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Japanese Candlestick Charting
London November 2006

Taso Anastasiou
Director: Technical Strategy
UBS Investment Bank
Phone : +41-44-239 91 04
E-Mail : [email protected]

Brief History
SECTION 1

Aims and Objectives of The Session

♦ Interpretation
♦ Timing trades with candlestick patterns
♦ Money management – identifying risk levels

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Candlestick History
♦ By the early 15th century the Shogun Tokugawa had created a
unified country by pacifying the 60 Daimyo feudal lords. This
facilitated more freedom to trade between the provinces as well
as towns such as Edo and Osaka. (Osaka became the centre of this
trading activity). Even today, the traditional greeting in Osaka is
“Mokarimakka”, which translated means, “are you making a
profit?”

♦ Early records show charts were first used in Japan in the early 16th
Century to record price fluctuations on feudal Japan’s rice
exchanges

♦ Rice was essential to the Japanese economy; a unit of exchange
and the primary dietary staple of the Japanese people

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Candlestick History (continued)
♦ There were as many as 1,300 rice traders working in Osaka at the
Dojima Rice exchange. As trade developed, receipts from rice
warehouses were accepted as payment and hence the first futures
contracts were effectively traded

♦ Sokyu Honma (1716–1803) was a brilliant rice merchant who

is widely acknowledged as being the grandfather of Candlestick
charting

♦ Honma was such a successful trader that he eventually attained

the status of bushi or samurai – an amazing accolade for the time
as merchants were regarded as being very low on the social ladder

♦ Honma developed a series of rules which were called the “Soba
samni no den” or the Sakata Constitution

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The Different Types Of Chart
Line chart

Anchor line

Bar chart
Close

Open

Close

Open

Open

Close

Point and fig chart
Open

Close

o
o
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What is a Candlestick Chart?

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Candlestick Components
Close

♦ A Candlestick shows the same
four price plots used to construct
a typical bar chart i.e. open, high,
low and close

♦ Candles are colour coded for; up

closes i.e. close > open and down
closes i.e. close < open

Open

Open

Close
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Candlestick Composition
“Uwakage”

H

Upper shadow

O

Real body

“Jittai”

“Shitakage”
L

C Lower shadow

The Candlestick Is Divided Into 3 Distinct Areas

• Upper Shadow
• Real Body
• Lower Shadow
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Candle / Bar Chart Comparison

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“Jittai”—The Real Body
♦ The Real Body represents the area between the opening and
closing prices

♦ The closing price is the most important piece of information since
it concludes the sessions trading and provides an insight into
market sentiment

♦ Most technical indicators use the closing prices as the basis for
their calculations

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The Real Body
♦ The size of the real body can provide useful clues regarding
prospective corrective / reversal points

♦ The colour of the real body can be used to identify directional
changes in any given market, over any given time frame

Close
Open

Close
Open
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Impact of opening vs previous closing
Danger—reversal

Normal—continuation

Neutral—correction

Short term consolidation

Danger—reversal
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“Uwakage–Shitakage”— Shadows

The longer the
shadow the more
significant the level

Critical support

“TAKURI”—
Testing the Water

Short
covering
and buying
pressure
off this level

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The 50% level—Market Profile©
♦ To understand the importance of the 50% level it is necessary to
understand the concept of Fair Price and Market Profile©. For any
given distribution there will be a level which is accepted by the
market i.e. an equilibrium point. A close above the Fair Value area
serves as a very useful guide what that consensus is
Extremes

Fair
value
area

Sellers

Close
Fair price
Point of control

Buyers

Extremes
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The dynamics of a candle line

RB—becoming smaller

Long shadows either side
Closes below previous
equilibrium price

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The dynamics explained
♦ A normal candle is called a strong line, this simply means it
represents a positive continuation of either a bullish or bearish
move

♦ The smaller the real body, the weaker the line. Typically this
reflects consolidation when uncertainty exists and traders square
positions looking for a potential reversal or correction

♦ Lengthening shadows herald the existence of weakness in a trend
♦ Significant penetration into the previous line is a potential
reversal once confirmation has occurred

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The Classification And Single Candle Lines
SECTION 2

The classification
The original eight

1

2

3

4

5

6

7

8

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A new perspective
♦ Any market can only make one of eight moves
♦ Interpretations may vary in different markets but the basis
remains the same

♦ There are no other possibilities
♦ Once you understand the eight moves you then apply them to
the markets you are trading



This is the key to the technique


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1. The standard line

(+)

(–)

♦ The standard line is generally considered to be a continuation
move. They have strong real bodies and small lower / upper
shadows. They will not provide you with any specific clues in terms
of a potential change in market direction, they merely reinforce
the existing directional bias
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Standard lines

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2a. The Koma—spinning top

(+/–)

(+/–)

♦ The Spinning Top is a neutral pattern and is distinguishable by its
small real body and long shadows either side of the real-body

♦ Generally the market is considered to be consolidating when this
pattern is formed. The market has little directional conviction

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Koma

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2b. The star—“Hoshi”
A ‘Koma’ that gaps away from the
market becomes a ‘Hoshi’ or star
The Gap is a window or ‘Ku’

The market has become
very weak and is showing
signs of imminent
reversal

♦ A potential top reversal pattern
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Hoshi

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3. The Doji—reversal

Juji

Tohba

Tonba

♦ The Doji is very important, it is considered to be a reversal line or
warn of indecision

♦ The Doji represents the area where Bulls and the Bears meet.
Opening / closing prices are equal. Doji means ‘same as’, in
Japanese

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3a. The Rickshaw man—“Juji”

Juji

♦ The Long Legged Doji—(Rickshaw man), shows a potential turning
point where the upper and lower shadows are long and of
approximately equal length

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The Rickshaw man—“Juji”

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3b. The Gravestone Doji—“Tohba”
♦ It is called the gravestone because of its shape. This candle is

considered to represent the onset of an impending reversal if
observed in an up-trend

Market rejects this level
strong selling pressure

Tohba

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Doji—NIKKEI

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3c. The dragonfly Doji—“Tonbo”
♦ This is the opposite of a Gravestone and is found at market
bottoms

Takuri -

Strong buying pressure
at this level—critical
support point

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3d. The Doji Star
♦ One of the strongest reversal patterns, found at tops and
bottoms. Is known as a pattern of three, though at this stage the
Doji that gaps away from the previous close is warning enough

‘Ku’
“Hoshi”
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Doji Star

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4. The Umbrella—“Karakasa”
Hanging Man

Takuri

Hammer

Takuri

♦ At the top of the market this pattern is called a hanging man,
but at the bottom of the market it is known as a hammer

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4. “Karakasa”—Umbrella reversal
♦ There are two distinctive variations of the umbrella pattern
♦ The Hanging Man which appears at a market top and the
Hammer which appears at a market bottom

♦ An umbrella should have a small real body with little or no upper
shadow. The lower shadow should be two to three times the
length of the real body

♦ The umbrella is widely regarded as a reversal line but
confirmation of reversal is required

♦ The colour of the real-body is usually not considered to be
important but would recommend that you do pay attention to
the direction of the closing as this gives additional weight to
the pattern

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4a. The Hanging Man
♦ The market has to be in a
clearly defined up-trend

♦ The market shows signs of

weakness and aggressively
tests the downside

Support

♦ The session however closes
much higher than the
recorded low

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The Hanging Man (continued)

LIFFE Lg-Gilt

Hanging Man

Dark Cloud Cover

Shooting Star

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4b. The Hammer
♦ The Hammer is a very
important bottoming reversal
pattern

♦ The colour of the real body is
less important than for the
Hanging Man as the market
has bounced off a low in
a downtrend

♦ Strong buying has occurred,
and indicates a good level
of support

♦ The long shadow is indicative

Support

of the strong buying pressure

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Hammer

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Karakasa

Inverted Head and
Shoulders Reversal

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Hammer

Bearish Engulfing Pattern
The Hammer in Zone 1, fails to confirm the positive tone
the weight of the signals following the hammer are -ve.
Hammer

The Hammer in Zone 2, fails to confirm at first. Notice
the resistance that has been established following the
formation of the hammer.

Hammer
Piercing Line

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5. Inverted Hammer—reversal
Shooting Star

Inverted Hammer

♦ This pattern is the direct opposite of the umbrella lines
or Karakasa

♦ The shooting star can be a powerful reversal signal in an up-trend
(but only on a new high)

♦ An inverted hammer is indicative of a strong area of resistance,
confirmation is sought prior to entering any new long positions
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Shooting Star

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Shooting Star
Shooting Star

Shooting Star

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Shooting Star

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6/7. The Bozu Line
Closing
Marubozu

Opening
Marubozu

Opening
Marubozu

Closing
Marubozu

♦ Also known as a Belt Hold lines or Shaven Top and Bottom.
These are regarded as continuation lines

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8. The Marubozu

50% level
critical

♦ The Marabozu is a candle line with no upper and lower shadow
♦ The period opens and closes on the low and high
♦ The Marabozu is very common in short term charts, especially
after the release of economic data. Corrections are likely in the
period following after the pattern
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The Long Standard line
♦ The Long Standard line is easily identifiable as a single candle line
which is two to three times the length of a normal standard line
(it stands out)

♦ Like the Marabozu this line generally corrects and it is quite
common to draw corrective retracements along the length of the
move in order to be able to ascertain the ability of the trend to
continue in its actual direction and to sustain the momentum of
the trend

♦ Because of the abnormal size of the move a correction or
consolidation phase is likely to occur after this particular line

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The Long Standard line

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The classification

1

2

3

4

5

6

7

8

Positive or negative—depends on the colour of the real body

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The classification (continued)

1

2

3

4

5

6

7

8

Neutral—Koma market has little directional conviction

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The classification (continued)

1

2

3

4

5

6

7

8

Reversal—Juji–Tohbo at bottom—Tonbo at top–Hoshi

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The classification (continued)

1

2

3

4

5

6

7

8

Reversal—At bottom Tonkachi very strong.
At top Kubitsuri quite weak
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The classification (continued)

1

2

3

4

5

6

7

8

Reversal—Tohba at top very strong.
Nagare Boshi at bottom very weak
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The classification (continued)

1

2

3

4

5

6

7

8

Continuation—Opening Bozu—hits resistance in an uptrend.
Very strong close in a downtrend
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The classification (continued)

1

2

3

4

5

6

7

8

Continuation—Closing Bozu—hits support in an downtrend.
Very strong close in an uptrend
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The classification (continued)

1

2

3

4

5

6

7

8

Corrective—Marabozu—no shadows usually very aggressive

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“Sandome no shojiki”

The Japanese candlestick chart
Part 2 reversal patterns

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Reversal patterns two-day lines
♦ In section 1 we looked at the individual classification of the
various candle lines and have assigned a nominal value to the
moves in terms of positive, negative and neutral

♦ In this section we look at the two-day (session) reversal patterns
♦ In this section it is essential to understand the impact of the
opening vs the previous session closing value as this often
provides directional clues

♦ We also look at a technique which is derived by combining the
open of the first day and close of the second day to look at the
candle formation as a single line. This is done to achieve a greater
understanding of changes in market sentiment

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Gyakushushen
Counter attack lines

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1. The Tsutsumi line
Bearish Tsutsumi line

Bullish Tsutsumi line

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1a. The Bearish Engulfing line—Tsutsumi line
Tsutsumi line

Close

♦ The Engulfing Line is one
of the strongest reversal
patterns and is an effective
method for identifying
changes in market
sentiment

Trend

♦ The market has to be
trending for this pattern to
be validated

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1a. The Bearish Engulfing line—Tsutsumi line
Tsutsumi line

Open
Gap

♦ The next period opens
higher than the previous
close, creating a gap or ‘Ku’,
(in section 1 we saw this
phenomena is usually a sign
of market weakness)

♦ The real-bodies are
obviously of opposite
colours

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1a. The Bearish Engulfing line—Tsutsumi line
Tsutsumi line

Open

♦ The close of the current
candle line is lower than the
previous session open—
engulfing the whole of the
last real-body

♦ The shadows are not taken
Close

into consideration at
this stage

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1a. The Bearish Engulfing line—Tsutsumi line
Tsutsumi line

♦ The open of the first day
and close of the second
day would result in the
entire session resembling
a, Tohba or Shooting Star

♦ This technique gives

additional understanding
to the analyst and
suggests that this pattern
does not require
confirmation

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1a. The Bullish Engulfing line—Tsutsumi line
Tsutsumi line

♦ Is the reverse of the bearish

engulfing pattern and is very
strong with the 2DC forming
a hammer

♦ There must be a reasonable

trend in place for this pattern
to to be effective

♦ Trading strategy is to square

(2 day line–classification = Tonkachi = Positive)

trades that are positioned
with the prevailing trend
and get ready to reverse if
second day follows
through—(confirmation is
not necessarily required if
all the rules have been
adhered to)
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The Tsutsumi line

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The Tsutsumi line

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2. The Kabuse line

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Bearish Deaisen
Major support

♦ The Bearish meeting line is
found at the top of a
trending market

Gap

♦ Price action initially gaps

away from the previous
close but closes into the real
body of the previous session

♦ The most common pattern
in the bearish meeting line
family is Dark Cloud Cover

2/D,C
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Examples
USDJPY

Bearish Engulfing
Pattern

Bearish Deaisen
Two Crows

Hammer

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2. Dark cloud cover—Kabuse line
Kabuse line

♦ Very similar to the Engulfing

pattern but does not engulf the
whole of the previous ‘Jittai’

♦ A sustained up-trend is required,
with price action of the active
session opening higher than the
close of the last session and in
turn closing well into the
previous real-body

♦ The greater the penetration into
the previous period the stronger
the signal

♦ Trading strategy—close long

positions, go short when trend
reversal confirmed
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2. Dark cloud cover—Kabuse line (continued)
2/D,C

Kabuse line

b
a

(2 day line—classification = Shooting Star = Negative)

This line is a reversal but is weaker than the
engulfing pattern therefore a close below point
(a) would act as a confirmation.

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Kabuse

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Counter attack lines—Deaisen
♦ Deaisen is a meeting line—

Major support

in effect two periods of price
action converge, to form a
reversal pattern known as the
Piercing line

♦ Sashikomi occurs when a big gap

occurs between the close and the
opening of two sessions with
price action returning to close on
the high meeting the old price
action

Gap

♦ The 2/D,C Shows the long Takuri

2/D,C

and suggests that price action
has touched a key support but
confirmation is required prior to
reversing a position i.e. a new
high in the next trading session
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3. The Piercing pattern—Kirikomi line
♦ Similar to the Engulfing

Kirikomi line

pattern but does not engulf
the whole of the previous
‘Jittai’

♦ An important feature of this
2/D,C

50%

pattern is that you must get
significant penetration into
the previous real body to
call a reversal

♦ The greater the penetration

into the previous period the
stronger the signal

♦ Trading strategy—close long
(2 day line—
classification = Red Closing Tonkachi = Positive)

positions, go short when
trend reversal confirmed

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Kirikomi

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3. The Piercing Pattern—Kirikomi line
Kirikomi Line

2/D,C

Tonkachi

2/D,C

2/D,C

Bozu

Standard
line

50%

Positive

Neutral

Continuation

The importance of closing well into the previous real body is
highlighted by the 2D/C
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5. The Harami line
Harami

Harami Cross

Support

Support

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5a. The Bearish Harami line
2/D,C

♦ The Harami similar to an
inside day with the body of
a session contained within
the previous sessions real
body

♦ A market must be trending
before this pattern can be
considered a reversal

Support
Shooting
Star

♦ The market opens lower

than previous close and
immediately becomes
corrective as opposed to a
reversal signal

♦ Colours of the two bodies
are different

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5b. The Bullish Harami line
2/D,C

♦ Confirmation is required ( a

break in the direction of the
reversal on the third day
would suffice).

♦ Trading strategy—

Resistance

Tonkachi

exercise extreme caution
when you see one of
these patterns, adjust
your stop-loss level
accordingly. If expecting
a full trend reversal it is
imperative to seek
confirmation prior to
acting.

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5c. The Harami Cross—Harami Yose Sen

Also known as
the Doji cross

♦ Because the last line is a Doji this pattern is much more significant
than the standard Harami line

♦ Shadows are excluded (except in the case of Tweezers which will
be covered later)

♦ Trading strategy—close current positions and look for
opportunity to stop and reverse where possible

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6. The Doji Star—Doji bike
2/D,C

2/D,C

♦ This pattern was already outlined in section 1 but if a trend is
actually underway then the gap at the open of the Doji indicates
a strong possibility of reversal. This pattern would not be so clear
on a bar chart

♦ This pattern needs to be confirmed as the 2/D,C equates to a
standard line (3-line reversal pattern, see later)

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Doji Star

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8a. Tasuki

Support

Resistance

♦ Shadows are not taken into consideration as we are primarily
concerned by the open of the real body which opens into the
previous days session suggesting Harami—but closes lower than the
previous session open

♦ This pattern is closely related to the Tasuki Gap which is a three line
reversal pattern

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Tasuki

Bearish Engulfing Pattern
Upside Tasuki Gap

Bullish Tasuki
Bullish Tasuki

Bullish Tasuki
Piercing Line

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7b. Tasuki Gap
Upside Tasuki Gap

Downside Tasuki Gap

Support

Upside Tasuki Gap

Resistance

Downside Tasuki Gap

♦ The Tasuki Gap is a form of star, but rather than a spinning top or
Doji the gap is part of a Standard line. The Ambush line is the
third Confirmation line which closes the window and forces the
change in the trend and sentiment

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Tasuki and Tasuki Gaps

Tasuki

Upside Tasuki Gap

Aggressive Sellers
below 0.8389

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Reversal patterns
Top reversal

Bottom reversal

♦ Doji***

♦ Doji***

♦ Shooting Star**

♦ Hammer***

♦ Hanging Man*

♦ Inverted Hammer*

♦ Star**

♦ Star **

♦ Bearish Engulfing Pattern***

♦ Bullish Engulfing Pattern***

♦ Tasuki Gap**

♦ Tasuki Gap**

♦ Dark Cloud Cover**

♦ Piercing line**

♦ Harami line*

♦ Harami line*
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Three line reversals
Sandome no Shojiki

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8. The Morning and Evening Star
Evening Star

Morning Star

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8a. The Evening Star
Evening Star

♦ The market has to be trending
♦ The second session is a small
star that has gapped away
from the price action

2

♦ The third session is always the
opposite colour of session 1

♦ The related pattern (2d/c)

1
3

would result in a bearish
engulfing line/dark cloud
cover so is extremely negative

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The Morning Star
Morning Star

♦ The market has to be trending
♦ The second session is a small star
that has gapped away from the
price action

♦ The third session is always the
opposite colour of session 1

♦ The related pattern (2d/c) would
result in a bullish engulfing line /
piercing pattern so is extremely
positive

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8b. The Doji Star
Evening Doji Cross
or Northern Star

Morning Doji Cross
or Southern Star

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The Doji Star

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8b. Sute Go – Abandoned baby

2

1

Sometimes known as the
abandoned baby and is
distinguished by a trading
session that gaps away
from lines 1 and 3. This
pattern does not require
confirmation and
is very powerful. Essential
that the entire session gaps
away.

1

3

3

2

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Upside Gap 2 Crows
Shita banare niwa garasu
Upside Gap Two Crows

♦ Another 3 line bearish reversal
pattern —market is in an
uptrend and gaps higher in
second session

♦ Third session again opens

2
3
1

higher and engulfs the body
of session 2.

♦ Session 2 and 3 gap away from
session 1.

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Unique 3 River Bottom
Sankawa Soko Zukae

♦ This pattern is extremely rare
♦ Session 1 is in a downtrend with a
lower closing

2

♦ Session 2 is a Harami line of sorts

but has the lower close so the
colours of the real bodies are the
same in sessions 1 and 2

♦ Session 2 has a long lower shadow

1
3

and in itself is a hammer or Takuri

♦ Session 3 is a positive session
Sankawa Soko Zukae

below the middle day (can be a
meeting line).
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10. Three White Soldiers
Aka Sanpei

♦ This pattern shows a bullish
reversal

♦ Session 1, 2 and 3 are all
bullish standard lines
3

2

♦ The sessions all open roughly

in the middle of the previous
real body and close higher as
bearish sentiment falters

♦ No confirmation is required
Aka Sanpei

1

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Advance Block
Saki zumari

♦ This pattern is potentially a bearish
reversal and certainly defines
weakness in the current trend

♦ The three positive sessions in a
sustained up trend all open within
the previous sessions real body
3
2

1

♦ The advance block is highlighted by
the long upper shadows leaning
towards a shooting star

♦ Confirmation is required

Saki zumari

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11. Three Black Crows
Saki zumari

♦ This illustrates a bearish reversal
pattern

♦ Three consecutive down
sessions are formed

♦ Each line opens within the

previous days real body and
closes on or near its lows, but
lower than previous session

1
2

♦ No confirmation is required
3
Aka Sanpei

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12. The Harami age and Harami sage
Confirmation of a Harami pattern

1

3

2

Support

Resistance

2

3
1

Harami sage

Harami age

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13. The Tsutsumi age and Tsutsumi sage
1

Confirmation of an Engulfing pattern
3
2
Support

Resistance

2

3
1

Tsutsumi sage

Tsutsumi age

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14. The Tweezers Top & Bottom—Kenuki

♦ Tweezers can be found at a market top or a bottom. The highs of
two sessions (top) or the lows of two sessions (bottom) are the
same. Includes the body (for example one day can be a
Marubozu). Indicates support or resistance.

♦ Tweezer tops or bottoms are more effective when they form part
of a reversal pattern.
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15. High Wave Warning—Takane nochiai

5

3
2

Trend

6

4

7

Support
8

1

♦ This usually occurs after a strong rally, the high wave is made up
of a series of spinning tops, doji’s and umbrellas

♦ There are lots of clues to the direction of the breakout, but seek
a confirmation line

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15. Tower Tops and Bottoms—Ohtenjyou

Trend

Support

1

2

♦ This pattern would equate to a double top and the break below
the support following the second tower and bearish engulfing
pattern gives ample warning of the trend reversal
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Identify The Patterns

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Identify The Patterns

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Identify The Patterns

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Identify The Patterns

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Identify The Patterns

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Bibliography and References
♦ Candlestick Charting Explained—Gregory L. Morris
♦ Japanese Candlestick Charting Techniques—Steve Nison
♦ Beyond Candlesticks—Steve Nison
♦ The Japanese Chart of Charts—Seiki Shimozu Stocks & Commodities
♦ Pattern Recognition & Candlesticks—Gary S. Wagner & B.L. Matheney
♦ Compressing Candlestick Patterns—Jean-Olivier Fraisse & K.D. Armstrong
♦ Candlesticks & Preserving Capital—Gary S. Wagner & B.L. Matheney
♦ Candlesticks as a leading indicator—Gary S. Wagner & B.L. Matheney

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Technical Trading Approach
For FX Markets
Taso Anastasiou
Director: Foreign Exchange Technical Strategy
UBS Investment Bank
Phone : +44 (0)20 7567 6870
E-Mail : [email protected]

What Are We Looking At?
Underlying Principles
♦ Momentum plays an important role in defining the
strength of an existing trend

♦ Japanese Candlestick techniques are effective in
pinpointing the early stages of a directional play or
the resumption of an existing trend – effective
timing signal

♦ Momentum assists in verifying the candlestick
signal

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Pinpointing The Turn…….
Dark cloud cover

♦“Dark Cloud Cover”

reversal pattern identifies
the potential turning point

♦The combination of a

negative momentum
crossover reinforces the
significance of such a
reversal

♦If momentum is

overbought or oversold,
the signal is deemed to be
more significant

Momentum is overbought

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How Does Momentum Fit In?
♦Momentum defines the
Dark cloud cover signals
a reversal in trend with
momentum already
displaying a bearish
climate

1

climate, either bullish or
bearish the market is in at
that point in time

2

♦Momentum - RSI and a

moving average of the RSI

♦1 – Pattern is identified

Bullish pattern ignored
given the fact that
momentum was still
declining

as a “Piercing Pattern”.
Momentum though is
declining and suggests a
higher probability the
bullish pattern will fail.

♦2 – Price action

completely reverses
pattern 1 and suggests a
resumption of the trend.

♦Positive and negative

momentum is defined by
the crossover of the black
line (RSI) above or below
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the red line (MA)

Example 1 - GBPCHF
♦“Bearish Engulfing”
Bearish Engulfing

pattern develops following
strong uptrend suggesting
a mature trend

♦Momentum confirms a

bearish reversal and
reinforces the potential
significance of the candle
stick pattern.

♦Entry - opening price
next day

♦Subsequent price action
confirms the bearish
outlook.

♦Subsequent breach of

trendline support also
reinforces the change in
sentiment
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Summary
Bearish pattern deemed
valid given the fact that
momentum was declining

♦A signal is deemed valid
only when momentum
considerations are in line
with price signals

♦A bearish price pattern
Bullish pattern
ignored given the fact
that momentum was
still declining

within a positive
momentum environment
suggests the market is not
“in vogue”

♦Momentum helps to

identify any false reversal
signals

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Risk And Objective
Underlying Principles
♦ Early trend reversal would apply a maximum 2% stop loss
(subjective decision).

♦ Such a trend reversal has typically resulted in a 3%

directional move. Therefore the trade is expected to
generate 3%, however this is actively managed.

♦ A signal that marks a resumption of trend uses the high /

low of the signal day or most recent corrective high / low
as the risk parameter. Maximum allowable risk remains
2%

♦ Risk and objectives are actively managed

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Identifying The Turning Points In CHFJPY
1
3

Trade 3 resulted in a loss although the
original 2% stop loss would have been
tightened and not incurring the
maximum stop loss

2

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Identifying The Turning Point In EURNOK

Stop loss was
appropriately
tight

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Identifying The Continuation In EURCAD

Achieves objective of 1.6230

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Identifying The Turning Point In USDZAR

Target 6.2013

Entry 6.0207

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Identifying The Continuation In USDCHF
Target 1.3200

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Information

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Information

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Information

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Information

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