the open and close on a Japanese candlestick are the same (or almost the same). There are different varieties of doji lines (see gravestone, dragonfly, and long-legged doji) depending on where the opening and closing are in relation to the entire range. Doji lines are among the most important individual candlestick patterns. They are also components of candlestick patterns. Northern doji are doji that appear during a rally. Southern doji are doji during declines.

on-neck line: A black candlestick in a downtrend is followed by a small white candlestick whose close is near the low of the session of the black candlestick. It is a bearish continuation candlestick pattern. The market should continue to move lower after the white candlestick’s low is broken. Compare to an in-neck line, athrusting line, and a piercing pattern on candlestick charts.

On-Neck Line
On-Neck Line

 

petrifying pattern: The candlestick trading nickname for the harami cross.

piercing pattern: A Japanese candlestick bottom reversal signal. In a downtrend, a long black candlestick is followed by a gap lower open during the next session. This session finishes as a strong white candlestick that closes more than halfway into the prior black candlestick’s real body. Compare to the on-neck line, the in-neck line, and the thrusting line.

Piercing Pattern
Piercing Pattern

 

raindrop: A small real body (white or black) that gaps away from the large real body preceding it. A star in a downtrend has the Japanese candlestick charting nickname raindrop.

real body: The rectangular part of the candlestick line. It is defined by the closing and opening prices of the session on a Japanese candlestick chart. When the close is higher than the open, the real body is white (or empty). A black (or filled-in) real body is when the close is lower than the opening.

rickshaw man: The Japanese candlestick charting nickname for the long-legged doji.

rising three methods: There are two types on Japanese candlestick charts. The first is the falling three methods, which is a bearish continuation pattern. It is ideally comprised of five lines. A long black real body is followed by three small, usually white, real bodies that hold within the first session’s high–low range. Then a black candlestick closes at a new low for the move. The rising three methods is a bullish continuation pattern. A tall white candlestick precedes three small, usually black, real bodies that hold within the white candlestick’s range. The fifth line of this pattern is a strong white candlestick that closes at a new high for the move.

rising window: The same as a Western gap. Windows are continuation candlestick patterns. When the market opens a window to the upside, it is a rising window. It is a bullish candlestick pattern and the ris­ing window should be support. If a window opens in a sell ­off, it is a falling window. This is a bearish signal. The falling window is resistance.

separating lines: When, in an uptrend (downtrend), the market opens at the same opening as the previous session’s opposite color candlestick and then closes higher (lower). The prior trend should resume after this line on candlestick charts.

Separating Lines
Separating Lines

 

shadows: The thin lines above and below the real body of the candlestick line on Japanese candlestick charts. They represent the extremes of the session.  The lower shadow is the line under the real body. The bottom of the lower shadow is the low of the session. The upper shadow is the line on top of the real body. The top of the upper shadow is the high of the session.

shaven head: A candlestick with no upper shadow on a Japanese candlestick chart.

shooting star: A bearish candlestick pattern with a long upper shadow, lit­tle or no lower shadow, and a smallreal body near the lows of the session that arises after an uptrend.

Shooting Star
Shooting Star

 

side-by-side white lines: Two consecutive white candlesticks that have the same open and whose real bodies are about the same size. In an uptrend, if these side-by-side white lines gap higher, it is a bullish continuation candlestick pattern. In a downtrend, on Japanese candlestick charts these side-by-side white lines are still considered bearish (in spite of their white candles since they come after a falling gap).

Side-by-Side White Lines
Side-by-Side White Lines

 

southern doji: A session in which the open and close on a Japanese candlestick are the same (or almost the same). There are different varieties of doji lines (see gravestone, dragonfly, and long-legged doji) depending on where the opening and closing are in relation to the entire range. Doji lines are among the most important individual candlestick patterns. They are also components of candlestick patterns. Northern doji are doji that appear during a rally. Southern doji are doji during declines.

spinning tops: The Japanese candlestick charting nickname for candle lines with small real bodies.

star: A small real body (white or black) that gaps away from the large real body preceding it. A star in a downtrend has the Japanese candlestick charting nickname raindrop.

Star
Star

 

tasuki gaps: The upward (or upside or bullish) gapping tasuki is made of a rising window formed by a white candlestick and then a black candlestick. The black candle opens within the white real body and closes under the white candlestick’s real body. The close on the black candlestick day is the fight point. A downward (or down­side or bearish) gapping tasuki is when the market gaps down with a black candlestick followed by a white candlestick. The two candlesticks of the tasuki should be about the same size. Both types of tasu­ki are rare on Japanese candlestick charts.

Tasuki Gaps
Tasuki Gaps

 

three Buddha patterns: A candlestick charting three Buddha top is the same as the Western head and shoulders top. In Japanese candlestick terms, the three Buddha top is a three mountain top in which the central moun­tain is the tallest. An inverted three Buddha is the same as the Western inverted head and shoulders. In Japanese charting terminology, it is a three river bottom in which the middle river is the longest.

Three Buddha
Three Buddha

 

three crows: Three relatively long consecutive black candles that close near or on their lows. It is a top candlestick reversal pattern at a high-price level or after an extended rally.

Three Crows
Three Crows

 

three methods: There are two types on Japanese candlestick charts. The first is the falling three methods, which is a bearish continuation pattern. It is ideally comprised of five lines. A long black real body is followed by three small, usually white, real bodies that hold within the first session’s high–low range. Then a black candlestick closes at a new low for the move. The rising three methods is a bullish continuation pattern. A tall white candlestick precedes three small, usually black, real bodies that hold within the white candlestick’s range. The fifth line of this pattern is a strong white candlestick that closes at a new high for the move.

Three Methods
Three Methods

 

three mountain top: A longer-term topping pattern in which prices stall at, or near, the same highs on a candlestick chart.

Three Mountain Top
Three Mountain Top

 

three river bottom: When the market hits a bottom area three times on a Japanese candlestick chart.

Three River Bottom
Three River Bottom

 

 

three white or three advancing soldiers: This is a candlestick charting pattern is a group of three white candlesticks with consecutively higher closes (with each closing near the highs of the session). These three white candles presage more strength if they appear after a period of stable prices or at a low price area.

Three Soldiers
Three Soldiers

 

thrusting line: A white candlestick that closes in the prior black real body, but still under the middle of the prior ses­sion’s real body. The thrusting line is stronger than an in-neck line, but not as strong as a piercing candlestick pattern. In a downtrend, the thrusting line is viewed as bearish (unless two of these patterns appear within a few days of each other). As part of a rising market, it is considered bullish on a Japanese candlestick chart.

Thrusting Line
Thrusting Line

 

towers: There is a tower top and a tower bottom. The tower top, a top candlestick reversal pattern formation, is comprised of one or more tall white candles followed by congestion and then one or more long black candlesticks. It is a pattern that looks like it has towers on both sides of the congestion hand. The opposite candlestick reversal pattern is  tower bottom pattern. One or more long black candles are fol­lowed by lateral action. Then the market explodes to the upside via one or more long white candlesticks.

Towers
Towers

 

tri-star: Three doji that have the same formation as a morning or evening star pattern. An extraordinarily rare candlestick charting pattern.

tweezers top and bottom: When the same highs or lows are test­ed on back-to-back sessions. They are minor reversal signals that take on extra importance if the two candlesticks that comprise the tweezers pattern also form another candlestick indicator. For example, on a candlestick chart if both sessions of a harami cross have the same high, it could have more significance since there would be a tweezers top and a bearishharami cross made by the same two candlestick lines.

Tweezers
Tweezers

 

umbrella lines: The candlestick charting generic name for the hammer and hanging man lines. The umbrella line looks like an umbrella since it is a candle with a long lower shadow and a small real body at, or near, the top of the trading range.

upper shadow: The difference between the session high and the close on a white candle or the open on a black candle.

upside gap tasuki: The upward (or upside) gaping tasuki is made of a rising window formed by a white candlestick and then a black candlestick. The black candle opens within the white real body and closes under the white candlestick’s real body. The close on the black candlestick day is the fight point. A downward (or down­side) gaping tasuki is when the market gaps down with a black candlestick followed by a white candlestick. The two candlesticks of the tasuki should be about the same size. Both types of tasu­ki are rare on Japanese candlestick charts.

upside gap two crows: A three-candlestick pattern. The first line is a long white candlestick that is followed by a black real body that gaps over the white candle’s real body. The third session is another black real body that opens above the second session’s open and closes under the second session’s close. It is very rare Japanese charting pattern.

Upside Gap Two Crows
Upside Gap Two Crows

 

window: The same as a Western gap. Windows are continuation candlestick patterns. When the market opens a window to the upside, it is a rising window. It is a bullish candlestick pattern and the ris­ing window should be support. If a window opens in a sell ­off, it is a falling window. This is a bearish signal. The falling window is resistance.

Window
Window

 

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