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Copyright © 2007 Stephen Margison www.sm-forex.com
“IT’S TIME TO GET MORE OUT OF LIFE”
www.sm-forex.com
Reading Charts 2
The Forex Codes Japanese Candlesticks (intro)
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks (intro)
• The Japanese began using technical analysis to trade rice in the 17th century. Candlestick charting first appeared sometime after 1850
• Long bodies indicate strong buying or selling and a faster move. The faster buying or selling activity occurs, the longer the body becomes.
Copyright © 2007 Stephen Margison
www.sm-forex.com
The Forex Codes Japanese Candlesticks (intro)
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks (intro)
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
• Useful for identifying Reversals
• Good “tool in the box” for Bounce trading
• Not to be used as a stand alone indicator
• Psychological depiction of trader mentality at the time
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candles – Hanging Man
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candles – Hammer
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candles – Inverted Hammer
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candles – Railroad Tracks
• Railroad Tracks are one of the strongest patterns there is
• A trend comes to a halt with a tall bar with long real body and little or no shadow and is followed by a similar tall bar going the other way
• This pattern shows many traders feel the market should reverse
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candles – Doji
• A Doji indicates indecision in the market and struggle between bulls and bears
• Open and close prices are the same or nearly the same
• Four main types Of Doji
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candles – Tweezer Tops
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candles – Tweezer Bottoms
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candles – Spinning Tops
• When a trend is running out of momentum, its exhaustion is shown by short real body candles
• In a “Spinning Top” price opens and closes near to the middle of the candle leaving little real body
• The shadows on these candles can be quite long and about the same length
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Japanese Candlesticks
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Trendlines
• A trendline is a good way to show S and R
• Price action can only do one of two things:
1. It can break through the trendline
2. It can bounce off the trendline
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Trendlines
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Trendlines
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Trendlines
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Channels
• Parallel Support and Resistance Trendlines with the price action enclosed
• It is possible to trade bounces within the channel or breakouts out of the channel
• Pick simple formations – be obvious
• VERY POWERFUL for trading
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Channels
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Channels
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Channels
Copyright © 2007 Stephen Margison www.sm-forex.com
The Forex Codes Channels
Copyright © 2007 Stephen Margison www.sm-forex.com
Copyright © 2007 Stephen Margison www.sm-forex.com
“IT’S TIME TO GET MORE OUT OF LIFE”
www.sm-forex.com
Reading Charts 2