Candlestick Success Handouts

Steve Nisons The Candlestick Success Formula Day 1
The
Candlestick
Success
Formula
Day 1
With
Steve Nison, CMT
President: Candlecharts.com
Candlestick Candlesticks +
Charting Western
Techniques Indicators
Steve Nisons
Trading Triad
Success
System
Candlesticks + Trade Management
Candlestick Success Formula Agenda
1
Reversal Signals
Where the current

trend slows or
reverses after the
reversal pattern.
Most candle signals

are potential
reversals.
www.candlecharts.com
SIMPLE!
The Framework:
Analyzing Real Bodies
and Shadows
2
high Shadow
close open
Real
Body
open close
low
Real Bodies / Shadows
The longer the real

body the stronger
the momentum.
The relative size

and position of the
shadow displays
the extent of price
rejection.
3
Whos in control?
Whos in control?
CANDLES REVEAL THE FORCE BEHIND THE MOVE:

HOW DOES THIS KNOWLEDGE IMPROVE YOUR TRADING?
These have the same

closing prices, but what are
the candles telling us?
What does this bar chart say?
Holding the highs very

well so looks fine
Chart courtesy of Genesis FT
4
Now what does this candle chart say?
Does the market still look

fine?
And what happened after .
7
Stocks Weekly
FX Daily
Options Hourly
ETFs 30 Minute
Futures 15 Minute
Bonds 1 Minute
5
Basic Criteria:
Market in up or down trend
Open and close prices are the same
(or nearly the same)
Market Implication:
Market at a point of indecision
Saved by the light of the candles!
Those poor
traders who
got fooled into
buying here.
6
Non Forex Doji
Which of these
scenarios is a more
likely top reversal?
Scenario 1 Scenario 2
ask@candlecharts.com 732.254.8660 USA
13
Doji in Forex

14
7
Doji as Warning
Weekly Weakly
Doji Confirms resistance
Use the highest high of

those two sessions (top
of upper shadow) as
resistance
8
Candles can be used in all time frames
Market is
tired
Nison Candles and Options - the Perfect Fit
This doji is showing a Is this doji telling us there is

shift in psychology since something different about the
it comes during a rally market?
9
Doji in Context
There is no trend to
reverse with this
doji thus we
ignore it.
Nison Case Study
Analyze these doji in the context of what happened before.

Are any of these a more likely reversal and why?
A B C
10
DRAGONFLY DOJI
Which three prices of the

session are on the high?
What happened during

the session and by
sessions end?
Dragonfly
Dragonfly Doji (and failure to hold lows)
11
Gravestone Doji
Which three prices of

the session are on the
low?
What happened during

the session and by
sessions end?
FMNA Bond Prices
Gravestone doji
Close under
m.a. support
area but note
25 day how we got an
earlier
moving reversal with
average the gravestone
Nison Case Study
With the idea of

candles in context
tell me about
these doji (and
doji like) candles
12
Shadows
Remember: location and size of the shadow should be

considered when analyzing the market psychology.
Implication: Bearish long upper shadow offsets rallying

strength. Bullish long lower shadows hints bears losing
force.
Long Upper Shadows
Market Rising in
Agony
Quickly Reading Market Psychology
13
Basic Criteria
Market in a downtrend
Small real body (either color) at, or
near, top of range.
Lower shadow at least 2x height real
body
Market Implication
A chance to buy at the bottom
Support or Resistance
Low of hammer as support
HAMMER AND BULL SHADOWS
14
hammers lower shadow as Support
The market will often retest the

lower shadow of the hammer
SECRET HAMMER TACTIC
Will often
retest
lower
shadow
15
HAMMER
PATIENCE TO LOWER RISK
Nison Case Study
2 Which are hammers and why
1
5
4
3
48
16
Basic Criteria:
Market in up trend
Small real body (black or white) at,
or near, bottom of session
Upper shadow at least twice height
of the real body
Market Implication:
Potential top reversal
Support or Resistance:
High of signal as resistance
Hammer and shooting star
Shooting star
hammer
Shooting Star signals trouble overhead
17
Shooting Stars as Resistance
Shooting Stars
These
are NOT
shooting
stars!
18
Shooting Stars Signal Trouble Overhead
Ends with back to back

Shooting stars
Rally started with a hammer
Nison Case Study
1) Name the two reversal signals at

the arrows.
2) Would you use these signals to sell
short? Liquidate longs? Why?
3) What is bearish confirmation of the
reversal signals?
Shooting star
Hammer
19
High wave
Convergence of Candles Define Support
2 3 4
1
Single Candle Lines: Reading the Markets Psychology
20
Reading the Markets Message Quickly and Accurately
If I had only known this!
Basic Criteria
Market in down trend
White real body wraps around prior
session black real body
Market Implication
Bottom reversal
Support
The lowest low of the two sessions
of the pattern
Nison Power Concept
Bullish Bearish
21
open
open
close
Shadows for Insights
Lower closes, but

what are shadows
hinting?
Getting into the Market Before it makes its Move
22
Bullish Engulfing Pattern
How many black candles did

this wrap around?
Basic Criteria
Market in up trend
Black real body wraps around prior
session opposite color real body
Market Implication
Top Reversal
Resistance
The highest high of the two sessions
of the pattern
23
open
close
open
Bearish Engulfing Pattern
Bearish Engulfing pattern as resistance
24
Candles: Support and Resistance
Getting into the Market Before it makes its Move
25
Nison Case Study
B
C
1) What candle clues were there in the circled

area at A?
2) What was happening to the highs?
3) Why concept does 1 and 2 show that increase
odds of a turn? And would you sell short or
adjust longs?
4) Should we be selling short at B with the spinning
top and doji?
5) What pattern is at C?
Basic Criteria
Opens below prior low (or close)
White candle closes more than 50%
into prior black real body
Market Implication
Bottom reversal
Support
The lowest low of the two
candlestick lines
26
Piercing Pattern
Piercing Pattern Confirms Support
Piercing Pattern
Not Piercing Patterns
27
Basic Criteria
Market in up trend
Opens above prior high (or close)
Black candle closes deeply into
prior long white candle
Market Implication
Top reversal
Support or Resistance
The highest high of the two lines
that make up the pattern
Dark Cloud Cover as Resistance- FX
Dark Cloud Cover- Futures
28
Dark Cloud Cover - Stock
Dark Cloud Cover
Basic Criteria
First candle is an unusually long
black real body
Second relatively small real body
(either color) within prior real body
Market Implication
Prior trend is losing its breath
Support
Not used
29
Bull Harami
Rising Window Hammer
Bull Harami
Potential
Selling
climax
Basic Criteria
Market in up trend
First candle is an unusually long
white real body
Second relatively small real body
(either color) within prior real body
Market Implication
Bulls losing momentum
30
Bear harami
Forex Harami
Bearish
black real body
Criteria:
First candle is unusually long
white
Second real body spinning top or doji
Second real body within prior real body
Second real body opposite color Bullish
Implication: Change in flow of market
Bear Harami
Not harami
31
Black candle followed by white candle

that opens at (or above) prior open. Then
closes over black candle open.
32
Bull Separating line
Bull separating but look

where it is!
152
White candle followed by black candle

that opens at (or below) prior open. Then
closes under white candles open.
Bear Separating line
33
Black candle followed by white candle

that opens within black real body and
closes over prior open.
Bull Sash Pattern
Bull Sash
White candle followed by black

candle that opens within white real
body and closes under prior open.
34
BASIC CRITERIA
Trend not important
White candle followed by black candle that
opens within white real body and closes
under prior open.
STRICT CRITERIA
Both long real bodies
2nd candle closes under prior low
Black real body closes at, or near, its lows
PATTERN PSYCHOLOGY
The white candle means the bulls are running
SUPPORT/MOMENTUM TRADING the show. And then the next session the
market gaps lower and is not only unable to
Highest high of both candles as
make it this lost ground, but closes under the
resistance
white candle. This shows the bullish energy
Consider buying on breakout over has been sapped out of the market resulting
high of pattern in very scared bulls.
Since the market has to gap lower this

pattern not applicable to FX.
The more the market gaps down on the
open and the lower the close on the
black candle the more meaningful the
pattern
Keep in mind risk/reward since this
pattern is completed after substantial
move has already occurred.
Opposite of Bull Sash pattern
If open of black candle is same (or
lower) as prior open, it is a Bearish
Separating Line.
Bear Sash
Bear Sash
35
Criteria
Market in downtrend
First candle is long black
Second candle small real body that
doesnt (or slightly) overlaps first real
body
Third candle is white real body that
gets deeply into first real body
Market Implication
Bulls now in control
white or black Support

Low of three candles
Morning Star as Support
Morning Star as Support
36
Criteria
white or black
Market in uptrend
First candle is long white
Second candle small real body that
doesnt (or slightly) overlaps first real
body
Third candle black real body that gets
deeply into first real body
Market Implication
Bears are now in control
Resistance
Highest high of three candle lines
Evening Star
Evening Star
37
Evening Star as resistance area
Evening Star
38
Nison Case Study

4
1 2 3
A- What candle signals at 1 to 4

reflect trouble near 1.9550?
Windows
Go in the direction of the

window
Corrections stop at the

window
Corrections stop at the window
A rising window is
support
Support
Zone
39
Candles in Context
Shooting
Star, but
Rising Window
How education SAVES you money
Bearish engulfing
pattern, but you must
not sell here!
40
Importance of Windows
Shooting Star
Nison Case Study
1) What is the pattern at A?

2) What were the two aspects that
made pattern A more likely bottom
reversal?
3) After the week of October 8 why
was there support near $23?
122
Corrections stop at the window
A falling window is
resistance
Resistance
Zone
41
Large and small windows
Large
window with
the bottom of
Small
this window
as pivotal
window
support
Falling Window
Falling window with extra confirmation
Falling
window
The spinning
tops helped
confirm the
importance of
the falling
windows
resistance
42
Closed under the windows support
Breaks the rising

windows
support area
Nison Case Study
1. What are the reversal signals?

2. Where is potential support?
3. Any signals confirming
support area forecasted in #2?
12
8
Breakaway Gap
When the market gaps above resistance or below support
43
Breakaway gap
The stock not only breaks support but does so

with a falling window. This increases the potency
of the windows resistance. Note the shooting star
and bearish engulfing pattern on the rebound
Breakaway Gap
Breakaway Gap
44
Fry Pan Bottom Dumpling Top
Fry Pan Bottom
Fry Pan Bottom
Broke support
Small window
Fry Pan Bottom
45
Dumpling top
Island Top and Bottom
Island Top
Island Bottom
Island Top and windows
Traditional Western resistance level

Candlestick resistance level
The falling window portion of

an island top becomes 1st
resistance.
46
Window and Island top
R2
R1
Gap up Gap down
Timing advantages of candlesticks
Windows and Island Bottom
What is next
support under
this window?
This is our first support,

not the low of the island
Island Bottom
47
Island Top
Nison Case Study
1. What pattern is highlighted?

2. When would you sell short based on this pattern?
Nison Case Study
During this time, the

market is ascending.
However, what are
reasons for caution?
48
Charting Western
The Multiplier Effect

Where a Nison candle signal confirms another indicator
How NOT to use candlesticks
Oh my goodness! The
market rallied after the
shooting star!
49
Bullish Engulfing Pattern at Support
Scenario
1
Scenario
2
Use candles at support or

resistance to screen for the
best probability trades.
Just ask two questions:

1) Is market at support or
resistance?
2) What is the candlestick
signal hinting at that
level?
50
Candles and Trend lines
How Education Saves You Big $$$
Major resistance 2.00-2.01
Long term resistance zone
51
Long term resistance

zone
Trend lines and Candle Confirmation
Reading the Markets Message with the Light of the Candles
52
Resistance
Resistance
Support
Support
Change of Polarity
53
Change of Polarity
Dont look through a well!
1
3
Why would we trade differently with Piercing Patterns
4 and 5, compared to Piercing Patterns 1,2 and 3?
Hint: Change of Polarity 4
How Education SAVES you money
54
Nison Case Study
1
2 What candle signals are at 1 to 8? 6
3 Assume you buy at 8 where is your stop and 7
why?
Where are some areas of resistance ?
8
5
Nison Case Study
What patterns at 1 and 2? Even if pattern at 1 is not classic

(explain why it may not be) why would you still be cautious there?
Based on Change of Polarity give S1, S2 2

And then where is S3
1
Target
Snap
Buy
Stop
Crack
55
Crack and Snap
Crack and Snap
Hammer and Crack and Snap
56
Crack and Snap
Stop
Sell
Target
Falling off the roof
Price
Target
57
Falling off the Roof
Falling off the Roof
Bollinger Bands
58
Doji in context
Candles and Bollinger Bands
59
SQUEEZE
Candles and Volume

And then!
Light volume
breakout
Candles and Volume
Higher volume on white candle

compared to black on this bullish
engulfing pattern magnifies the
likelihood of a reversal
60
Candles and Volume to increase success
Volume Confirming the Candle Signal
Oscillators
61
Oscillators
Objective
Separate from price
Best in lateral markets

Includes stochastics, MACD,
RSI, price oscillator, etc.
Divergence
Positive Divergence Negative Divergence
2
1
1
2
Price Price
1
2
2
1
Oscillator Oscillator
Relative Strength Index

(RSI)
Compares advances to declines

Most common 9 and 14 period
Uses : Divergence, Extremes (70%
and 30%), Trend lines
62
Relative Strength Index

Formula: = 100 (100/1+RS)
Where RS = average of N days up closes

average of N days down closes
Example: If total up points (close to close) over 14 days was $28 and
total down points for 14 days was $14:Average up = 28/14=$2
and Average down 14/14=$1.
So, RS= 2/1=2 and RSI = 100 (100/1+2)=100-33.33 = 66.67%
Stochastics
Concept closes cluster to highs
Most common 9 and 14 period
Two lines - %K and %D
Stochastics
a) %K close compared to price range

b)%D 3 period average of %K
(a) and (b) - Fast Stochastics
3 period average of (a) and (b) = Slow
Stochastics
63
Stochastics
Formula for %K:
100 * todays close-lowest close in N periods
highest high in N periods-lowest low in N periods
Example: for 14 day %K, todays close is 41, if highest high

was 46 and lowest low was 41, for %K we have:
%K = 41-38/46-38 *100= 37.5%
This means todays close was 37.5% relative to the entire
range of last 14 sessions.
Stochastics
a) %K close compared to price range

b)%D 3 period average of %K
(a) and (b) = Fast Stochastics
Slow Stochastics = The %D in Fast
Stochastics becomes %K in Slow
Stochastics, and %D in slow is a 3 period
ma of Fast %D.
Stochastics
Using Stochastics
Faster %K Overbought Bullish and

line crosses and Bearish
% D line Oversold Divergence
64
Dual Moving Averages

aka Price Oscillator
Short term from longer term m.a.
Overbought/oversold, divergence
Price Oscillator
Formula:
short term moving average long term moving
average
Example:
10 day moving average = $23
30 day moving average = $31
Price oscillator = $23-$31= -8
If 10 and 30 day moving averages are the same Price Oscillator = 0
Moving Average
Convergence/Divergence
(MACD)
MACD line and Signal line
MACD Line spread of two

exponential moving averages
Signal Line Exponential moving

average of MACD line
65
Moving Average
Convergence/Divergence
(MACD)
Using the MACD
MACD lines Overbought Bullish and

Crosses and Bearish
Signal line Oversold Divergence
Bearish Divergence
Bearish divergence with candle confirmation
Doji and shooting

star warning of
trouble overhead
66
East + West = Higher Confidence
Two doji, but one is

more likely a reversal
based a western
indicator
Candles in Context: East + West
Two doji, but.
Oscillators Bearish Divergence
67
Bullish Divergence confirmed with candles
Hammer and bullish

divergence
Stochastic Crossovers
Bearish Crossover with stoch. confirmed by candles
Bullish engulfing
pattern and %K
crossing under %D
line from overbought
reading in oscillator
68
Oscillator- Stochastic with Candles
Overbought/Oversold
1 and 2 are the same price, but where

is the stock healthier?
1 2
Moving Averages
Moving average
price
Trend Indicator Support / Resistance
69
Moving Average
Convergence of Signals
Candles in Context Moving Averages
70
Moving Average
Moving Average
Candles in Context Moving Averages
71
Doji in context
72
Retracements
(B) $200
38.2%($162)
50% ($150)
61.8% ($138)
(A)
$100
Retracements
Candlesticks do not give price targets
73
Support and Resistance/Pivot Highs and Lows
This high is higher than the

session before and after it
This low is lower

than the session
before and after it
Left
Shoulder
Head Right
Shoulder
Neckline
Neckline
Head and Shoulders Top Inverted Head and Shoulders
Head and Shoulders
Head Right
Left Shoulder Shoulder
Neckline
Sell
signal
Head and Shoulders Top
74
TASC Interview - Jan. 24, 2003 S&P at 860

1) Once the necklines
Head and support is broken, it
Shoulder top should become
resistance.
2) To get a target with the

head and shoulders top
we measure from the top
of the head to the
neckline.
neckline Interview
the heads and shoulders top on the

S&P gives a target to near 775. A close
over 870 would void this. Hammer
TASC Interview - Jan. 24, 2003 S&P at 860

Head and 1) Once the necklines
Shoulder top support is broken, it
should become
resistance.
2) To get a target with the

head and shoulders top
we measure from the top
of the head to the
neckline.
neckline Interview
the heads and shoulders top on the

S&P gives a target to near 775. A close
over 870 would void this. Hammer
Candles Shine for Safety First Trading
75
Descending
Ascending
Ascending triangle
Candles for reversals and Western for targets
Bearish engulfing
pattern at top of bull
channel
target

76
East and West

Candles and Price Targets

This doji takes on extra significance
because it confirms a resistance level
BOX RANGE
77
Box Range Breakout
Box range Breakouts
Box range breakout
Harami with
target bottom of
box
78
East & West = Profits
79
Steve Nisons Candlestick Success Formula- Day 2: How Steve Trades
Find a watch list of markets
Reasons for the potential

trade
Cautions
Risk -why
Target
Check for any expected news
Review watch list for potential
trades
1
Move stop?
Adapt?
Track open trades
Exit price
Why did you exit
Analyze the trade
Exit
2
Go through watch list for high potential candidates
Reasons for the

potential trade
Cautions
Risk
Target
Exiting the Trade
sold
Covered at support
before weekend
Protecting
your Assets
3
Setting up the trade
Placing and monitoring the trade
Exit and analyze
4
Setting up the trade May 3
Reasons for the

potential trade
Cautions
Risk
Target
Getting into the trade May 4
Monitoring the trade May 5
5
20-50 day What would

BB
you do and
why?
Trade Overview
After close of this day I scanned the

markets for recent bear candles. Two
came up at the same resistance. Next
day sold short 6.06
6
How Education helps SAVE and MAKE you money
Liquidated my stock portfolio
Re-entered the market here
How Education helps SAVE money
Evening star variation
Exited my stocks here
How Education helps MAKE money
Entered the
market here
Falling window
Morning star
variation
7
Steve Nisons Candlestick Success Formula- Day 2: Candlesticks and Options- The Essentials
Nison
Candlesticks
with
Options:The
Essentials
What Are Options?
Options are contracts:

Giving the owner the right to buy or sell an asset
at a fixed price for a specific period of time
and obligating the seller to take the opposite
side if and when the right embedded in the
option contract is exercised by the owner.
Examples
XYZ January 70 Call at $3.10
ABC February 35 Put at $1.20
Call or Put
Calls are options to buy a stock.

The buyer obtains the right (but not the obligation) to
purchase the underlying stock.
Puts are options to sell a stock.
The buyer obtains the right (but not the obligation) to
sell the underlying stock.
Examples
1
Underlying
Options are customarily on one underlying.
Equity options ordinarily represent 100 shares of

the underlying stock.
Examples
Four Basic Trades
CALL PUT
Buyer Right to Right to

(long) buy sell
Seller Obligation Obligation

(short) to sell to buy
Examples
Exercise & Assignment Defined
Exercise:
to invoke the right contained in an option
contract
Assignment:
to be required to fulfill the obligation
2
If long or short an option trade here are your choices
Sell to close or buy to close

Exercise or accept
assignment
Shares are exchanged at
the predetermined price
(strike)
Let expire (worthless)
If long, lost what was paid
If short, gained the maximum
possible
Im Long or Short, What Now?
Sell to close or buy to close 69.4%

Exercise or accept 11.6%
assignment
Shares are exchanged at the
predetermined price
Let expire (worthless) 19%
If long, lost what was paid
If short, gained the maximum
possible
Source:
Option Clearing Corporation
* Calendar year 2008
Major Components of Options Price (Premium)
Price of Underlying Security

Strike Price
Expiration
Implied Volatility
3
Premium
The price of the option.

Paid by buyer; received by seller.
The price is multiplied by the number of shares
the contract represents, generally 100 shares.
$3.10 option actually costs 100 x 3.10 or $310
$1.20 option actually costs 100 x 1.20 or $120
Examples
ABC January 35 Put at $1.20
Strike Price
The pre-determined In the listed options
price at which the marketplace the strike
underlying asset will be prices are standardized.
bought or sold should Stocks priced between 0-
the option be exercised. 25 intervals of 2 1/2
Stocks priced between 25
- 200 intervals of 5
Stocks priced greater
than 200 intervals of 10
Examples
Intrinsic Value and Time Value
Intrinsic value: the amount, if any, by which an option contract

is in-the-money. By definition, at- and out-of-the- money options
do not have intrinsic value.
Time Value: the portion of an option's total premium that

exceeds its intrinsic value, if it has any. By definition, the premium
of at- and out-of-the-money options is entirely time value.
4
In, At, or Out of the Money
The relationship between the strike price and

underlying securitys price determines if call or
put option is In, At, or Out of the Money
In-the-money
For calls: a call option is in-the-money if the strike price

is less than the current price of the underlying security
or index.
Example: underlying@40, 35 strike
For puts: a put option is in-the-money if the strike price

is greater than the current price of the underlying
security or index.
Out-of-the-money
For calls: a call option is out-of-the-money if the

strike price is greater than the price of the
underlying security or index.
For puts: a put option is out-of-the money if the

strike price is less than the price of the
underlying security or index.
5
At-the-money
For calls and puts: When the price of the

underlying security or index is equal to
the strike price
In, At and Outs for Call Options 80 Strike Call Option
90 In-the-Money
85
Market
Price
80 At-the-Money
75
70 Out-of-the-Money
In, At and Outs for Put Options 80 Strike Put Option
90 In-the-Money
85
Market
Price
80 At-the-Money
75
70 Out-of-the-Money
6
Calls
Market at $49
Strike Price Intrinsic ? Time Value? Premium In-At, or Out

of the
Money?
$48.00 3.77
$49.00 3.15
$50.00 2.75
$52.50 1.76
$55.00 1.17
Puts
Market at $49
Strike Price Intrinsic Time Value Premium In-At or Out

of the Money
$48.00 2.55
$49.00 3.01
$50.00 3.62
$52.50 5.20
$55.00 7.05
Time decay
Time decay (or time "erosion") is the decrease, of an option

premium's time value due to the passage of time. The rate of this
decay increases as expiration approaches. At expiration a call or
put is worth only its intrinsic value, if it has any.
7
Implied Volatility (IV)
Implied volatility is the volatility as implied by

the market price of the security's options. In
other words, implied volatility is the market's
opinion of the volatility of the option's underlying
security and is determined using the following
information:
RISK CONTROL
Buy stock at 183. Risk 179 on a

close (due to rising window) .
Youre at work and by the time

you get back market at 160.70.
Loss on stock about $19
If you bought the 30 day ATM

call @ $5.30 loss would be
$5.06
Also in getting the call at $5.30

means that is your max loss
LEVERAGE
Buy at 144.50
Sell at 151.50
% gain on stock = 4.8%
Buy ATM 145 call @4.98

Liquidate call @ 8.49 with
mkt @ 152
% gain on options =70%
8
Why Nison Candlesticks are a perfect fit

for option traders
Volatility vs. Direction

MSFT
1) Hold Vol constant at 22% and price +20%
MSFT @ $25: 30-day 25 call = 56 cents
MSFT @ $30: 14 day 25 call = $5.00
2) Hold Price Constant at $25 and Vol +20%

30-day 25 call Vol @22% = 56 cents
14 day 25 call, Vol @26.4% = 51 cents
Result:
20% change in price = + $4.44 change in premium (792% gain)
20% change in Vol = - 5 cents change in premium (8.9% loss)
9
Nison Candles and Options- the Perfect Fit
Scenario 1 buy at hammer

Mkt @ $395: 400 call @ $11.31
Exit remaining at 2nd doji (13 days

after hammer) mkt @ 447: 400 call
@ $47.53 (320 % return)
Note: Could take some profits at 1st doji 6 days

later: Mkt @$405: 400 call @ $15.05 (33%
return)
Scenario 2 buy based on MACD

Mkt @ $418 : 420 call @ $13.43
Exit at doji (5 days later) mkt @ 447:

420 call @ $31.19 (132% return)
Result: Nison candlesticks

generated almost 2x the profit!
Nison Candles and Options for Protection
Time Decay
10
East and West
Buy 20 put: mkt @22.50 @7 cents
5 days later mkt @21: 20 put @ 26 cents
32
Candle Confidence Level
At support
BULL PUT:
but any signs Mkt at 20:
of bears
losing force? Buy 30-day 17.50 put for .05
bull put Sell 30-day 20 put for .70
spread
Net credit of 65 cents
Next session closes @ 19

which is under support- you
turn bearish:
Cover short 20 strike puts @

1.20 (1.20 - .70 = .50 loss)
Make
directional
Trade- leg
out of Net: long 17.50 strike puts
spread
and buy
back short (8 days later) Mkt at 13.52:
put
Liquidate long 17.50 put
mkt@ $4.00.
11
Flexibility for Stops Using Options
Buy 7 day 310 put @ 37 cents

Can wait for close
Exit at $3.87
12
Steve Nisons Candlestick Success Formula- Day 2: Trade Management
The
Candlestick
Success
Formula
Day 2
With
Steve Nison, CMT
Charting Western
1
A candlestick line or pattern

requires two criteria:
The shape of the line or pattern
The preceding trend
Importance of Owning the Correct Knowledge
4
5 4
5
3
How Education MAKES you money
These are
NOT bearish
engulfing
patterns!
This is a bullish
engulfing
pattern
2
What defines a trend?
Higher highs and higher lows

Chart of higher degree
Price above a moving average
Dual moving averages and use golden and
dead crosses
Prevailing Trend
20 day m.a over

50 day m.a and both
sloping up
3
Longer Term Trend
Stops
4
Protective Stops
Nison Case Study
What candle signal?

If flat what would you do here and why?
A candle signal even if it

confirms other indicators is not
enough of a reason for a trade.
You must always consider
risk/reward
5
Candles in Context
To know where
you stand is as
important as
candle pattern
recognition.
Hammer and Risk/Reward
reward
Risk
Risk-reward
Two hammers at 1 and 2. But

due to falling windows only
hammer 2 presents a buying
opportunity due to the r/r.
6
Risk/Reward
Why I went long:
1) Bullish engulfing at support
2) Other spinning tops

confirming support
3) Trend line breakout of price
Was this a good trade that just

didn't work out or did I make a
mistake in judgment that I can't
see?
Thank you,
Gary B
Candles in Context R/R
Nison Case Study
3
Is this hammer a
potential good trade
candidate?
Why or why not?
2 Tell me about how you

view each of the three
doji with the idea of
1 prior trend, overbought,
confirming a technical
signal, etc
7
If.Then Rule (slide 1 of 2)
Head and Shoulders

Top?
If.Then Rule (slide 2 of 2)
Was Head and Shoulders

Top Confirmed ?
If.Then Rule
The bullish
ascending triangle
and the new high
close for the move
strongly hints that
the market will
break out. But
resistance held.
8
Adapting
Adapting to the Market
Sell here
www.candlecharts.com 1
9
Market Chameleon
Buy on these back to back

hammers. Original target is
resistance as defined by recent
orginal high and falling window. With
Falling
target the resistance and decline from
window the shooting star that zone now
becomes the area to take profits.
Shooting star
(new target)
Buy
10
Adapting
The low of the

bullish engulfing
pattern as
support. Once
hammer is formed
(at the arrow) we
then adjust our
support
Goal: Keeping emotions

Trading Journal out of your trading
Exit price and reasons for exit

Was your initial analysis correct?
Entry Price Did news come out during the trade, and
Risk should you have known this before?
Initial Target- and Did you use precepts of trade management
how did you get it like adapting to the market, risk/reward, etc?
What would you have done differently ?
Reasons for the

potential trade
Cautions
Risk
Target
11
Monitor, Exit and analyze
Case Study Part 1
window
At last session on chart:
Entry Price
Risk
Initial Target- and
how did you get it
Number of shares
or contracts
Your notes:
Case Study Part 2

1) Would you do a new trade
2) If had a trade from before
what would you do now?
YOUR NOTES:
12
Case Study Part 3

1) Would you do a new
trade?
2) If had a trade from
before what would
you do now?
YOUR NOTES:
Case Study Part 4
Say you have been using a

moving average crossover
where you are bullish when
dashed line is over the solid
line. Based on adding these
moving averages does this
change what you have done on
Part 3?

1) Would you do a new trade
2) If had a trade from before
what would you do now?
YOUR NOTES:
Case Study
Which is a better sale?
Scenario 1 Scenario 2
13
Steve Nisons Candlestick Success Formula- Day 2: Intraday secrets
With
Steve Nison, CMT

Intraday Candle Charts
Be more flexible with

candle patterns on
intraday candle charts
than with daily or
weekly candles
1
open
close
Close Open
close
open
2
Dark Cloud Cover as Resistance
Close Open
Piercing Pattern
For intraday okay to have

open at- or very close- to
prior close
Secrets of Intraday
Candle Charts
(for intraday traders):
Monitoring Daily
Support/Resistance
3
Using Key Levels from daily Charts
Daily Chart
Hourly Chart
Feb.28 Feb.28
Daily chart for support ( 1 of 2)
June
26
We are thinking of buying on the session at the arrow as market

approaches solid band of support 43.25 on June 26. Lets turn to
Buying
an intra-day chart to see if there are any buy signals as the stock
area
nears 43.25 .. (see next chart).
Intra-day to place trade on confirmation of support ( 2 of 2)
On this 5 minute chart on

June 26, the dashed line
shows support area obtained
from prior daily chart near
43.25. The hammer at this
support was the buy signal
Hammer
4
Daily Chart for Resistance (1 of 2)
High volume falling

window on Jan. 7
Intra-day chart to place trade (2 of 2)
Falling
window
Although
near
resistance
market is
still strong The
spinning
tops hint of
weakness
$40. Time to
pull the
trigger
Secrets of Intraday
Candle Charts
(for Swing Traders):
Finding the Extra Early
Reversal Areas
5
Intraday Candles for Early Reversals
Hammer on
this daily chart
gives reversal
at $53.05
Hammer on
this intraday
chart gives
reversal at
$49.09 on the
same day
Intraday for Swing Traders earlier reversals 1 of 2
Lets look at this

daily session from
an intraday
perspective
Bull hammer signal at $50.79
Intraday for Swing Traders earlier reversals 2 of 2
On daily chart got bullish hammer

at $50.79. On this 5 minute chart
got reversal more than $2 earlier with
this bullish engulfing pattern.
Bull signal at $48.68
6
Harnessing the insights of intraday candles
Hello Steve,
I attended your seminar in NY. Please

attached find the log of my trade on
EUR/USD. The first picture shows my
short entry based on a daily chart's
Shooting star which confirmed the
Resistance.
Later on the 4hr. chart, a Doji

appeared which confirmed the
support level. I exited the trade with
+61 pips.
If you have any

comments/suggestions, please feel
free to do so. The first picture shows my
short entry based on a daily
Many thanks, chart's shooting star which
Frank C. confirmed the resistance at
bearish engulfing pattern.
Harnessing the insights of intraday candles
Daily chart reversal with

shooting star at 1.2900. With
Resistance area from the reversal on intraday at
bear engulf on daily
1.2930 Frank would have
chart
improved his profit by 50%
Later on the 4hr. chart, a

Doji appeared which
confirmed the support
level. I exited the trade
with +61 pips.
Secrets of Intraday
Candle Charts
Finding Hidden
Support/Resistance
7
Using intraday charts to uncover hidden support: 1 of 3
On this daily chart where is

Daily first support after this tall
white candle on April 15?
Lets go to the intraday.
Intraday
April 15
On this daily chart we see what

occurred after April 15
Daily
Support zone
obtained from
intraday chart
8
Intraday candles for Deep Insights
This daily chart

shows harami and 60 minute chart
hesitation on May
May 5,8,9
5,8,9. To get a sense
of the importance of
this resistance see
intraday
Intraday candles for Deep Insights
Daily Intraday
Finding Hidden Insights with Intraday Candles
How
important
is this
harami on
11/21?
9
Secrets of intraday Candles
Intraday
Daily
Dec 9
Using
intraday
get buy
signal
here
Secrets of Intraday
Candle Charts
Using Intraday Windows
Falling
Window
Rising
Window
10
Intraday Windows
Most intraday
windows from
one day to the
next
Intra-day window not a window on daily chart
27th
28th
Window on Intraday- But not daily
Intraday Daily
3/28 3/29
11
Secrets of Intraday
Candle Charts
Is the Market
Overextended?
Overbought/Oversold
Overbought/Oversold
On this daily chart market

looks oversold
12
Overbought/Oversold
This intraday chart gives a

different perspective
Secrets of Intraday
Candle Charts
Was There a Successful
Test of
Support/Resistance?
Successful test of Hammer? 1 of 3
Daily Chart
Aug 2
13
Successful test of Hammer? 2 of 3

August 2 - 60 and 15 minute candle charts
Aug. 2 was Successful test of Hammer: 3 of 3
Aug 2
Successful test of Resistance? 1 of 3
Daily Chart
www.nisonfx.com
14
Successful test of Resistance? 2 of 3
Intraday chart
www.nisonfx.com
Successful test of Resistance? Yes! 3 of 3
Daily Chart
www.nisonfx.com
15

Candlestick Success Handouts

Enviado por

Dados do documento

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Candlestick Success Handouts

Enviado por

Direitos autorais:

Formatos disponíveis

Steve Nisons The Candlestick Success Formula Day 1

Candlesticks + Trade Management

Candlestick Success Formula Agenda

Where the current

Most candle signals

Real Bodies / Shadows

The longer the real

The relative size

CANDLES REVEAL THE FORCE BEHIND THE MOVE:

These have the same

What does this bar chart say?

Holding the highs very

Chart courtesy of Genesis FT

Now what does this candle chart say?

Does the market still look

Chart courtesy of Genesis FT

And what happened after .

Chart courtesy of Genesis FT

Saved by the light of the candles!

Non Forex Doji

ask@candlecharts.com 732.254.8660 USA

Doji Confirms resistance

Use the highest high of

Candles can be used in all time frames

Nison Candles and Options - the Perfect Fit

This doji is showing a Is this doji telling us there is

Nison Case Study

Analyze these doji in the context of what happened before.

Which three prices of the

What happened during

Dragonfly Doji (and failure to hold lows)

Which three prices of

What happened during

FMNA Bond Prices

Nison Case Study

With the idea of

Remember: location and size of the shadow should be

Implication: Bearish long upper shadow offsets rallying

Long Upper Shadows

Quickly Reading Market Psychology

HAMMER AND BULL SHADOWS

hammers lower shadow as Support

The market will often retest the

SECRET HAMMER TACTIC

PATIENCE TO LOWER RISK

Nison Case Study

2 Which are hammers and why

Hammer and shooting star

Shooting Star signals trouble overhead

Shooting Stars as Resistance

Shooting Stars Signal Trouble Overhead

Ends with back to back

Rally started with a hammer

Nison Case Study

1) Name the two reversal signals at

Convergence of Candles Define Support

Single Candle Lines: Reading the Markets Psychology

Reading the Markets Message Quickly and Accurately

If I had only known this!

Nison Power Concept

Shadows for Insights

Lower closes, but

Getting into the Market Before it makes its Move

Bullish Engulfing Pattern