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Candlestick Charting Basics Spotting the Early Reversals Video by Steve Nison

Candlestick Charting Basics Spotting the Early Reversals Video by Steve Nison

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Candlestick Charting Fundamentals: Spotting the Early Reversals by Steve Nison

“A solid start is the most crucial thing of all.”

(Japanese saying)

In the stock market, forex market, and other markets, candlestick patterns are a type of technical analysis and charting. They are also applicable to all time frames, whether one is aiming to make long-term investments or engages in swing trading or day trading. When utilized properly, candlesticks, also known as Japanese candlestick charts, have the ability to reduce market risk exposure and are excellent at identifying market turning points.

Some typical candlestick chart patterns and words you may be familiar with are bullish engulfing pattern, doji, black cloud cover, hammer, and shooting star.

Only a handful of the numerous candlestick chart patterns are covered in this section. This basic introduction does not cover all significant candlestick patterns and trading strategies. This section’s objective is to show how candlesticks, particularly Nison candlesticks, may give new and distinctive tools for technical analysis. However, as this is only an introduction, it won’t offer a trading strategy. For instance, candlestick signs should frequently be disregarded. Experience with candlestick charts becomes useful in this situation.

HOW DO CANDLESTICKS WORK?

Japanese candlestick chart analysis has been perfected over many years of use in the Far East. This is because the candlestick lines resemble candles. Today, swing traders, day traders, investors, and prestigious financial institutions employ candlestick charts on a global scale.

charts using candlesticks

Are simple to comprehend: Anyone can use candlestick charts to their advantage, whether they have experience with technical analysis or not. This is the case because, as will be demonstrated later, a candlestick chart uses the same data—high, low, open, and close—that a bar chart does.
Give earlier warnings of market turning points: Unlike bar charts, which can take weeks to give out reversal signals, candlestick charts may send them out in a matter of sessions. As a result, candlestick charts will frequently show market turns before conventional indicators. You will be able to join and leave the market at better times as a result of this.
provide original market insights: Unlike a bar chart, which just displays the trend of a movement, candlestick charts also display the force that is driving the movement.
Improve Western charting analysis by applying Western technical tools to candlestick charts. However, candlestick charts will provide you with timing and trading advantages not present in bar charts. Your ability to combine Eastern and Western analysis will put you ahead of others who simply employ conventional Western charting methods.
can be used to trade options on any market, including the stock market, FX market, futures market, or market for commodities.
are employed by people who engage in active investing, day trading, swing trading, and investing.

Nison Candlesticks: What are they?

You owe it to yourself to understand how to utilize candlestick charts properly if you’re serious about doing so.
You can be certain that you are receiving the appropriate candlestick training when using Nison candlesticks—candlestick training done properly. When it comes to explaining candlesticks, there are many so-called teachers out there with good intentions. However, the fact is that they haven’t put in the time or effort necessary to become The Expert in candlestick charting.

Keep in mind that throughout many generations, these Japanese candlestick chart patterns have been improved. I thoroughly dissected candlestick trading strategies from the original Japanese sources and the best Japanese traders as the first person to introduce candlestick charts to the Western market. The risk for traders arises when other instructors, albeit having the best of intentions, start including their own modifications and candlestick chart patterns that aren’t a part of the original set of Japanese candlestick patterns. Or, much more risky to your trading cash is when they erroneously instruct in candlestick usage. Many traders lose actual money because of this incorrect information. However, things don’t have to be that way. Because of this, I put a lot of effort into teaching you how to use Nison Candlesticks properly.

Bottom line: This training is effective.

CANDLESTICK LINE CONSTRUCTION

The true body of the candlestick line is its widest portion. It indicates the range between the start and end of the session.

Setting Up the Candle Line

The true body is black if the close is lower than the open. If the close is higher than the open, the genuine body is white. If the close is higher than the open, the genuine body is white.

The shadows are the thin lines that appear above and below the actual body (sometimes called candlestick wicks). The session’s high and low are represented by the peak of the higher and lower shadows, respectively.

Which side is in command may be determined by the color and length of the true body. Keep in mind that the candlestick chart lines utilize the same information as a bar chart (the open, high, low and close). As a result, candlestick chart analysis may be used with any Western charting methods.

The candlestick charts are most effective, according to Candlecharts.com, when combined with Western technical analysis. As a result, we combine the greatest charting methods from the East and the West to give you trading tools that are incredibly powerful.

CANDLESTICK CHART USE

The size and color of the actual body of the candle may convey a great deal of information, which is a crucial and potent benefit of candlestick charts.

For instance:

A long, true white body makes it obvious that the bulls are in authority.
Long black actual bodies are a symbol that bears are in charge.
A little genuine body (white or black) suggests the market’s trend may be losing steam and points to a time when bulls and bears are engaged in a “tug of war.” We eventually get at a doji, which is a candlestick line with an equal open-close and no true body, as the real body shrinks.

Setting Up the Candle Line

Doji

The candlestick’s actual body is frequently regarded as the most significant component, but the size and placement of the shadows reveal crucial details as well. For instance, a lengthy lower shadow indicates a market that has tested and rejected lower prices while a tall upper shadow indicates the market rejected higher prices.

Reversal signs are frequently evident on candlestick charts earlier than they are on typical bar charting methods, if not at all. Candlestick charts are a great way to help you protect your trading cash, which makes them even more valuable. Even just one benefit is crucial in the unstable world of today.

Let’s see an illustration of how a candlestick chart might prevent you from entering a potentially risky transaction.
A bar chart is shown in Exhibit 1 (below). The stock appears strong in the circled region of Exhibit 1 since it is making consistently higher closes. This feature makes it seem like a stock to purchase.

What is this bar graph trying to say?

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

Examine the outlined region of the candlestick chart in Exhibit 2 presently (below). Note how the candlestick chart gives us a different view than the bar chart. There are a number of little actual bodies on the candlestick chart that the Japanese call spinning tops, all of which are located in the same circular region. Small real bodies suggest that the rally, the previous trend, may be losing steam.

What is the message of this candle chart?

As a result, while the bar chart suggests that it would be advantageous to purchase, the candlestick chart demonstrates that caution should be exercised before going long.

The little genuine bodies show how the bulls are waning in strength. A swing trader, day trader, or even someone who engages in active investing would thus probably refrain from buying in the circled region while utilizing the candlestick chart. As a consequence, a lost trade was avoided.

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About Author

Steve Nison

Steve Nison. CMT holds the distinction of introducing Japanese Candlestick Charting to the Western world. As such, the foundation of all candlestick information in America and Europe is based on the foundation of Mr. Nison’s work.

Regarded as one of the most foremost technical analysts in the world, Mr. Nison is not only the acknowledged master of these previously secret candlestick techniques, but is also an expert on Western technical analysis with over 30 years real world experience.

Mr. Nison’s work has been highlighted in The Wall Street Journal, Institutional Investor and Barron’s. He has presented his trading strategies to traders from almost every investment firm on how to apply – and profit from – these methods. He has also lectured at numerous universities and, by request, at the World Bank and the Federal Reserve.

You have candles on every platform. You may be new to candles- or even using them now. Either way it is vital to your trading success that you learn how to use them correctly. That is why Mr. Nison is dedicated to giving traders and investors the correct candlestick education with Nison Candlesticks- Candlestick training the right way.

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