Japanese Candlesticks

Japanese Candlesticks to make money – Tweezer Tops and Bottoms

April 23, 2024July 22, 2024traderpro

As well as providing a general and succinct set of data about the price at a given interval (see our Japanese Candlesticks Introduction page: Japanese Candlesticks – an introduction – Trader Pro (trader-pro.co.uk)), Japanese candles can also be used in conjunction with other indicators to identify good times to enter or exit trades. The first we consider are tweezer tops and bottoms. As the name suggests, Japanese candlesticks – tweezer patterns look a lot like pairs of tweezers either facing upwards or downwards. These are explained below with some examples on the chart together with what they are likely to mean/what they can predict is going to happen next.

Tweezer bottoms

Tweezer bottoms appear on the chart as identified in the screen shot below. They can appear at the end of a down trend and signify a possible change in direction. On a practical level, they represent a struggle between the bulls and bears where the price was pushed all the way down to form a long bottom wick (to a very specific limit) and then it recovered and the bulls took back control, pushing the price back up again. Another one with the same pattern (where the price was pushed to the same price level, and it then came back up), creates the ‘tweezer top’ shape. The bears were unable to push the price below the level seen in the tweezer bottoms. See the screen shot below. This happened twice in short succession before the price started trending in the upwards direction.

Japanese candlesticks – Tweezer Tops

The same is true for candles which appear in the same way, but reversed. These are called tweezer tops. See the example below where the price reached the same high in two candles next to each other before the price was pushed back down in a new trend/direction. As a minimum you would need two candles but there could be more which test the same level either with tweezer tops or bottoms.

We hope this explains this very useful candlestick pattern. Now that you are familiar with this pattern you will start to notice it when you are waiting for a reversal and when taken with other indicators/criteria, it could be a good entry point (or exit) depending on the direction of the trade.

We hope this helped! For more great tips and trading set ups visit our other blog pages at Trader Pro – Trading strategies for success in the financial markets (trader-pro.co.uk)

If you would like to use the charting software above, we highly recommend Trading View to you. Use the following link and you may receive a discount on your subscription: https://www.tradingview.com/?aff_id=117138&source=TraderProBlog

Please note any subscriptions taken via my affiliate link with Trading View may result in me earning a small commission. However, I provide complete transparency on me using Trading View personally – I publish my success on the financial markets via my broker reports and any profits earned were done so by using my own Trading View subscription, so I genuinely do recommend them and have been using the Trading View charts for many years.

How to use Japanese Candlestick Patterns – Shooting Star and Hammer / Hanged man to make money

April 22, 2024July 22, 2024traderpro

Another very useful candlestick pattern which any professional trader will be aware of, is the shooting star & hammer/hanging man. These are patterns which form from a single candlestick and can indicate that a reversal or new trend is about to start. We discuss these Japanese candlestick patterns below with some chart examples.

Japanese Candlestick Patterns – Shooting Star

Note that some knowledge of Japanese candlesticks is assumed on this page. Please see Japanese Candlesticks: An Introduction here, if you are new to Japanese Candlesticks: Japanese Candlesticks – an introduction – Trader Pro (trader-pro.co.uk)

The shooting star is formed by a single candle with a long upper wick and a very short or non existent lower wick. A picture of this type of candle is below.

The pattern is formed when there has been one last push/attempt by the bears to raise prices higher, but they failed and the closing price closed below, or very close, to the opening price.

Now let’s look at some examples on the charts:

You can see on this NASDAQ chart that the price was in a nice uptrend, until the shooting star appeared. Prices quickly descended from that point onwards.

How can you use the Japanese Candlestick pattern – Shooting Star in technical analysis?

If you are in a long position, waiting for prices to move higher and the shooting star candlestick pattern appears on the chart, it may, when taken with other indicators, indicate a good time to take profit off the table.

Japanese Candlestick Pattern – Hammer/Hanged Man

The Hammer/Hanged Man is the opposite of the shooting star. A picture of this type of candlestick pattern is below.

As in the case of the Shooting Star, the Hammer/Hanged Man candlestick pattern is formed when the sellers tried to push the price lower, but failed, and it closed very close to where it started. It can indicate a reversal of a downtrend/beginning of an uptrend.

Now lets take a look at some examples on the charts:

You can see in the NASDAQ chart above that the price reached a low point and then the hammer/hanged man formed. The bulls took control – the candle is green in this instance so price was pushed all the way down the lower wick but came all the way back up again and closed higher than the candle’s opening spot. Following this, the price reversed in a strong uptrend pattern.

How can you use the Hammer/Hanged man in technical analysis?

If you are looking for an entry point or are waiting for a reversal, this candlestick pattern, when taken with other indicators, could give you a good entry point.

We hope this was useful. You are likely to see a great deal of these candlestick patterns on the charts – we hope you are able to make good use of them in becoming more profitable.

We hope this helped! For more great tips and trading set ups visit our other blog pages at Trader Pro – Trading strategies for success in the financial markets (trader-pro.co.uk)

Please note any subscriptions taken via my
affiliate link with Trading View may result in me earning a small commission. However, I provide complete transparency on me using Trading View personally – I publish my success on the financial markets via my broker reports and any profits earned were done so by using my own Trading View subscription, so I genuinely do recommend them and have been using the Trading View charts for many years.

Make more money with Japanese Candlesticks – an Introduction

April 22, 2024July 6, 2024traderpro

Japanese candlesticks can be used to create trading strategies themselves or to just help you understand the direction and activity on the chart. We examine below, the structure of a candle stick and what it means, the different types of candle sticks you might see on a stock trading chart, and how you can use the candlesticks as indicators of market sentiment.

Japanese Candlesticks and timeframes

A new candle is formed on the chart every ‘n’ minutes/hours/days/etc, depending on what chart timeframe the chart is set to. For example, in the chart below, the timeframe setting is ‘D’ for ‘one day’ – so each day another candle completes its formation. As you can see below, there are many timeframe settings. Switching between them will change the candles so that a candle appears at each interval selected.

Structure of Japanese Candle Sticks

An example of a Japanese candlestick is shown above.

The most obvious thing to say about these is that they look like candles – but each part tells you something about what is happening to the price, as follows:

– Upper wick – this element shows you the highest price level which the instrument reached within the timeframe applicable to the candles.
– Lower wick – conversely, the lower wick shows you the lowest price reached within the time interval.
– Candle body – the top part of the candle will show you either the closing price, or the opening price, depending on whether the candle is red, or green (sometimes substituted for blue). Broadly, if your trade is predicting the price to rise, green or blue candles are good news, red ones are bad, and vice versa. You can see on the chart above that when the price is rising, the candles are mostly green.

The purpose of using candle sticks is to provide a quick and visual indication of what is happening to the price.

There are a few special types of candles which are easy to spot and which have extra meaning. These are discussed on our Japanese Candlestick Patterns pages linked below:

Shooting star/Hanged man:

How to use Japanese Candlestick Patterns – Shooting Star and Hammer / Hanged man to make money

Tweezer tops and bottoms:

Japanese Candlesticks to make money – Tweezer Tops and Bottoms

We hope this helped! For more great tips and trading set ups visit our other blog pages at Trader Pro – Trading strategies for success in the financial markets (trader-pro.co.uk)

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