Candlestick Identifier

Last modified 13:55, 5 Nov 2012

Candlestick Pattern Identifier

Candlestick patterns are one of the oldest types of chart based technical analysis. It is known that they were used in 18th century Japan for predicting rice prices.

Many traders feel that candlestick trading formations identify predictable patterns which are clear visual descriptions of market sentiment during specific time periods.

There are a number of different candlestick patterns and a wide variety of interpretations. Many books and educational materials have been produced explaining and interpreting candlestick patterns. We recommend further research and training before using candlestick in active trading.

Pattern Selection

Your SOFTWARE has 19 Candlestick patterns.

By default all are turned on.

To toggle each candlestick pattern's display on or off, double left mouse-click on the Candlestick Pattern Identifier's label in the top left corner of the price chart work area to open the Candlestick Pattern Settings dialog box (see below).

Individual candlestick patterns can be toggled on or off by checking/un-checking the check boxes.

The dialog box has three tabbed pages:

Bullish Patterns Tabbed Page

hilit_cndlstkbullsets.pngThe first tabbed page contains candlestick patterns that indicate bullish price movements.

The first five patterns (Hammer, Inverted Hammer, Bullish Engulfing, Piercing and Morning Star) are usually considered to be reversal patterns.

The last two patterns (Upside Tasuki and Rising Three) are generally considered to be bullish continuation patterns.

The Tweezer Bottom can be interpreted as either a continuation or reversal, depending on its surrounding candlesticks, trend of volume of trades and other factors.

Bearish Patterns Tabbed Page

cndlstkpropbear.gifThe second tabbed page contains candlestick patterns that indicate bearish price movements.

The first five patterns (Shooting Star, Hanging Man, Bearish Engulfing, Dark Cloud Cover and Evening Star) are usually considered to be reversal patterns.

The last two patterns (Downside Tasuki and Falling Three) are generally considered to be bearish continuation patterns.

The Tweezer Top can be interpreted as either a continuation or reversal, depending on its surrounding candlesticks, trend of volume of trades and other factors.

Reversal Patterns Tabbed Page

cndlstkproprvsl.gifThe third tabbed page contains three patterns (Doji, Harami and Spinning top) that are not associated with either directional trend, hence they are included in there own tabbed page.

These candlestick patterns are associated with uncertainty, prices in balance and indicative of a reversal to follow.

As with all candlestick patterns, the surrounding price movements, the relative strength of price movement and volume of trades and other factors can be indicators of whether the reversal will be dramatic or gradual. Again, we strongly recommend that further training and information be sought before employing this very complex trading technique.

Hi-Lite Display

cndlstkdisplay.gif

When the Candlestick Pattern Identifier Hi-Lite is applied to a price chart all instances of enabled candlestick patterns will immediately be tagged.

The display of individual candlestick pattern types can be toggled on or off using the check-boxes in Candlestick Pattern Settings dialog box, described in the previous section.

Shadow, Icon and Tab

For each instance of a candlestick meeting some of the pattern criteria, Your SOFTWARE will highlight the candlestick with a light purple shadow.

It will also display an icon indicating if the candlestick is a Bullish pattern (green upward triangle), a Bearish pattern (red downward triangle) or a Reversal pattern (blue diamond).

An abbreviation of the name of the pattern will be written in a tag using vertical letters above or below the icon.

The font display of the candlestick tags cannot be altered by the user.

Elongated Shadow

Often the candlestick pattern includes a sequence of candlesticks. For example the Bull Engulfing pattern has two consecutive candlesticks, while the Falling Three pattern has five consecutive candlesticks.

When this is the case, the shadow will extend to cover all of the candlesticks that are included in the pattern.

Note - The Candlestick Pattern Identifier Hi-Lite will work with other chart types, but the patterns are easier to interpret using the Candlestick chart display.

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