McGraw-Hill New York San Francisco Washington, D.C. Auckland BogoU Caracas Lisbon London Madrid Mexico City Milan Montreal New Delhi San Juan Singapore Sydney Tokyo Toronto [...]...Chapter 1 Candlestick Charts Japanese candlestick charts do not require anything new or different as far as data are concerned Open, high, low, and close are all that is needed to do candlestick charting Many data vendors do not have open prices on stocks This problem can be addressed by using the previous... Figures 1- 4 and 1- 5, you can see that the Japanese candlestick chart really does not display anything different from the standard bar chart However, once you become accustomed to seeing Japanese candlestick charts, you will prefer them because their clarity is superior and allows a quick and accurate interpretation of the data This matter of interpretation is also what this book is about Japanese candlestick. .. in Chapter 6 Introduction When drawing candlestick charts by hand, the Japanese use red instead of white to represent the up days (close higher than open) With the use of computers, this is not feasible because red would be printed as black on most printers and you could not tell the up days from the down days This also applies to photocopying Figure 1- 4 E? 11 0030 "' The Body (jittal) The box that... weak line It often becomes part of a bearish continuation or bullish reversal candle pattern, especially if it occurs during a downtrend This line, being black, shows the weakness of the continuing downtrend A long black line could be a final sell off; this is why it is often the first day of many bullish reversal patterns It is ;also called a Major Yin or Marubozu of Yin 11 Candlestick Lines shadow,... the marketplace Stars are part of many candle patterns, primarily reversal patterns Paper umbrella (karakasa) Four Price Doji Figure 2 -11 This rare Doji line occurs when all four price components are equal That is, the open, high, low, and close are the same (Figure 2 -11 ) This line could occur when a stock is very illiquid or the data source did not have any prices other than the close Futures traders... interpretation is also what this book is about Japanese candlestick charting and analysis will continue to grow and gain in popularity For as long as it is used as intended, only a profit of doom would suggest its demise A day of trading in any stock or futures market is represented in traditional charts by a single line or price bar; Japanese candlestick charting is no different, except that the information is... (Figure 2 -10 ) Like other Doji days, this one normally appears at market turning points You will see in later chapters that this Doji is a special case of the Hanging Man and Hammer lines A tonbo line with a very long lower shadow (tail) (shitahige) is also called a Takuri line A Takuri line at the end of a downtrend is extremely bullish Candlestick Lines tainty in the marketplace Stars are part of many... the body at either the open or the close, or at both Reference to long days is prevalent in most literature dealing with Japanese candlesticks Long describes the length of the candlestick body, the difference between the open price and the close price, as shown in Figure 2 -1 A long day represents a large price movement for the day In other words, the open price and close price were considerably different... basic yin and yang lines in candlestick analysis These can be expanded to fifteen different candle lines for a clearer explanation of the various possibilities It will be shown in later chapters how Chapter 2 most candle patterns can be reduced to single candle lines and maintain the same bullish or bearish connotations Reading the single daily lines is the beginning of Japanese candlestick analysis A few... between the open and close is called the real body of the candlestick The height of the body is the range between the day's open price and the day's close price When this body is black, it means that the closing price was lower than the opening price When the closing price is higher than the opening, the body is white The Shadows (/cage) The candlestick line may have small thin lines above and/or below . down days. This also applies to photocopying Figure 1- 4 E? 11 0030 "' If you compare Figures 1- 4 and 1- 5, you can see that the Japanese candlestick chart really does not display anything. software. Chapter 1 Candlestick Charts Japanese candlestick charts do not require anything new or different as far as data are concerned. Open, high, low, and close are all that is needed to do candlestick charting. . year is blank. And, of course, there is 19 29, when the Industrials peaked on Septem- ber 3 at 3 81. 17 and hit bottom, three pages later, in July of 19 32 at 41. 22. The book means a lot to me. Between