CHAPTER 1 : POWER OF JAPANESE CANDLESTICK

PART I : BASIC STRUCTURE OF CANDLESTICK

HIGH HIGH

OPEN CLOSED

CLOSED OPEN

LOW LOW

TYPE 1 : PINBAR(BULLISH) / HAMMER(BEARISH)

BODY
shadow
SHADOW/WICK

body
PINBAR/DESCRIPTION
HAMMER/DESCRIPTION
1. SHADOW LENGHT 2/3 OF THE
1. SHADOW LENGHT 2/3 OF THE
BODY SIZE.
BODY SIZE.
2. PREFER BULL BUT CAN BE IN BEAR
2. PREFER BULL BUT CAN BE IN BEAR
CANDLE.
CANDLE.
3. APPEAR IN DOWNTREND OR BUY
3. APPEAR IN UPTREND OR SELL AT
AT UPTREND RETRACEMENT.
DOWNTREND RETRACEMENT.

TYPE 2 : ONE WHITE SOLDIER(BULLISH) / ONE BLACK CROW(BEARISH)

C C

O O O O

C C

ONE WHITE SOLDIER /DESCRIPTION ONE BLACK CROW /DESCRIPTION

1. BULL CS OPEN ABOVE PREVIOUS 1. BEAR CS OPEN BELOW PREVIOUS

CLOSED BEAR CS. CLOSED BULL CS.
2. BULL CS CLOSED ABOVE OPEN 2. BEAR CS CLOSED BELOW OPEN
PREVIOUS BEAR CS. PREVIOUS BULL CS.
3. BUY DURING OR UPTREND 3. SELL DURINGOR UPTREND
RETRACEMENT. RETRACEMENT.
4.
TYPE 3 : TWEEZER BOTTOM(BULLISH) / TWEENZER TOP(BEARISH)

BODY OPEN/CLOSE BODY OPEN/CLOSE

AND HIGH/LOW SAME
AND HIGH/LOW
LEVEL
SAME LEVEL

TWEEZER BOTTOM/DESCRIPTION
TWEEZER TOP/DESCRIPTION
1. APPEAR IN DOWNTREND OR DIP OF
1. APPEAR IN UPTREND OR TOP OF
UPTREND./ RETRACEMENT
UPTREND./RETRACEMENT

TYPE 4 : MORNING STAR(BULLISH) / EVENING STAR(BEARISH)

A C
A C

EVENING STAR/DESCRIPTION
MORNING STAR/DESCRIPTION
1. BULL CS (A) MUST LONG/BIG
1. BEAR CS (A) MUST LONG/BIG
2. SMALL CS (B) EITHER BULL OR BEAR
2. SMALL CS (B) EITHER BULL OR BEAR
HAVE GAP WHEN OPEN AND CLOSE.
HAVE GAP WHEN OPEN AND CLOSE.
INDECISION CS.
INDECISION CS.
3. BEAR CS (C ) ATLEAST CLOSE 50% OF
3. BULL CS (C ) ATLEAST CLOSE 50% OF
BULL CS (A) BODY.
BEAR CS (A) BODY.
TYPE 5 : BULLISH ENGULFING/ BEARISH ENGULFING

BEARISH ENGULFING / DESCRIPTION BULLISH ENGULFING / DESCRIPTION

1. BEAR CS ENGULF WHOLE OF THE 1. BULL CS ENGULF WHOLE OF THE

BULL CS. BEAR CS.
 CHAPTER 2 : DIVERGENCE
1. PURPOSELY TO DETECT TREND CHANGE AT EARLY STAGE BY COMPARING PRICE
WITH INDICATOR (EX: AWESOME OSCILATOR,MACD 12,26,9)

TYPES OF DIVERGENCE

UPTREND DOWNTREND

I. BEARISH DIVERGENCE I. BULLISH DIVERGENCE

REVERSAL REVERSAL
II. BULLISH DIVERGENCE II. BEARISH DIVERGENCE
CONTINUATION CONTINUATION

I II I II

DIVERGENCE PATTERN CONFIRMATION CANDLE

THERE’S CONFLICT IN PATTERN ON THE SHOW RED LINE BEAR CS MUST MAKE LOWER HIGH .
BETWEEN THE PRICE AND MACD. BEAR CS BODY CLOSE LOWER THAN BULL CS
LOW. (CONFIRMATION CS MUST BE BEAR)

RULES OF DIVERGENCE

a. FIND CONFLICT (DIVERGENCE PATTERN) OF PRICE AND INDICATOR

b. WHEN CONNECT LINE WITH SWING HIGH/SWING LOW FOR CS AND INDICATOR, NO
INTERSECTION IN BETWEEN THE RED LINE.
c. WHEN DIVERGEN PATTERN HAPPENED, WAIT FOR CONFIRMATION CANDLE.
d. BUT U CAN BUY STOP/SELL STOP IF HAVE CANDLE PINBAR/HAMMER. NOT
REQUIRED CONFIRMATION CANDLE.
 CHAPTER 3 : BREAK-OUT TRADING
1. WHEN AN UP-TRENDING/ DOWN-TRENDING BREAKS ABOVE RESISTANCE
LEVEL/SUPPORT LEVEL , THERE IS HIGH PROBABILITY OF BULLISH/BEARISH
MOMENTUM.

RULES OF BREAK-OUT

I. WHEN PRICE AT CONSOLIDATE WITH SAME HIGH/LOW, AND RESISTANCE

/SUPPORT(ZONE) MUST BE TESTED ATLEAST 3 TIMES TO BE SIGNIFICANT.

UPTREND BREAKOUT DOWNTREND BREAKOUT

BREAKOUT

R1 R2 R3 S1 S2 S3

BREAKOUT

II. FOR UPTREND BREAKOUT, IT CAN BE EITHER BULL OR BEAR CS (PREFER BULL CS)
MUST OPEN AND CLOSE ABOVE RESISTANCE LEVEL. THE LOWER /LOW SHADOW
OF THE OPEN CS CAN CUT THE RESISTANCE LEVEL.
FOR DOWNTREND BREAKOUT, IT CAN BE EITHER BULL OR BEAR CS (PREFER BEAR
CS) MUST OPEN AND CLOSE BELOW SUPPORT LEVEL. THE UPPER/HIGH
SHADOW OF THE OPEN CS CAN CUT THE SUPPORT LEVEL.

1ST ENTRY

2ND ENTRY

BREAKOUT CS

III. UPTREND /DOWNTREND COMFIRM BY MOVING AVERAGE (EG : 50MA > 150 MA
, 20 EMA > 40EMA)
IV. 2 OUT OF 3 MOMENTUN INDICATORS ARE BULLISH/BEARISH (EG:FORCE INDEX,
MACD 12-26-9,PARABOLIC SAR)
V. ENTRY PRICE CLOSE TO EMA 20 OR MA 50 . AVOID TRADE OVEREXTENDED
BREAKOUT WHICH IS BREAKOUT CANDLE FAR AWAY FROM MOVING AVERAGE
(EMA 20)
VI. EXIT RULE , WHEN SHORT TREND REVERSE EMA 20 CROSS EMA 40 OR TRENDING
SUPPORT/RESISTANCE IS BROKEN.
 CHAPTER 3 : THE POWER OF CONFLUENCE TECHNIQUE
THESE TECHNICAL TECHNIQUES CAN BE COMBINE TOGETHER ATLEAST 3 ARE SHOWING
CONVEGENCE/SAME DIRECTION BEFORE PUT ANY LONG/SHORT ORDER.

FOR CHANGING OF TREND, COMBINE WITH THESE INDICATOR:

I. MACD 12,26,9 – FIND DIVERGENCE OF MACD AND PRICE

II. CANDLES REVERSAL PATTERN
III. SUPPORT AND RESISTANCE
IV. TRENDLINE
V. STOCHASTIC OSILATOR FOR LOOKING OVERBOUGHT/OVERSOLD

FOR REENTRY FOR TREND CONTINUATION, COMBINE THESE INDICATOR :

I. MOVING AVERAGE (EMA 20, EMA 40, MA 50,MA150, MA 200)

II. CANDLES REVERSAL PATTERN
III. SUPPORT AND RESISTANCE
IV. TRENDLINE
V. STOCHASTIC OSILATOR FOR LOOKING OVERBOUGHT/OVERSOLD
VI. FIBONACCI LEVEL AT ZONE 38.2 , 50 , 61.8 . (MOST IDEAL 61.8)

FOR BREAKOUT TRADING, COMBINE THESE INDICATOR :

I. SUPPORT AND RESISTANCE

II. FORCE INDEX
III. PARABOLIC SAR
IV. MACD HISTOGRAM