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STEVENISON'S | | ia Candlecharts.com Trade Smarter. Trade Safer. Trade Better.” Steve Nison’s Candlestick Companion ‘Adesktop canillestick reference guide “He who is well prepared has won half the battle” — Japanese Proverb he training, advisory and commentary services available from Candlecharte.com ara triad and ‘ria weapons that are contina- aly proven on the battlefields of world markets avory day. Noted ‘andlestick expert Stove Nison provides custorrized technical advisory and on-site seminar sorvicgs to top-tier institutional firms inclucing markot makers, nedge funds and money manage ‘Wile recognized as THE authority on candlastick charts, Ni- son is also an expert on Westom technical analysis with over 30 yeard real world experience. As such, our products and services incorporate the best ékbotn Eastern and Western technical trad ing techniques which wa let you spot tuning sigeals before your competion, help preserve capital, and improve market timing. AA pattial list of Candlecharts.com products includes daily market commentaries, Nison MarkelScan™, DVD workstiops, ‘and wed based education. A complete list is on the back cover. We invite you to visit Candlecharts.com to sign up for a free bisweckly nowelater, view Mi. Nison’s seminar sehactule and to viscover al the tools designed to help you Trade Smarter, Frade Safer, Trade Better™. Expertise You Can Trust ‘Steve Nison, OMT, Prosidont and Founder of Candie ccharts,com is uniquely qualtiec to take advantage of his ‘dynamic candle charting techniques, ‘As the very fist to reveal candlestick charts to the Western Hemisohere, he is acknowiadged as the leading autnorty on the subject, Mr, Nisan is the author of three books including “Japanese Candlestick Charting Techniques.’ Saies ot over 100,000 copies, in nine languages, nave made these books the bles OF CANestICK analysis” aroun the world (Mr. Nisan has appeared numerous times on CNBC and his ‘groundbreaking work has beon highlighted in the Wall Street ‘Journal, Barron's, Instiutional Investor, and many other pubilea- tions around the word As a renowned and sought aiter speaker. Nisoa has trained professionals in 18 countries from almost every major investment firm on howto apply ~ and proff from - these methods, Mr. Nison has sp0Kon, by request, before the World Bank and the Federal Reserve, He has taught at numerous universities, ‘and majr stock and commodity exchaniges. Important Caveats THIS GLOSSARY 1S DESIGNED TO BE USED AS A REFERENCE ONLY AFTER YOU HAVE TAKEN MA. NISON’S LIVE OR WEB RASED SEMINARS OR HAVE VIEWED HIS DVD WORKSHOPS. This is because Mr. Nison's training covers critical trading factors such as riskreward, candlestick confirmation, when to ignore a signal, ofc. These and otner factors are no! addressed in Stave Nison Candlestick Companion. As such do not tad on just the information is this visual quid. Although this reference guide does not inolude all the pattorrs, itdoes have tha most common and important signals. The pattems are separated by bullish and bearish The orcer is hased an the number of candlestick ines in the pattern. Note: There are other s0-called "candlestick experts" who make no reterence to where they lound their information about candlesticks. Evert more worrisuine fur yuu a a liader is that tiey are inventing thei own candlestick signals without any historical basis. The true canclestick pallers in this dasitop glossary have been relined by generations ct use. Constructing the Candlestick Line Cangtestick (also called candle) charts can be used in stocks, futures, and any other market That nas an open, high, ow and close, And they can be used inal time ‘ames. ‘The Real Body is the open and clase range of the session. Ifthe close is lower than the open, the Fieal Body Is black. The Real Body is white tha close is higher than ‘he open. Ihe thin nas-above ane below tne real body are called thm Sieaduws. The peak of the Upper Shadow is the session's high and the bottom of the Lower Shadow 5S the low of the session, Note that the candloatick tine usce the eam data ae a bar chart ithe open, high, low, an close), Thus, all Western charting tachniques can be Integrated with candle chart analysis high Shadow = cose — ba open ‘ Real Body open be" J—close low (©2005 Candiecharts.com wu. candlecharts.com (732-254-8660) Doji during decline (soutnom Doi, t ‘Maret Implication: Prior bear rer couki be losing moments Support: No! used as suppor. Enyehology: Wit tie samo openvclone we get A vleval uo nat thao ic a balance between ‘susp and demans ison insignis! ‘fa small real body is almost a Doi t can te views DO + Daj oer work beter at calling top athor than Reto, urea + See also Dragonfly and Gravestone Doi * Oppost ct Narern Day itera: * Market in down trend # Asoesion in which te ‘poneng and closing pices re he carne Hammer Suites | Marke in down trend + Sy eal bony aot riba, top atrange + Lower snadow atleast ‘wo Lmes the size of the teal body [Meret Impligation: Bottom reversal Support: Tre low ofthe llarmes aycholoay Long ower shadost and close at ‘r near session highs shows the merkets ‘ejecting lower evels ‘Nison Insights: > Marke il lle eet foe sation + Vary mall uppor chadow is acceptable {2 Onna nf Shorting Sine Tweezers Battom Criteria: Fo oF more candles wih ‘matching lows + Ether bath or the second ccna tne must reiet bear's cive is easing Markel Implication: Hetlor: reversal | Support: Bottom of matching ow. ayenology: Wit bat candles having same lows wo ar goting a hint of slackoning of eeing *Dethcanaios nos net be axacly the carne lowe ‘The second candle must have ela along lower shadow anelor sll eal aody + Opposite af Fweezers To (©2005 Candlecharts.com Bullish Signals Dragonfly Doji Sater: ‘Marat in & down tend ‘This special dorms ‘withthe open ane close atthe Figh of he sass suppor ‘on Marked impliewvon: Bears may ba stg com mand ‘Suppod; The ow ofthis cand ine Payehology: Vory ong lower shecow ane ‘lose at the high o the session means that fen wl scl as De Wan San ‘ison Insighte: Fated ta the Hammer inser a ath bottom eavereals have vary long lower shadows and loses st or near session's ng) + Opposi of Gavstone Daj Inverted Hammer 'Y asthe same citeia as the Shocting Star (200 Stovtiy Sia) How fever ste appears LU] atisradectine whereas a Sir twee Shooting Star emerges dtr an up one Market Implication: Potent bottom rovers, Buppert: Net used as suopom, Psychology” These who sole shor on the ieverted hammers cession’ apen ov close Deught at naw ix forthe move, thus making ‘hem nervaus. ‘ison Inatahta: ‘Must come afr a signfeart decine “Because ofthe oparsh shane of the fine {the very long upper shacow) we do nae ‘iow tls as mearingfl reversal signal 1 Sppesie of Hanging tan Bullish Harami 1 crteria: Mart in devin wend henge eens an rusi- I-Sai" aly long black real boty + Secor real body within por eal bocy (Marie malication: Bottom reversal Suppor: Wot use as = Suppo Paychology: Th tet long black rea body rellacts tho ears! contr. The small real body {hen rellects the b2are aro lecing mementu gon Insights: * Bax real Doales can 06 ho same color ‘The more deeply the second real booy ‘elnsoe inte me fst real body te hater the signal + Opposite of Beavish Haram — ‘Small Real Bodies (Spinning Tops) in Dectine itera sina eal body s cas “Spinning Tos" Market implication: Bear force losing momen ‘Support; Not usod for support ures there are free or more with tne same lows. Psychology: Sal real body dolays that tate is tg of war between supply and e+ ‘ard, with nether ull contol ‘Nison nsignts: “= Roal bacy can be ether wri or biack + The more spiming ts, the more the wend has gone tom down fo neuzal Sauron: Spioning toys, wie yin werd 1 jess bearsh, coud just bo a fu mat relleves an overseld condition Long Lower (Bullish) Shadows + 1 riterta: {Two ar more scesions ith {ong lower shadows “= Tha batons of aP Nee lower shacows are at, or near, tne same level ‘Market Implication: Trond turing less nega tive. ‘Suppor: One tong ower shagow s nar uso: for suppor, but a group of bulish shadows ‘ear the seme un woul Be Paychotogy: Tho extended ‘ower shadows Tea the same lows mean the marke is reject: tng those toner aves 1 Tha grater ha numer at ang tsar shadow candies noar fhe cams ows, te ‘mare sign ean thal supped + Oppesia of Long Under (Boarsn) Shad. Bullish Counterattack tri * Market in down end “Second candle gaps balew prior low (or cone) atthe en, then aloses al prior Market implication: B01 reversal Support Ihe low at ne second cand, Payctiology: On the second session's open {ne markot'e weak, cut ne unchangod e'az0 at stasione’ ene could mean the decline Is ex hausting sat ison insignis: *s Cloaes do ct have tobe exsety the same {Roth real bodies onoue We lng + Oppesia of Boarsh Counteratack Lino ‘ww candlecharts.com (792-254-8560) Piercing Pattern I 1, SS Market n down rene <3 eepiy nto por Diack fn ralbody Market impucation: wotem reversal ‘Support Tre iowest lof the two candlestick ives, Paychology: The bearish implications of he ‘lack real body are offset by te aby ofthe pulls to push prices deeply io the lack cane «do's real body the next session. Msoninsighte: +The second session has to cose atleast hata no the per real body + Boi real body should be relatively fang * Opposite of Dar Cloud Cover Morning Star tea: Haat it cown tend + Fiat candle is long blac + Second real bd is sma Ste * Third candle (wile) closes eeply nfs back cane I Market implication: Boriom savers upper The lowest ow of tha threo esndlo ines, Paychology; The fet black candlo shows heavy supply. The smal rel Body shows @ minuto afte bearish force. The white ‘sande then proves tho bulle nave gainad the Upper hand. ison insights: * Second small cancle ca be atthe bottom pat ofthe fest or ko cance’ reat body + By thr ast al white candi, the racket may be everoought + Onposit of Evening Star Frying Pan Bottom Bullish Signals Bullish Engulfing Pattern criteria: 1 Bare in down treet + Yitite real boy wrens aroun prececing S78 black ea body Markt Implication: Bottom revarcal ‘Bupgerts The lowest low ofthe ra candle ies, Paychology: Fist amall ral body small clue beats losing momentum. ‘Then the axtended lai white eancle proves bulls have gaieed tha peer hand, ison Insights: = While eal body need not wrap arounet ‘shadows of plo candle «Frat biack real body should be sat! ‘urmore lo lite te! baal + First veal body can oe 2 dj opposite of Rearch Eng iiag Paria Three Advancing White Soldiers Marken down tend 1 Throe eonsecutvo cing white candles Sev = Each while candte hae a higher dose ‘= Eacn wate canai's opening ‘thin or above the prior 90 ‘Sows white ea bay ‘Market Implication: Sign ot strong. Suppurt Lu uf Ue gale Payehelogy: One write candle that ciosoe at (Ornoar ine igns is a ok, and whon there are ‘ree means the buls ars running tha show. ‘Nison insights: Tere es De sre wile rel Ade, each has to be rolavaty long Frere aretha lite af ine shadow foreach canis «Opposite af Tree Black Crows Rising Window genera: There is no texting between cur rent sessice’s Tow and pro session's high Market Implication: Has bulisn imoteations. “Support: The ence rising window with major uppar atthe beter of the Picing Window. Payghology: The gap up shows how stvorg'y (Gre sided the market in over 9” tre ula ison insights: +The market ray not pill Back tothe window ‘the pent at which the Mining Window = suppor is aroKen ts On a ose under the bottom af the window + Opposia of Fallng Window {J Sox... HILT “des erate shorten il Shona age wnt candle emerges Market implication; Botom rovers! ‘Supod: Lowest eval reachod wifu this pat ierrenciarg te pono). Psychology: Bears are calling the shots at first Fett sorcery conte Te tal vie carlo moans to bul sre now inca Miso Insights: 1 Fst anda hast be long ack {TLitcan be mato up o any env nes neat ene me have an extonded ve eas + Dpposte of Ter Tap ‘support Record Session Lows Siterias = Market in down ro and then moves ino a conve pate: «+ Palle is confirned whon market gaps oe Market imotication: Bottom reversal ‘ors Pising Window) Criteria: 7A tomer ow is called a recard session tow + 810 record 9ossi00 lows in & shor lime Increasos possbity a rene change ‘uunporte Tw lovole of eunpare 5) Bottom of ising Weicow 2) Ratlam low ‘Going tor lwo lowe f righer lows proves bears are losing {er lookhos. sing bap then puts bush care, ‘Nigon instants: This pater isthe same ao a reunding batt fn Watom toshnical, cxcopl that also has the acldod postive agra! ofa Fang Wincow + When markets erming concave pattem should eve smal real bodies, Opposite of Dumping Top 22008 Gandlocharts.conm The markst's viewed 2s eversold, be we recom mand waitng or a bullsn cand or other Signal otore etna on Lie record sessions eaten th |Support One ie she rales usa the lewest low of he pater. Payonology: The deci wit itt or no lara action or rally means the ‘matte is avarextonded 1 The dowrsie. Nigon tnsighs: fhe markat has a steep rally, or trades sidowsays fora period. the Couns i retare +8-10is only aguelne = Opporta of Racerd Sossion Highs ‘www. canalecharts.com (732-254-8660) Doji during rally morthern Doi) ata ‘ Market in up trend + Asession in wien the ‘pong ard closing prices are the same, Margot impleston: Pe! Oued wong momenta Besistange: The Nght ti of te ne ane fhe rer cade line dun bo ueod ao resbtarce. Poychology: Shows balance venween 39) ang comane Neon insight: Ss smal el 200e snort oft can be owed asa Dey + Daj usualy work bear 2 caling tps than bottoms nao +See aio Dragonty and Gravestane Daj + Opposite of Southam Boj Shooting Star {Smal rea body at, or ‘ear, bottom of sos + Uppor shadow at least twice height of the eal body Market imalication: Top rovers. ‘Resistance: snootng Stare high Baychology: Visual dspiays 2 session which enh tell ene en lhe to WO rose. levels. ‘ison Insiahts: * eal body can be Black or whita = Very small ower shadow acceptable + Opposite ot Hammer ‘Two ar more candies with matching rigns = Eber bet a7 tha second ‘candi exe must ctlest bulls ettve s easing Maccetinpllation: Top versal. Toy of itn igs Baychology: With fist and score fang ot sae highs we re geting clues ofa slackening staemare ison Insights: * Bor canciesnees ot he exaety wo same nis Tha sect cana ine mt have sir long upper shadow andor small eal body + Opposite of Tweezers Bottom (©2005 Candiecharts com PIE UES ily Gravestone Doji [ cites ste | Tote Usted ees Maraet implication: Mat rjoctng hignet pcos. ‘Rasistange: Ser Doi ining a ely Psychology: Extended unpar shadow ana lose at he ow of the sersion shows after an tat faye bears lone coma Nison insights: "= Opperite of Dragonlly Dat + Related tothe Shooting Star sea both have varying upper shadows and ciecos ator neat the session lew Hanging Man er T Fainging on nao a aama rtf anor ce I Fane, However ne Wap al a a oes Saagee ate ‘i Markgt Implication: Paton tp reversal Fesistance: Not used as resisarce. Bsychology: Those wh bought on the hang- ing man session's open or close bought at new highs foc the move, thus making them nervous ‘Nizom Insighte: ‘Must come aller a signifeant rally | Because af the posilve shape ol the ing (tho very long lower shadow) me do rot ow ths 2¢ mearingiu reversal signal = Opposite of verted amar Bearish Harami ‘Market mup rend + Fiet candle unusually long white real Body + Second real body wit ror real booy Market implication: Tap reversa Fosistance: Not usod 2s a resistance, Psychology Altera bull move ne fang white real bodys wally i followed by the emal 73 body's uncertainty ison Insights: * Both rea bodles can be the same coor ‘The mere deep the second real body ‘alooca ita the fest eal Bagy ene Bete he ‘signal + Opposite of Bulsh Haram ‘Small Real Bodies (Spinning Tops) ina Rally Gaiters: 2 smal teal body i calle -ephming Top" | Market implication: Su frcetesing momen: Resistance: Not used ior resistance unos there are three or mora with ine sama Nghe. ayshology? Smal ol body anowa tere ia @ tug of ar with nether bull ror pear fu weontos ‘Nison Insights: + Peal body can be either white or back +The more spineng tops tm nae he ern thas gone trem up to neal “Nate of caution: One or more soaring tops, while changing the tere 1 188 Bul Ish, gould jute aul that elleves an ecole Long Upper (Bearish) Shadows ‘teri: Feo more sessions win ‘ulended upper shadows «She ot ee par howe ort orneat he same tral Market Implication: Trane! ene ass piv stance: One ong upper shadow isnot used resistance, bul a group a hese bearish shacows reat caro highs wou be. Psychology: Tne extendes upper shacows near he sme high shat mare ecg * ihe greater ts number ot tong upoee ‘stadow candles near he same igh, tho fea elgnteant that rezitance + Ozposie of Long Loveer(Bulish} Shacaws Bearish Counterattack 1 ‘Sterns Markets up wend + Second candle opons above ror seosion's hgh tor lose, then clases at prior ] core Markl impliation: Top ove Desistence: The Fgh of fe second cance Baychology: As goos as tungs ack at no stead seston’ open, We urehanned cose fs ‘Nison insiahte: loses donot have ble ex er + Both rea! boctes sould be tong {Opnonite of llth anntaratiack ine ww. candlecharis.com (792-254-8660) Dark Cloud Cover Saitetes athe in up ere Topens ahnwe pee hh ‘erdlose) “Black candi closes wa nto prong white candle ‘Market imptioation: 109 reversal. ‘Hesistance: Tho hgfost high ofthe two ‘anclostak ings. Psychology: Tal white cancle and gap higher xt sesso clays the buls aren complete tonal Butte second sessions weak ose ‘means the tide nas tamed. Nison Insights *= Close of black candle has fo cose at least that way nto tal mite candle + White eal body shout be relavaly long + Opposite of Pereing Pattern Evening Star «+ Frstcanle long white Second real body is small ‘Thre candle ozo) closes dooply fist who real boay Market Implication; Top reversal Besletance: Tho highest ign of tho too ‘and tines. Psychology: The white candle reflects the Dilish won tore. Next smal ea cay warns somoatum i aging and than back ‘eal bedy confime te pror rally has stale ‘Nison Insiahta: ‘+ Tho sacord smal candle can sometimes be atthe top secton ofthe stor tre canale's real bady 1 Attne Int long baal canal, tha markt canbe oversole + Oppesio of Moming Star Cee ued Market in up wand + Bink real bouy maps ‘arouri procedg mall | ‘white eal bod ‘Market Implication: lop versa. Fesistanee: The highest righ of th two candlactck ine. Psychology; The long black candle vellacts ow ie beara have wrested corto oF ‘marke tom ta Gua, * Black raul body nod not wrap round ‘shadows of prior whito candle + First white real body shout be small ‘compared fo Sex real body + Frstreal body oan ve a doj 1 oppunita of Beh Enyulirg Par Three Black Crows: | =F cuterin: Marks? mun ond Wome + Each block sana hao a ower ‘lose + Each carde's open wiin or below te pir black real badly stetance: High of he patter. Psychology: One black cance that casos at or thou D tons isuregatve, Toe shun boars are running tie show. ‘ison insights: been a substantial geckne bye pars ‘completion + Each back cendla has to belong {There shout bo Ilo ot ae ler snarnw te ‘each candle ‘Three consecutive faling back Market Lmpcation; Toopira sonal * Markel ray be oversold since there may have} + Opposite of Tree Acvancing While Sovsers Falling Window gr There sro xading ELE ca roumamezone bolwaen current ‘session's hgh ard por session's ioe Market implication: Has bear'sh implications. asistanes: The ertie wirdoss with major resis: ‘anes at hs ep af tho Falling Window. Peychology: ‘The gap down echoes now Stongly ove sided tho market gin favor ofthe bears ‘ison Insight: = The market may not ell e the window The Faling Windows resistance s oroken ‘naclese above te 1p ofthe wincow «+ Oppasta of ie Fising Wirdows Tower Top Resistance grtorta: Typ rNaretin un wong 11} Aitorone or more white can tes there a shortte-m lu ‘tren largo back earcio merges Market implication: Top ravers [ocistance; Highest lovel wcachod wthin tis pall {inclucing te lull period), Payenotogy: Eis are first caling the shots, Tho bl snows buts losing foros. ne olack ‘anale proves bears ate hows command icon Inelghte “Fist candle nas to be long white ‘+ Lul can made up of any eanae lines. The last eanle must have an exondod tack real boxy + Opposite ef Tower Bator Dumpling Top criti ‘Market up won + Market then fms a convex pater + Market hen gaps down Gi. ferme a Faling Window) resistance Fating Window Market implication: Top revert. Resistance! Two levels of oclelanes: 4} Top of Falng Whadow 2) Pattern High Peysholoay: Gong om higher highs ts lower highs foplays 2 loss of un Side momentum, The gap down moans the bears have grabbed contol Nigon insights! = This pater isthe same a a rounding topin Wester techaicsis, excapt that false has the anded nearsh signal ta Faling Window += Winen marco ferming conven pater anovie have arma ral bode + Opposite of Frying Pan Bottom (©2005 Candtecharts.com 7 Record Session Highs uiterla = Ahighor high ica tozordzaacion high 18.10 record season highs ina Short time reteases OSSD of trond enange ‘Market Imotication: The market's viewec as overoought, but we racor ed ay or Ub atelch ten Sigal bee eng ot Pee ecard eossors. Besialange: Crice the marke oteats use the highest hich ofthe pater, Peycholoay: Tho advance wn ltt ono laoral acon 9” pres cartes. tion means the market i overentenced tothe upside ‘son insights Ifthe market has a steep correction, o races sideways for perod, th conat has to teste + 850%9 only a guideline opposite of Receed Session Lows ‘wirw.candlecharis.com (732-254-8660) Western Glossary ND Ling A popula indicat that moasiens haath fhe tk met advance ot sn whore the nunber ct advarciy sue6 8 compro he qumbe of he cecting lzeuna, “Ts AD tno usualy compared to popular index such a8 ne Dow Jones, Th art an tie AD le seul end nthe sar secon devia Index 2a alld ho Taine inate arate oe avorage volume of dasiing sorte Ghted hy ha serge vino ann socks. Reading Blow {ehietas ave volume.n rig lacks A macing sbove 10 mises mare lume in deelig tcc, A 10 ay Average sts nde wo 20s eid and ‘Ascending Tangle ecenays price ator whore ha restarce Trois harzoral whe the suppor ine is ascencng. Abie over the resisineo area is ewes blah. ar enare-A grape tepresermtcn fe oy, THe aN) kr Ut ee a ine Hare ad Morn of 8 vert ne, The hae forthe peed mad chor onion bar attach th ght a varie ine. The cpan sake wih sev nl Na aches oof he vero! e,Prieisin en fhe veal acne es ‘one hozorta go ‘loa (also called Sling or Buying Climaxee op baton tal Blow of cer aflor an etonded move. Prices sharply an ule vs rong the dee inl precedg rn and hen aude tumain te eppaste dscton sity on igh vere ‘Boinger ands -A poruaincae hat pos vo Bens ate he elaw «20 gatod maving merge. The tans apo scaly wo dud davis shove ar lw iis 20 pred rosng vera. The tp and betan and dtine scm sppod an sisiance ares. ‘Breakaway Gap han sons can any tom a kyr ogres area (Le. 3 tending or aeongeston zene) Breakout -Overoring a rsaarce& supper we Box Rize The ugarase tamfora markatin a trl ring rang. | Sandestick (Candie) Chart - A mathe of charting deve ty he panaso in wtich he open ar close range ae represented by rectangle cated he rea ody (ack cose undo the con ite for & Gove over he oat, Th ines above ana bela teres] badly ave called shadows Ths top athe user shadow she sessen high and ne stom of ower stazow she seston om change f Bott hon nt sapenn evar no eltence oF When ol olan coms to new EO, Confimation - hen mere than ang irate substaiates the acter of ancien. Congestion Zeno sled nox ange A geod alter pce actor within a wahualy arm Rend Consolation - The same ae 8 congestion zn Consol, Powovor, haste mpicalon fa ie ee end tke rose | cultha Pall A pate hoes npcalore we ea cantnusten ofthe por van hag or mtance Fan pao. Crtce sng Saap- Yen pices bak under te sper ota haart eorgeston bar ad then springs back above ne "broken scp tes, Ts mlsh ene 9 stra ce age toe up a gq ba Cotsover Wen re aso atc crosses azove (bul eesiovey Orbea ears soscovt elmer rican, For evap, 43 § day moving srorage roses und 13 ¢ayriving averagert = a Deore

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