Candlestick Analysis in Trading - Price Action Analysis

20/02/2021 Candlestick Analysis in Trading - Price Action Analysis
Price Action
Candlestick Analysis
 How to Study Candlestick
 Candlestick Analysis
Back to: Trading with Smart Money
 Price Action Analysis
 Advanced Price Action
Analysis Candlestick Analysis in Trading
 Thrust Pullback and
Measuring Move Analysis In this article, I am going to discuss Candlestick Analysis in Trading. Please read our previous article
 How to Trade with Smart where we discussed How to study Candlestick in detail. The ultimate guide you will ever need to
Money understand CANDLESTICK and its behaviors. After the study, you will no need to recognize any
CANDLESTICK patterns. As part of this article, you will understand the following four things which are
 Supply and Demand
related to Candlestick Analysis in Trading.
Zone Trading
 How to Day Trade with 1. Understanding candlestick
Trend 2. How to read candlestick
 Multiple Time Frame 3. How to read a chart using candlestick
Analysis 4. How to find opportunity using candlestick
 Head and Shoulder
Part1: Understanding Candlestick Analysis
Pattern
 How to Trade with What is a candlestick?
Support and Resistance
 Advanced Candlestick Candlesticks are a reflection of what buyers and sellers are doing. CANDLES TELL YOU who is in
Analysis control in that specific time frame
 Trendline Trading Candlesticks tell us the immediate information about the supply-demand relationship
Multiple candles form patterns that tell us a story
Strategy
Understanding candlesticks is paramount to successfully day trade
 WRB Trading Strategy
Elements of candlestick
Day Trading Strategies
 VWAP Trading Strategy The High
 Gap Trading Strategy The Open
 Intraday Open High Open The Low
Low Trading Strategy The Close
The Change(BODY)
 PIN BAR Trading Strategy
The Range
 Trading with Sideways
Price Action Area
 Pullback Trading Strategy
 Intraday Breakout Trading
Strategy
Risk Management
 3 Techniques for Risk
Management in Trading
Stock Selection & Live

Scanner
 How to make own Day
Trading Scanner
 Stock Selection for
Intraday Trading
Intraday Trading Course

2020
 Intraday Trading Course
https://dotnettutorials.net/lesson/candlestick-analysis-trading/ 1/27
 Multiple Timeframe
Analysis for Intraday
Trading
 VWAP Trading
 Opening Range Trading
Strategy
 Opening Range Breakout
Volume Price Action

Analysis
 Volume Analysis in
Trading
 Volume Price Action
Analysis
 Volume Spread
Analysis in Trading
 Candlestick Pattern
Analysis
 Finding Entry
Opportunity using
Volume Spread Analysis
 Spring and Upthrust
Trading Strategy
 VSA Trading Strategy
Option Chain Analysis

 Option Chain Analysis
Indicator
 RSI Trading Strategy
BTST
 BTST Trading Strategy
TECHNICAL ANALYSIS
MASTERCLASS
 Technical Analysis
 Market Structure
Part2: How to read candlestick
 Understanding Market
Structure through Swing STEP 1: The size of the body (open to close)
 Supply and Demand
Trading Remember that in every bar, the same number of contracts/shares are sold and bought at that time frame
The only reason for a bar to end up with a higher price is that the buyers were committed to one
direction and more aggressive than the sellers. The reverse is true for a bear wide range bar
So candle body shows, What extent they move the price and the strength behind the move
BODY:
Generally, we have to consider 3 types of body
1. Narrow range candle

2. Average candle
3. Wide range candle
The candle body shows lots of information such as
Let us see some example
STEP 2: The length of wicks

The length of any wick, either to the top or bottom of the candle is ALWAYS the first point of focus because it
instantly shows, strength, weakness, and indecision, and most important where SMART-MONEY enter
Larger wicks show that price has moved a lot during the duration of the candle but it got rejected,
shows the presence of supply or demand
Lower wick act as support and upper wick act as resistance
Let’s understand pin bar
What a pin bar telling us
When candles are not able to break through a zone 70-80% of the time they will go the opposite way
Part3: How to read a chart using candlestick?
Step 1 First read DIRECTION OF current CANDLE with respect to the previous candle
That means, the relationship of each bar high/low relative to the previous bar. What it telling us
Step 2 Context (read the current bar sentiment with respect to the previous bar)
Candlestick should analyze the context of the move. You should never try and read the market looking at one
day’s action in isolation. A candlestick always must be analyzed in the context of what has happened in the
past.
Context is what current candlestick shows with respect to the previous candlestick
The current candlestick larger or smaller than previous ones? Which shows momentum increases or
decreases
Is the size-changing meaningfully or not? Buying or selling pressure
Is volatility increases or decreases
Is the change happening during an active trading period or not? For example, candlesticks on mid-
period generally dead or inactive.
Step 3 Testing (Read what it showing when testing key level (support or resistance))
The concept of testing refers to the market moving towards a price level to “test” if the price level will accept
reject the market’s advances. Key levels are
Previous candles high/low

Last swing high/low
Previous day’s high/low
Major support or resistance
The high and low of each price bar are natural support and resistance levels and the wick generally acts as a
supply and demand zone. The test of these levels or zones shows the undercurrents of the market and is
critical for reading price action.
Step 4 Expectation
With a clear read of DIRECTION, CONTEXT, TESTING. we are able to form expectations of the market in
the third candle. We would expect the market to move in a certain way in the third bar with our read of
DIRECTION, CONTEXT, TESTING. The confirmation or failure of our expectations of the third bar reveals
more about the market, and add to our candlestick analysis
To form expectations, we need to make a very simple assumption about how the market should behave and
should not behave.
Essentially, the market has momentum and inertia. bearishness should follow bearishness and bullishness
should follow bullishness. When it does not obey this assumption, we have to cautious, Maybe a possible
change in market direction.
Part4: Finding Trading opportunity

A candlestick pattern is useless if its location is not correct, where it happens is the most important variable.
So we should analysis candlestick at support and resistance for opportunity either reversal or continuation of
the trend
AT resistance we expect the price to reverse or supply exceed demand confirms the supply or resistance
level. Like at the support we expect the price to reverse for confirming demand overcome supply
There are some key pointer should consider when trading reversal Means what candlestick action validates
our support and resistance level
Explained below
Point1: Momentum loss when approaching a key level(support resistance)
Below is the example of bullish reversal
Point2: Clear Rejection from resistance in the form of the pin bar multiple rejections
In an established uptrend any Clear Rejection from resistance in the form of the pin bar confirm the
resistance level, it indicates buyers tried had but failed to close above the resistance
MULTIPLE REJECTION SHOWS THAT BUYERS TRIED OVER AND OVER AGAIN TO PUSH THROUGH
THE LEVEL BUT FAILED
Point3: Price Unable to close above the resistance level or below the support level
When Buyers trying hard each time to close above the resistance level, each time they failed shows supply
coming and trying to dominate demand
Point4: Candle color change
For bearish reversal. The price should breaks the previous candle low and close below the low at resistance.
It shows bullish strength completely lost
Point5: REVERSAL MOMENTUM CANDLE FROM KEY LEVEL
When a reversal momentum candle formed from the key level it confirms the strength of the level of the
opposite party. When bullish strength candle formed from support it confirms the support level as strong
What candlestick action disconfirms the resistance? Opposite for support
There is a certain point also consider when price approaching support or resistance. That validated or
invalidated our support or resistance level
Candle spread increasing when approaching resistance level
With a widespread up, while the price is getting close to the resistance, we would expect to see the
resistance broken due to the extra effort by buyers
If price hug the support and hold it disconfirm the demand and shows the presence
of supply
If there is strong support or resistance level, price should immediately react within a few candles
Price hold (unable to react) after a move down to support. Sellers overcoming buyers is the repeated
inability of prices to REACT away from the danger point(support). Such hugging of the support usually
leads to a breakout
What we learned
Summary of candlestick analysis
Part1: Understanding candlestick

Part2: How to read candlestick
Wide range bar(show strength or momentum)
Narrow range bar(momentum or strength decreases)
A pin bar(shows rejection or either supply or demand came in)
Doji(indecision )
Part3: How to read a chart using candlestick
First, read the current candle direction with respect to the previous candle
Second, read the current candle sentiment with respect to the previous candle
Third, read the testing key level
Expect what you fill
Part4: How to find opportunity using candlestick
Step to find a trading opportunity for reversal

Point1 Momentum loss when approaching resistance /support
Point2 Clear Rejection from resistance in the form of the pin bar multiple rejections
Point3 Price unable close above the resistance
Point4 CANDLE COLOR CHANGE
Point5 REVERSAL MOMENTUM CANDLE FROM KEY LEVEL
What candlestick action disconfirms the resistance?

Candle spread increasing when approaching resistance level
If price hug the resistance and hold it disconfirm the demand and shows the presence of demand
Please watch the following video if you want to learn and understand this concept in a better way.
In this article, I try to explain Candlestick Analysis in Trading. I hope you enjoy this article and understand
the Candlestick Analysis in the Trading concept. Please join my Telegram Channel to learn more and clear
your doubts. https://t.me/tradingwithsmartmoney.
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How to Study Candlestick Price Action Analysis
7 thoughts on “Candlestick Analysis ”
KRISHNA RAJENDRAN
APRIL 26, 2020 AT 8:02 AM
Thanks very useful
Reply
DIKOBELA MASHILOANE
MAY 2, 2020 AT 3:06 PM
Thanks,I have learned a lot
Reply
SUBBU
SEPTEMBER 1, 2020 AT 9:20 PM
Really You are awesome person…Doing Great job by sharing knowledge…Thanks a lot for your commitment.
Reply
ASHOK DASHORA
OCTOBER 15, 2020 AT 5:55 PM
Very well explined.

Thanks a ton sir.
Reply
SATISH JAGDHANE
OCTOBER 18, 2020 AT 7:49 PM
never learned like this before whether paid or free. Kudos to Teacher
Reply
HABEEB
DECEMBER 13, 2020 AT 9:06 AM
great work… really appreciate
Reply
BAPI
DECEMBER 21, 2020 AT 3:42 PM
Very nice analysis Sir. Thanks a lot.
Reply
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20/02/2021 Candlestick Analysis in Trading - Price Action Analysis

Stock Selection & Live

Intraday Trading Course

Volume Price Action

Option Chain Analysis

Generally, we have to consider 3 types of body

1. Narrow range candle

The candle body shows lots of information such as

Let us see some example

STEP 2: The length of wicks

Let’s understand pin bar

What a pin bar telling us

Part3: How to read a chart using candlestick?

Previous candles high/low

Part4: Finding Trading opportunity

Point1: Momentum loss when approaching a key level(support resistance)

Below is the example of bullish reversal

Point4: Candle color change

Point5: REVERSAL MOMENTUM CANDLE FROM KEY LEVEL

What candlestick action disconfirms the resistance? Opposite for support

Candle spread increasing when approaching resistance level

Summary of candlestick analysis

Part1: Understanding candlestick

Part3: How to read a chart using candlestick

Part4: How to find opportunity using candlestick

Step to find a trading opportunity for reversal

What candlestick action disconfirms the resistance?

← Previous Lesson Next Lesson →

7 thoughts on “Candlestick Analysis ”

Thanks very useful

Thanks,I have learned a lot

Very well explined.

great work… really appreciate

Very nice analysis Sir. Thanks a lot.

Name* Email* Website

© Dot Net Tutorials | Website Design by Sunrise Pixel

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