Introduction to Advanced Candlestick Patterns Thank your Host – Mona and The FOREX Traders Association for inviting you to speak. Introduce Pat Johnson, Business & Marketing Director and Debi McDonough, Editorial Department Explain this is Advanced by request but the beauty of candlesticks is the quick and easy visual … Introduction to Advanced Candlestick Patterns

Advanced Candlestick Patterns Fry Pan Bottom Cradle Pattern Jay-Hook Scoop Pattern Belt Hold Breakout Patterns

Fry Pan Bottom The downtrend starts waning with the appearance of small trading bodies As the trend starts slowly curling up, a gap up in price indicates that strong buying sentiment has now returned

Long Rounded Curved bottom Fry Pan Bottom Long Rounded Curved bottom

Fry Pan Bottom – minutes, days, months The indecisive rounding bottom is the predominant factor

Fry Pan Bottom - Past Analysis Big Percent move at top has a different meaning when a pattern can be identified

Fry Pan Bottom measuring point A dimple usually marks the Halfway point

Fry Pan Bottom - A Break Out or Failure? Easy identification of a failure, which makes for easy stop loss procedures

Fry Pan Bottom can become a Cup and Handle Or a J-hook pattern

Fry Pan Bottom – Exuberant buying Want to see break out buying

Fry Pan Bottom – What is expected?

CLWR – Classic FP results

MICC – excellent option trades

VCI Expected results 55% Gain

SQNM Breaking into new highs

INCY What is the entry strategies?

MEOH Option Strategies

SPWRA What does a gap up tell us?

BAS – What do you do with this chart?

MD What pattern?

MGM – Next target? Then what?

What do we want to see at the end of a FPB?

What Are we looking for now?

FPB/J-hook classic Fry Pan Bottom J-hook

Cradle Pattern The Cradle Pattern is a symmetric bottom pattern that is easy to identify. A downtrend becomes obvious with a large black candle at the bottom. A series of small or indecisive trading days trade in a flat area. A bullish candle, more powerful with a Bullish Engulfing signal, is formed of approximately the same magnitude as a Bearish candle at the end of the downtrend. This signifies that the Bulls have come out of the indecisive trading area with decisive force.

Cradle pattern

Cradle Pattern

Cradle Pattern what is the predominant indicators?

Cradle pattern

Cradle Pattern at the MA’s

Cradle pattern

Jay Hook Pattern The first move of the uptrend is very strong. A candlestick sell signal indicates a pullback about to occur. After a few days, small indecisive candles start to appear Doji, small Hammers, Bullish Engulfing signals

Jay Hook Pattern The first test becomes the recent high Indecision as found in candlestick sell signals at the recent high becomes a quick indicator to get out of the position A Bullish candle breaching the recent high illustrates that investor sentiment is taking prices up

Jay Hook Pattern How to differentiate between profit taking and a full-scale reversal.

J-hook

Jay Hook

J-Hook – How to Identify The pull back is stopped when Candlestick buy signals appear Stochastics do not get to the Oversold area

J-hook - what is first criteria? A strong price trend

J-Hook with added confirmation Indecisive trading at a major moving average Adds more evidence of a J-hook pattern potential

J-Hook – Easy Expectations

Scoop Pattern An extended flat trading area Followed by a pullback Buy signals bring price back up to flat trading range Once price breaks above flat range, look for strong uptrend

Scoop Pattern formation

Scoop Pattern- Completed

Scoop pattern

Scoop pattern off the MA’s

Scoop pattern - Do not scan for a Scoop

Scoop pattern Use it to analyze

Scoop Pattern - What should happen upon confirming?

Scoop Pattern - A strong trend to potential targets

DHI 50 MA resistance?

Mini Scoops

WY

LVS

PCX

MEE What is the buy criteria?

WYNN

Belt Hold Pattern Strong prevailing trend The candlestick body should be the opposite color of the prevailing trend Gap on the open, continuing the trend The open is the high or low of that trend The length of the body should be a long body. You can read my full article on ‘The Belt Hold Signal’ in Feb 2006 issue of Stocks & Commodities Magazine. The Bullish Belt Hold is a long white candle that has gapped down in a downtrend. From it’s opening point, it moved higher for the rest of the day. The bearish Belt Hold is just the opposite. It is formed with a severe gap away from the existing uptrend. It opens at it’s high and immediately backs off for the rest of the day

Belthold

Belthold - Adds strength to existing trends

Belthold – shows the sellers are flushed out

Belthold – gets rid of the last of the sellers

Belthold

Belthold

Belthold Bearish

Knowing when to get on board and when to take profits. Breakout Patterns Knowing when to get on board and when to take profits.

Breakouts

Breakouts

Breakout – where to buy?

Moving Averages Support

Analyzing The Market

DOW

MA’s support and targets

MA’s act as magnets

MA’s and patterns

MA’s once breached , will come back and test

MA’s Targets

MA’s – first attempts usually fail

Wave 1-2-3

The T-line

Trend channels

Trading Gaps Gaps represent enthusiasm to get into a position to the point that investors will pay prices away from any of the previous day's trading range. Great for identifying panic selling at the bottom and exuberant buying at the top.

High Powered Scanning Techniques with Candlesticks Market trend Strongest sectors Strongest signals in those sectors Additional indicators confirming Best Target potentials Easy stop loss points

HAR – Stop Loss

Analyze best potentials The Signal The pattern Where is it moving from? Ma’s, trendlines? Where is the next resistance area? What is the sector doing?

Money Management Eliminate Emotions

The Point of investing is to have the probabilities in your favor The Point of investing is to have the probabilities in your favor! Candlestick signals provide the positive probabilities

Candlesticks are merely the graphic depiction of what investor sentiment is doing

Trend Analysis Made easy with Candlesticks

2008 Downtrend Easy analysis Sell signals at declining MA’s Double Top at 200 MA Dumpling Top Cradle BUY J-hook

MA’s support to resistance

Double Top at 200 MA

Dumpling Top has expectations

The Bottom – Morning Star/Cradle Pattern

J-hook ends with Cradle pattern

What is the market doing Now?

Recent Rec - XTEX

CSIQ

MIPS buying the BO

CCME buying the J-hook

SOHU buy on BO

Buy when the patterns say to buy - BAS

F signals and MA’s

Cradle Pattern – indicates very strong uptrend What was the market doing?

DOW trend

Signals at the MA’s make HP trades CORN

XIDE buy on BO confirmation

WFR – signals need confirmation

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