TABLE OF CONTENTS

Page
Introduction 3

J-HOOK PATTERN 5

Appendix 1- Train the Eye Exercise 12

Appendix 2 - Candlestick Patterns and Signals 15

Appendix 3 - Candlestick Patterns and Signals

Confirmation 17

Rick Saddler – Trading for Profits, LLC 2 hitandruncandlesticks.com

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 INTRODUCTION

Trading stocks is one of the most rewarding careers of my life. The path to my successful
trading was not without pitfalls and disappointments. Along the way, I learned to
persevere and pay attention to my mistakes and take action to fix them. I started to earn
profits consistently when I developed a disciplined approach to my trading. This included
designing trade plans for every trade and making changes to my trading approach based
on my notes and observations about my habits and practices.

Before I could design a trade plan, it was imperative that I develop the skill to recognize
price patterns that produced the highest probability of success. A big part of this process
is that I spent many weeks if not months flipping through thousands of stock charts
making note of patterns and how price behaved around these patterns. After studying
these patterns and choosing the ones with the highest probability of success, I focused on
being able to quickly recognize these patterns. Once I thoroughly studied the patterns, I
then developed a trade plan for each of them.

This book provides a framework for the J-Hook pattern. The framework will help you to
recognize the pattern and give you a trade plan for each pattern so that you can build
confidence in trading them.

When starting out with new trading strategies it is best to stick with a basic approach.
Once you have mastered the basics, then you can feel free to modify your approach based
on your experiences. There is no one way of trading. Period! We all have to start with a
framework and a basis to develop a disciplined trading approach and then build from
there. That is what this book provides.

I am excited to share the fruits of my labor and provide you with a solid framework to
trading the J-Hook pattern.

If you have questions on material in this book or need help with your trading, please feel
free to contact me at [email protected] . If you are looking for a
supportive community of active successful traders consider joining my online stock
trading room. You can sign up for a 2 week trial to see if it is right for you. Go to
www.hitandruncandlesticks.com for more information.

Best Wishes on Your Road to Success,

Rick Saddler
www.hitandruncandlesticks.com

Rick Saddler – Trading for Profits, LLC 3 hitandruncandlesticks.com

Copyright © 2016 REV 01/10/2016
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 TERMS AND CONDITIONS

By purchasing training products and/or follow-up training, or receiving complimentary

educational products and services, from Rick Saddler, hitandruncandlesticks.com or
Trading for Profits, LLC, you understand and acknowledge the following terms and
conditions:
The content provided in these training materials is for your use only. Neither printed or
downloaded versions, nor any follow-up instruction or materials, are to be copied, shared,
sold or distributed to any other individual or entity without written permission from Rick
Saddler. You acknowledge that you are not an agent of, or acting on behalf of, any
seminar or other company that provides competitive training or products.
All content in these training materials, and any related materials provided with them
today or in the future, is for educational and illustrative purposes only and does not
constitute either investment advice or buy/sell recommendations. The author, Rick
Saddler, is not a stockbroker, broker dealer or investment adviser. He makes no
recommendation either to purchase or sell any particular stock, bond, option, equity or
security of any kind. No content, examples, or information provided shall be construed as
a recommendation, solicitation, prediction or advice for your own actions in, and dealings
with, the stock market.
Trading in the stock market involves a high degree of risk and you may incur financial
losses if you engage in such activity. These training courses and commentary were
designed and intended to assist recipients in increasing their knowledge of the stock
market and applying the techniques and strategies learned. Users are advised to apply
prudent risk and money management techniques in order to protect their capital.
Any or all strategies may be subject to change as needed with market conditions. The
dynamic of the markets often requires that traders change their methods and systems over
time. Therefore, what the author is utilizing currently may differ in the future as market
conditions change and/or as the author tests new systems and learns new, more effective
methods. Past performance is not indicative of future results.
These materials represent the author’s knowledge and interpretation of the stock market
and trading methods and techniques at the time they were developed or revised. Some of
the content of these materials is subjective in nature. There is no guarantee that these
strategies, techniques, systems or trading plans will suit your trading personality, but
rather are intended to serve as a model.
Reference above to “products and services” includes, but is not limited to: private training
or coaching; phone or web-based instruction; down loadable or printed eBooks; forms
and trading tools; audio/video products. The above terms, conditions and waiver of
claims are provided and acknowledged at the time of registration for complimentary
products, or the purchase of products and services, either in person or at one of the
following web sites: www.ricksaddler.com, www.hitandruncandlesticks.com.

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 J-HOOK PATTERN

The J-Hook pattern is a bullish continuation pattern. Spotting the J-Hook pattern is easy
because it looks like the letter “J”. This pattern is part of up trending price action that
takes a little dip before resuming the trend. The key is to look for three or four
candlesticks that have lower highs because this may be the beginning of the J-Hook
pattern. Then price will stop moving down and start moving sideways. The lows of the
candlesticks in this part of the J-Hook pattern stay in the same range. You can literally
draw a box around the candlesticks that form the bottom of the J-Hook. Price then starts
to move higher and breaks up and out of the sideways price action. It continues and then
breaks outs from the price high at the start of the J-Hook pattern. This breakout from the
price high confirms the J-Hook pattern and signals a buying opportunity. The uptrend
then resumes and price moves higher.

J-Hook Visual

The J-Hook looks like this

Example 3-1 - J-Hook Pattern

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Five Stages of the J-Hook Pattern

There are five stages to the J-Hook Pattern

(1) Price is moving higher in an up trending fashion

(2) Price pulls back and forms three or four candlesticks with lower highs

(3) Price stops moving lower and finds support. There are usually two or more
candlesticks the stay in the same price range and hold the lows.

(4) Price moves higher and resumes the uptrend. This looks like a series of candlesticks
with higher lows.

(5) Price then breaks out to complete the J-Hook pattern. This is the first candlestick in
the resumed uptrend to close above the high candlestick prior to the pullback.

Below is a J-Hook visual with the 5 stages.

Example 3-2 - J-Hook with 5 stages

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J- Hook Pattern on a Chart

Example 3-3 below shows a J-Hook Pattern on a daily chart. The 5 stages are marked on
the chart.

Example 3-3 - Boyd Gaming Corp (BYD)

A Trade Plan for the J-Hook Pattern

ENTRY - Enter on the day of the breakout if the candle looks like it will close above the
breakout level. Another entry is the day after the breakout on an opening price above the
breakout level.

STOP LOSS - Place a hard stop at a price below the breakout level. Two alternatives are
(1) a close below the breakout candlestick which could also coincide with a price below
the breakout level or (2) a close below the candlestick before the breakout. Consider your
risk tolerance when setting this stop. If the stop loss price is more than you can tolerate,
then move to another trade.

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EXIT - Determine resistance levels and use them as possible exit areas. When price
approaches one of these areas, look for candlestick sell signals and then decide if you will
take all or part of your profits. At the very least, raise your stop to protect profits.

Illustration of J-Hook Trade Plan

In the example above, possible entries are marked 1 and 2. This correlates to the first
close above the breakout level and the candlestick the day after breakout. Entry at either 1
or 2 produces a nice trade to the resistance level where traders can take all or part of
profits on the trade.

Notice that the Stop Loss is around the close of the candlestick before the breakout
candlestick at 1.

There is another J-Hook opportunity after the one marked in the example. Can you find it
based on what you have learned?

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The Best J-Hook Patterns

Not all J-Hook patterns are created equal. There are characteristics to look for when
looking for J-Hook patterns.

 Shallow pullback - The pullback part of the J-Hook should not retrace more than 1/3
of the rally measured from the low of the uptrend to the high of the left hand side of
the Cup. A larger pullback could indicate a change in trend and that is not what we
are looking for.
 Pullback to a Price Pivot or Support Level - The support level of the J-Hook
coincides with a price pivot point or support level. A price pivot point is a level
where price pulls back to and then bounces during the uptrend. A support level can be
an area of consolidation or a price pivot level during the uptrend. To illustrate this let
us look at BYD.

Example 3-5 - Boyd Gaming Corp (BYD)

Notice that in Example 3-5, the J-Hook pattern found support within the previous
consolidation area. The price pivot level is within the consolidation area and represents a
smaller support level.
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 J-Hook appears in an uptrend - Since the J-Hook is a bullish continuation pattern,
it appears in an uptrend. This may sound repetitive but there are times where a
J-Hook like pattern appears in a downtrend. This is not to say you can’t trade it. It is
just that a J-Hook pattern in a downtrend doesn’t have the upward momentum
necessary to produce a reliable profit. The risk here is that price briefly breaks out
above the Cup and then snaps back down to resume the downtrend. Stick with
J-Hook patterns in an uptrend!

Summary - J-Hook Pattern

 Five Stages of the J-Hook Pattern

There are five stages to the J-Hook Pattern

(1) Price is moving higher in an up trending fashion
(2) Price pulls back and forms three or four candlesticks with lower highs
(3) Price stops moving lower and finds support. There are usually two or more
candlesticks the stay in the same price range and hold the lows.
(4) Price moves higher and resumes the uptrend. This looks like a series of candlesticks
with higher lows.
(5) Price then breaks out to complete the J-Hook pattern. This is the first candlestick in
the resumed uptrend to close above the high candlestick prior to the pullback.

 A Trade Plan for the J-Hook Pattern

ENTRY - Enter on the day of the breakout if the candle looks like it will close above the
breakout level. Another entry is the day after the breakout on an opening price above the
breakout level.

STOP LOSS - Place a hard stop at a price below the breakout level. Two alternatives are
(1) a close below the breakout candlestick which could also coincide with a price below
the breakout level or (2) a close below the candlestick before the breakout. Consider your
risk tolerance when setting this stop. If the stop loss price is more than you can tolerate,
then move to another trade.

EXIT - Determine resistance levels and use them as possible exit areas. When price
approaches one of these areas, look for candlestick sell signals and then decide if you will
take all or part of your profits. At the very least, raise your stop to protect profits.

 Characteristics of the Best J-Hook Patterns

Shallow pullback - The pullback part of the J-Hook should not retrace more than 1/3
of the rally measured from the low of the uptrend to the high of the left hand side of
the Cup. A larger pullback could indicate a change in trend and that is not what we are
looking for.

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 Pullback to a Price Pivot or Support Level - The support level of the J-Hook
coincides with a price pivot point or support level. A price pivot point is a level where
price pulls back to and then bounces during the uptrend. A support level can be an
area of consolidation or a price pivot level during the uptrend.

J-Hook patterns appear in an uptrend - Since the J-Hook is a bullish continuation

pattern, it appears in an uptrend. This may sound repetitive but there are times where
a J-Hook like pattern appears in a downtrend. This is not to say you can’t trade it. It is
just that a J-Hook pattern in a downtrend doesn’t have the upward momentum
necessary to produce a reliable profit. The risk here is that price briefly breaks out
above the Cup and then snaps back down to resume the downtrend. Stick with J-Hook
patterns in an uptrend!

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 APPENDIX 1
Train the Eye Exercise
This exercise is to help you recognize the pattern when you see it. Focus on the boxed in
area to see the pattern. As part of your own exercise, draw a box around patterns that you
see when flipping through charts. Keep a file of these charts for later study.

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 APPENDIX 1
Train the Eye Exercise

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 APPENDIX 1
Train the Eye Exercise

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 APPENDIX 2
Bullish Candlestick Signals and Patterns
Doji Spinning Top Kicker Morning Star

Dragonfly Doji

Belt-hold Hammer Piercing Candle

Doji Sandwich Harami Tweezer Bottom

Engulf

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 APPENDIX 2
Bearish Candlestick Signals and Patterns
Gravestone Doji Engulf Kicker

Belt-hold Evening Star Shooting Star

Dark Cloud Cover Hangman Tweezer Top

Doji Sandwich Harami

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 APPENDIX 3
Bullish and Bearish Candlestick Signals and Patterns
Remember that candlestick patterns and signals need confirmation before taking action.
This means that if you see a bullish candlestick signal or pattern, look for bullish price
action the next day. This bullish price action can be a higher open or close the next day. If
you see a bearish candlestick signal or pattern, look for bearish price action the next day.
This bearish price action can be a lower open or close the next day.

Rick Saddler – Trading for Profits, LLC 17 hitandruncandlesticks.com

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