The ULTIMATE Candlestick Patterns Trading Guide (Full Course: Beginner ➜ Advanced)

0:00 your ability to use Japanese candlesticks to make optimal trading decisions and inevitably make money in any Market is imperative it is something you just can't do without if you do not understand certain aspects of candlesticks or if you don't really understand how to use them effectively then that is likely a major factor why you are actually losing money as a trading or why you are struggling to create these consistent profits over time so for that purpose what I want to do in this video is to show you guys everything you need to know about Japanese candlesticks no matter your experience level this video is for you whether you are a complete beginner seeking that first Spark of

0:46 understanding or if you are a more advanced Trader looking for refined insights and Candlestick Mastery there's a place here for everyone and by the end you will see why this video is a must watch for every Trader out there grab a notebook settle in and let's embark on this Candlestick journey together [Music] foreign [Music] to chapter one of this Candlestick pattern course this chapter is going to be all about understanding Candlestick patterns and understanding candlesticks and we will start with the very Basics

1:32 and then in a step-by-step manner move towards more and more advanced topics so no matter your starting point if you are a complete beginner or if you have been trading for years my goal with this chapter is that you will walk away with lots of new knowledge so let's start by taking a look at how to read Candlestick patterns so we have two main types of candles first of all we have the red candle which is also called a barish candle and we have the green candle which is called a bullish candle a barish candle is a Candlestick where the price decreases during the session and a bullish candle is a Candlestick where the price increases during the candle every Candlestick can represent different time frames so one candle can

2:19 be for example one day but one candle can also for example represent one hour or even one minute but for the sake of this example we can think about every Candlestick as representing one day so for the green Channel or the bullish candle you can see that the price opens or starts right here so the day starts right here and the day closed all the way up here so you see that during the day the price increased but you can also see that we have a low Point all the way down here and we have a high point all the way up here this means that during the day the price went down all the way down here as the lowest point and during the day the price increased and reached

3:05 a highest point all the way all the way up here but then when the day closed the price was at this level right here the same thing but the opposite is true for the red candle or the Irish candle the red candle start to the day right here during the day it went up reached a highest point all the way up here the price went down to our lowest point which is all the way down here but today closed at this level right here now as for the terminology the white part of the candle which is this part right here for the red one and which is this part right here for the green one this is what we call the Candlestick body or sometimes we call it the Candlestick real body we use these words interchangeably the small part of the

3:51 candles which we have right here right here right here and right here we Call Wix or another word is Shadow so if you hear either Wick or Shadow you know that we talk about the small part of the candle so now let's switch the attention and take a look at how can we know how strong a Candlestick is and this section right here is extremely important and it will be valuable throughout the rest of the video so make sure to really pay attention now so if you look at these two channels right here you can see that they look very similar they have a lowest point at the same level they opened here at the same level as well and they also closed at the same level the only difference here is the upper part of the candle which remember we

4:38 call this either a wick or a shadow you can see that this candle right here has a very long upper Wick while the other candle right here has a very short upper Wick so even though these candles closed at the exact same level and they look very similar they tells us a very different story about the price for the candle to the right here we can actually see that we saw a strong price reaction because the Bulls managed to push the price all the way up here but before the candle closed the bars actually managed to take control and push the price all the way down this actually makes this candle right here much more bearish

5:23 compared to this candle right here even though the two candles look very similar the Wicks of the candles so this part and this part are super important and this is something that will come up again and again and again in this course so if we only look at these two candles as only two variables this candle right here is more likely it's more likely that we will see for example a red candle and that the selling pressure will continue after this candle compared to this candle right here one thing that helps is to just visualize how the price could have looked like during this candle you can say that during this candle right here the price may have moved something like this while for the other candle here the price is more

6:09 something like this which is a much more bullish bullish movement compared to a movement that looks something like this the same thing is of course also true for red candles so let's say we have one red candle that looks something like this and then we have another red candle that looks maybe something like this once again these two candles look very very similar but the big difference here is that the one to the left have a long lower Wick while the candle to the right have a short lower Wick so for this red candle to the left here you can see that we have lots of buying pressure I'm so sorry for my ugly handwriting here but you can see that we have much more buying pressure on the left one compared to the right candle and this actually

6:56 makes the candle to the left much more bullish compared to the channel to the right and this leads to an important Insight that you know feel free to write this down the body of the candle relative to the wick is very important now I want you guys to take a look at these three channels right here as you can see all of these three candles have the highest point here at the around same level at the same time all of these candles have their lowest point also at the same level but in this case you can see that all of the bodies right this is the Candlestick body the sort of length of the bodies here are very different you can see that here we have a very

7:43 small body the next body is a bit larger and this body right here is massive and the question now is what does this tell us about the price well as always it can help a lot to visualize the potential price action during the candles so for example the candle to the right here we can imagine that the price moved something like this it started off it moved down then it went up all the way up to this point right here but before the channel closed the price once again returned to this point the next candle may have moved something like this we can also imagine that the price started to go up here in the beginning but then it fell down to the low the the price went up here all the way up to the highest point but what we know is that before the channel closed the

8:29 price went down to that point once again if we take a look at the the last candle here maybe once again maybe the price started to move up but what we know here is that the price went down here to our lowest point all the way down here it went up to a highest point all the way up here and the price closed right here so if you take a look at these three different channels you can see that the price action of the channel to the right here looks sort of very uncertain we can't really say if the bolts are in control or if the bars are in control the price is highly volatile here [Music] while if we take a look at the candle to the right here we can see that it's much more clearer that the Bulls are in control of the price you can see we have

9:15 a distinct movement here towards the upside Channel sticks that have very small bodies like these three candles right here compared to the Wicks you can see in all of these cases we have very you know long weeks here compared to the real bodies of the candles these type of candles are called indecision candles and they represent that neither the Bulls or the bars are in full control of the market [Music] when we see these type of candles it's usually assigned to wait or stay away from the market but depending on the context so depending on how the price looked like before we saw these candles they can mean different things so what

10:03 do I mean by this well let me change the color here to Green real quick here and let's say that you know before this candle appear right here let's say that before this candle we had an uptrend so we had many bullish candles here we had many bullish green candles before this massive candle appeared right here if this candle comes after an uptrend like this what does this mean well in this case this is actually an indication that the uptrend is losing momentum or in other words that the Bulls are losing some steam but at the same time if we for example have a downtrend before this candle appears so let's say that we have you know before this candle appeared we

10:49 had many red candles happening what does this mean well in this case this candle could indicate that the downtrend is losing some speed right so this indecision candles can both be bullish or bearish compared to the context before the patterns appeared and this right here is so important that I want to write it down context matters and this is true for all the channels you know where a Candlestick appears on the chart will matter a lot for example let's take a look at this candle right here you can see that this is a case where we have a long lower week or a long lower Shadow and the candle has a relatively small body and the context or

11:35 in other words where this pattern appears in the market matters a lot so let's for example say that this pattern appears after a strong move to the downside you can see that during all of these candles the Bars were in full control all of these candles had barely any week and they had a large bodies here indicating that the bars have full control of the market but if we see you know after this downtrend if a Candlestick like disappears what does this tell us about the price well as we can see now the price continued to go down here continue to go down but then we saw a strong price reaction to the upside so if this pattern appears after a strong downtrend then this is a strong

12:21 bullish signal and this pattern actually has a name it's called a bullish Hammer pattern and we will talk about this pattern later on in this video when I show you guys my top five Candlestick patterns for beginners later on in this video I will also talk about my top 5 Candlestick patterns for more advanced Traders this pattern right here is is amazing but what I want to show you guys with this whole example is that it matters a lot where this pattern up here so let's delete all of these previous candles and let's say that before this candle appeared we had you know the price was just going sideways you can imagine you know these candles being either you know green or red we just had you know some sideways movement before this pattern up here right here if these

13:07 patterns appear of the this kind of movement then this pattern doesn't really say a lot at all we can even imagine that these candles looked more you know more random we had some high Wicks here and there and you can see that if we imagine the price movement of these candles prior to the Hammer you know let's say that the price you know it went sort of up and down like this it went something like this and as you can see when the hammer appears after this kind of movement then it doesn't really say anything because the hammer will just add on to this sort of sporadic movement now you can't really see because my camera but I hope you get the point I want to really emphasize that the context matters a lot when it comes to patterns so now let's switch the attention to something very important

13:53 and this is something that you have to understand in order to be a successful Trader and that is to understand momentum or speed of price action so let's take a look at two examples right here in example one we have strong candles here that pushes the price down with you know pretty small weeks and we can clearly see that the bars are in control of this Market in example two here let's take a look at another example example two please excuse my ugly writing right there but in example two we have a price that looks something like this the sort of candles are getting more and more sort of larger Wicks and you can see that the price starts to look something like this which

14:38 of these two examples do you think have the strongest moment them to the downside while the strongest bearish momentum can be found in example one because as we can see in this example the speed that the price moves to towards the downside is very fast if you visualize this price it moves something like this you can see the price moves fast here to the downside while in the other example you can see that in this case yes the price started you know by moving pretty fast to the downside but as the price went lower and lower you can see that the momentum was sort of slowing down you can see that the price is starting almost to look like it will reverse to the upside and you can think about this as the momentum of the price is slowing down the bars are slowly and

15:24 slowly losing control of the price right here so if you have price action that looks something like this after a downtrend this is actually a signal for Traders that the trend might be coming to an end or at least that the trend might be slowing down let's take a look at another example right here we might have a few candles that look something like this as you can see in this case the price really doesn't have any strong Direction here but then let's imagine that we suddenly see a candle that looks like this in this case you can see that this candle indicates a strong change in the momentum of the price the price pretty much moved sideways here for a long time and then it suddenly shot up higher this right here is what we call a

16:12 momentum candle and a momentum candle is a candle that shows much stronger momentum compared to the previous candles always remember that the context is very important usually I try to Define momentum candles as being at least you know two but preferably three times larger than the previous candles [Music] and specifically you want to look at the real bodies so here we have a real body a real body a real body and as you can see that this most recent candle this massive green candle right here it looks to be more than three times larger than the previous real bodies of the candles so this right here is a strong momentum

16:58 candle and many times momentum candles can actually be the beginning of massive uptrends or the beginning of massive downtrends and the momentum candle is super important to be able to spot and the most important thing about momentum channels is as I said you know how large is the real body of the momentum candle compared to the previous price action so now guys you hopefully have a basic understanding of how to read and more importantly how to interpret candlesticks and Candlestick patterns so now I think we are ready for the next step and that is to put this knowledge into real life now we are ready to take a look at how to actually trade in real mark kits using Candlestick patterns [Music]

17:52 all right guys so welcome to chapter two of this Candlestick pattern course this chapter is all about putting the knowledge we learned in chapter 1 into action I will show you guys in a step-by-step manner how to trade using Channel sticks in real markets so right now as we're speaking we are looking at gold and we are looking at a daily time frame and the first lesson here is that Candlestick patterns are much more significant if they appear at key levels so for example if you take a look at this Candlestick right here you can see this red one you can see that this one is pretty similar to the candle we talked about earlier in the video you can see that on this red candle we saw a pretty long lower week here indicating that the sellers might be losing some

18:38 momentum here and as you can see this one is actually pretty similar to the Hammer pattern however what is very important about this candle is that this candle appeared in the middle of nowhere and when a channel stick up appears in the middle of nowhere on the chart we usually want to completely avoid that candle however if we take a look here at the chart we can see that it looks like we have one pretty significant level of support right here you can see the price we bounced here the price went up we came down bounce once again at this level a smaller bounce this time and then yet another time we saw a bounce coming in at that level this is a key level of support to draw support levels you can go up here to where it says

19:24 trendline tools and use the horizontal line but I actually prefer to go up here where it says geometric shapes and actually use the rectangle tool to draw my area of support So as you can see right here we have an a key area of support and it is at these key areas of either support and resistance where candlesticks are much more significant so let's for example take a look at these two channels right here you can see that the price came down to the support area we saw this red candle right here with a pretty significant lower week you see we did see a small bounce coming in here at this red candle but this candle was probably not enough to enter a trade but if we look here at

20:09 the next Green kernel you can see that we have a massive massive momentum candle right remember the momentum candle we talked about in chapter one and because we are seeing a strong momentum candle coming at a key level of support this makes this candle much more significant and could actually be used as an entry signal later on in the chapter we will take a look at even more ways to make these kind of Trades even stronger but for now let's just realize that this momentum candle coming in at a key area of support is a strong signal that the Bulls might start to take control here of the market and that the trend will reverse to the upside so let's take a look at how we can have played this trade so let's open up our

20:55 long position right here after seeing this strong momentum candle one example of a trade would be to enter at the candle close of this candle a very common way to get entry points is to wait for the candle to close in this case we are at a pretty high time frame remember guys we are on the daily time frame so on this chart we have to wait one day in order for a new channel to form but this is just an example you can use the principles I'm talking about in this in this video on all time frames so this could be for example a five minute time frame or a one hour time frame the same principles would apply it but as an example let's say that you enter here on the channel close ask for your support level a good way to set your stop loss

21:40 is many times to put your stop loss below the key area so you can see we have a key area of support right here so what I like to do is to put the stop loss a bit lower than the key area you can see I leave space here for some wiggle room so if the price would go down once again to test this area it's possible that we can get yet another bounce and still not to be stopped out so we can still avoid to lose the trade as for your profit Target many times it's good to also use key areas of support or resistance to take your profit so for example right here you can see that we do have a pretty significant area coming in at around this gray area right here and in this case you can see

22:26 that this one acted as support all the way back here with some support coming in once again then we broke this key area of support but then this previous support right flipped to become resistant so one way to set your target for this trade is to set your target just slightly below the area of resistance so in this case your trade could have looked something like this the risk to reward ratio right here is around 1.5 meaning that the green area right here is around 1.5 times as large as the stop area here so this basically means that when we take these kind of Trades we can have a win rate below 50 percent but still make money the next

23:13 thing I want to talk about is Trends because trading in the same direction as the trend can give us an advantage and in turn improve our win rate just super super quick before we take a look at Trends and why Trends are so important if you guys are enjoying this video so far I would be super super happy if you can show that by dropping a like on the video it really really helps out with the YouTube algorithm and all that stuff and it also makes me know that you guys like this kind of this kind of videos and I also actually have a question for you guys and that is do you guys prefer to have the chart black like we're having right now or we would you prefer to have a white chart please guys let me know that down in the comments below if

23:58 you want to but now guys as I said the next rule when it comes to trading with candlesticks is that if we can take trades that are in the same direction as the trend this can many times give us much better trading opportunities so if you take a look at this chart right right here what is the trend on this chart [Music] well what we can notice here is that we are printing consecutive lower highs so we have one high lower high lower high lower high lower high and at the same time we're printing one low lower low lower low lower low and when we have consecutive lower highs while at the same time we're printing consecutive lower lows then we have a downtrend and

24:46 when we have a downtrend it's usually a good idea to look out for short trades so we want to look out for raids where we are betting that the price will go down when it comes to downtrends it's usually a good idea to use our trendline tool here to try to draw this sort of downtrend we're drawing a resistance line here which is the you know about the area where the price is getting reacted you can see we've got one reaction right here got yet another reaction right here and if you take a close look at this reaction right here we can actually see a very interesting thing let's zoom in on the chart on this reaction and what we can see here is that on this resistance we actually saw a bearish Candlestick pattern forming

25:32 this Candlestick pattern right here is what we call a bearish engulfing pattern and a bearish engulfing pattern is a Candlestick that indicates a potential reversal to the downside and this pattern is significant if it comes after a move towards the upside you can see in this case we had a move towards the upside right we saw a bearish engulfing pattern and we also saw the bearish engulfing pattern at a key resistance level and also we also have a downtrend which makes short trades trades where we bet that the market will go down more likely to succeed so this right here would in my opinion have been a good short entry point so we go up here to

26:18 our short position and as we talked about earlier many times a good entry is where the Candlestick closes so you can see the Candlestick closed right here later on in this video I will talk about how we can make this trade even stronger but for now let's just say that we enter the trade right here so what would be a good stop loss level well as usual we want to set our stop loss above the resistance before we talked about below the support but in this case we want to set the stop loss above the downward sloping resistance and to be more specific I set my stop loss above the highest point right here because if we set our stop loss above this point we can allow for the price to go up here and perhaps form a double top before

27:06 continuing here in the same direction as the trend so setting our stop-loss at this point makes sense for multiple resistance as for your Target you can once again use key levels of support resistance as your target for example right here we have a potential support so you can use this one to set your target level just slightly above that level or another way to take profit targets is to use a risk to reward ratio a common risk reward ratio is to use a risk to reward ratio of two it's very simple very straightforward and when having this risk reward ratio as long as you win like 40 of the trades you will make a profit and as you can see this was a very nice trade the price started to move in our direction right away it saw

27:53 a small bounce here but after a few more candles we locked in some nice profits now I want to talk about something that can improve our odds of winning trades even further and that is something called confluences confluences is when we combined more than one trading technique or more than one technical variable to improve our win rate so for example in this case we recently talked about so far we have one variable and that is that we are in a downtrend this improves our win rate to win ashore portrayed another Confluence is that we are seeing a bearish engulfing pattern happening here at this key level so now we have two conferences but we can

28:39 actually look out for even more technical variables here to improve our trade even further so for example in this case what we can notice here is that we had an area here a previous support area you can see that this one acted a support at least one time to time three time and actually pretty much four times here if we extend this area even even further you can see we saw yet another bounce right here and if we extend this trade we can actually see that this one flipped to become resistance in the future right so this is a very common principle in trading that when we have a support level many times when we break that support it can flip to become supported to become resistance here in the future and as you

29:25 can see we saw this selling pressure coming in here at the key resistance so this is yet another technical variable improving our trade even further so you can see that this bearish engulfing pattern happened at a key resistance area also a downward sloping resistance and we also had the pattern so we had three bearish things happening at the same time so this makes it a very nice trade let's take a look at yet another example right here if you take a look at this chart you can see that we had a very clear support area forming back here you can see we had one touch as support then we had yet another touch and if we extend this area we can see something super super interesting you can see that the price it took very long

30:12 time here the price went up down up again but then we went down here and we got a massive reaction of the support you can see we saw a very strong reaction here a massive massive uh lower Wick of this red candle right here in indicating that the bars quickly lost control of the market here and because we saw this massive lower week happening at a key support area we have two variables indicating that we might see you know a strong reversal here towards the upside after this we saw a doji candle representing Market indecision but the third green candle here showed strong bullish momentum indicating that indeed it looks like the Bulls are

30:57 taking control of the market this right here could have been where we entered our long trade and asked for profit Target once again we look out for key levels you can see for example right here we had a key resistance we got reacted one time two time so it did make sense here to set your profit Target just below this below this resistance so as you can see it turned out that we got reacted at this resistance but because we set our profit Target used below the resistance this still allowed us to lock in some very nice profit as for your stop loss in this case you could of course set your stop loss below the support but as you can see if we set the stop loss all the way down here we have a risk to reward ratio of one that is

31:44 definitely possible but in this trade I would probably set my stop loss below you can see below the candle right here so below this Adobe candle because if the price would have fallen you know to that point it indicates that you know it looks like the Bulls are not really taking control here and the odds are that the price will once again go down and test this key area so now guys you hopefully have a better understanding on how to trade using Japanese Candlestick patterns so now we are ready to move in to chapter three and in chapter three I will show you guys my top five Candlestick patterns for beginners these are patterns that happens a lot and I think that every single Trader should learn these Channel stick patterns thanks

32:32 [Music] so welcome everyone to Chapter 3 of this Candlestick pattern trading course and in this chapter I will reveal my top five Candlestick patterns for beginners and one important thing I do want to mention right away is that just because a Candlestick pattern is simple and beginner friendly does definitely not mean that the candle is not effective as a matter of fact many times the most simple patterns and patterns that happen frequently in the markets are the most useful patterns so yes guys this chapter is beginner friendly but this part is might be you know even more useful if you are an advanced Trader these planets are used by professional Traders all the

33:18 time so guys make sure to you know really focus during this chapter because we will not only take a look at how to identify the patterns but we will also take a look at how to actually trade the patterns in real markets so the first pattern I want to talk about is the bullish hammer and this is one of these patterns that happens all the times in the market kit and this pattern if used correctly can be a super powerful tool but let's start here by taking a look at how does the pattern look like well the hammer pattern is characterized by a long lower Wick you can see the lower Wick here is pretty long we have a relatively small real body so this part right here needs to be small and the third thing is that the upper Wick so

34:03 this part right here should either not exist at all or we can allow for a very small upper week but the most important part here is that we have a small real body and a long lower Wick to be specific we want this lower Wick or lower Shadow to be at least twice the length of the real body of the candle but preferably we want the lower Wick to be maybe three times as large as the real body or even longer than that another important thing about the hammer is that the hammer can be either green but it's also okay if the pattern is red so this part right here can be red and it's still a valid Hammer You could argue that a green Hammer is a bit more

34:50 bullish than the red hammer but both of these patterns are valid hammers another super important thing about the hammer is that in order for this to be a valid Hammer we need to see the hammer appearing after a downtrend so prior to the actual pattern we need the price to go down the hammer pattern is what we call a reversal pattern meaning that it indicates a potential reversal here from a downtrend to an uptrend another important thing about the hammer candle is that it's most effectively used together with a significant support level so when we see a hammer appearing at a key support level many times we

35:36 will actually see the wick here you just slightly drop below the support here before we see the reversal to the upside this makes the hammer pattern even more significant so now let's take a look at a real life example here and if you guys want to you can pause the video right here and try to identify the hammer pattern on this chart by the way we are currently looking at an apple chart on a 15 minute time frame but you can use the hammer on pretty much every single time frame but alright so the hammer pattern is right here if you manage to identify the pattern congratulations but let's take a look at why this is a good Hammer well first of all we can notice that the wick or the shadow is at least two times larger right than the real body of the

36:22 pattern we can also notice that we don't really have any upper Wick in this case which is a good sign as you remember we don't we want to either have a very small week or no Wick at all and also remember that in order for us to have a good Hammer pattern it needs to appear after a downtrend and as you can see prior to this candle we had a strong movement towards the downside so we had a movement towards the downside and we had a hammer pattern up here but also remember guys that this pattern is best used to gather with a support level and in order to find support level we need to look a bit to the left here and take a look at previous Market structure and as you can see if we look back all the way back here you can see that it appears that we had some kind of support

37:07 here you can see we had three times support and one could also argue that we had some resistance coming in here as well so we can use our rectangle tool here and try to draw some sort of support area at around here so as you can see in this case the hammer pattern appeared we didn't really touch the support right you can see the hammer pattern the price reversed just above the support area but this is still a very good sign if we see the hammer either appearing at the support so if the hammer would have lift on something like this this would be this would have been a good sign but also if the pattern for example that dropped below the support and looked something like this this would have still been a good side sign because this indicates that the support level is being respected here

37:53 and that the Bulls are slowly starting to gain control here so for multiple reasons this is a good Hammer candle let's just take a very quick look at how we could have traded this part and so let's open up a long position a common entry point for the hammer is to enter at the counter Channel close and this is a very common theme as you know from chapter 2 and 1 and as for your stop loss here there are a few different methods you can set your stop loss the most common one is to set the stop just below the lowest point of the hammer so to set the stop loss below this point right here however we always as you know we always need to take the overall Market structure in mind so because we have a support level right here in my

38:39 opinion it does make sense in this case to perhaps actually set your stop loss below this support level so you can either have a tight stop set the stop loss below the hammer or set the stop loss below the support let's say that we go for the tighter stop in this case you may wonder what is the profit Target well as you have learned from earlier in this video a common you know simple profit Target is a two to one risk reward ratio but you can also of course use you know Market structure such as support and resistance to set you know larger profit targets now guys let's take a look at our second pattern right here and this is the bearish shooting star pattern but the most important thing is once again that the wick in this case the upper week should be at

39:24 least twice as large but preferably you know three times or more times as large as the real body and as you can see once again the real body can be either green or red you can actually see in this picture you can see that the upper week in this case is many many times larger than the real body and this is usually a signal that we're talking about a strong shooting star pattern as for the lower week you can see as it says right here we want to have a little to no lower Shadow so it is okay if we have some small Shadows sticking out here on the bottom but preferably we want to see no Shadow at all now let's jump back here to the chart and if you want to you can pause this video and try to identify the

40:09 shooting star pattern but I'm gonna reveal it right away the shooting star is right here you can see on this candle we had a very long upper Shadow we had a small real body and once again we had no lower Wick so this is a you know clear looking shooting star pattern another thing I want to just notice here is that as you can see this is a green candle right here the shooting star can be either green or red but this is still a bearish pattern and a pattern that indicates a potential reversal to the downside and now I remember that I forgot to mention this but of course the shooting star needs to appear remember it's the opposite of the hammer so the shooting star needs to appear after an

40:55 uptrend and as you can see in this case we had an uptrend the shooting star appeared and this is a pattern indicating a potential reversal to the downside one more thing we do want to look out for is a potential resistance level if the shooting star appears at a resistance this makes the shooting star more significant and as you can see in this case we do have some resistance right here right you can see we definitely have some kind of resistance we could draw it actually all the way up here to you know include all of the Candlestick Wicks you can see we got reacted multiple times right here and you can see that in this case the shooting star went just slightly slightly above the resistance immediately reversed and this right here

41:41 is a very nice sign when we are seeing a shooting star let's take a look at a quick example how we can trade this pattern remember this is a bearish pattern so now we want to enter a short position and bet against the market right as for our stop loss in this case the stop loss is more straightforward I would definitely set my stop loss above the highest point of the shooting star so if the price goes up and test the resistance once again we still have some wiggle room here so we the price can go up without us being stopped out from yet another touch of the resistance so we set our stop loss right there and as for our profit Target let's keep it simple this time set uh you know two to one risk the reward ratio and as you can see

42:28 in this case this trade played out beautifully now guys for pattern 3 we're gonna talk about the doji and this candle is super super important to understand this is a pattern once again that happens all the time in the market and this is a very special pattern one thing that makes the doji candle so special is that the real body you can see the real body right here doesn't really exist you can see the dirty candle opens right here remember the candle opens right here during the day the price reached a lowest point all the way down here a highest point all the way down here but you can see that the closing level a perfect doji closes at the exact same level as where the candle opened however it is okay to have a

43:15 Dodie that looks something like this you can have you know a very small real body so you could have a candle that looks something like this and this still counts as a doji the most important thing here is that the real body should be either just a straight line or the real body needs to be very very small a doji candle is a Candlestick that represents in this position in the market and this basically means that neither the Bulls or the bars or in full control so the context for the Dodie candle is very significant let's imagine here that you have a strong Trend towards the downside and then you know a doji candle or even multiple doji candles appear this right here is actually a sign that the downtrend is

44:02 either cooling down or that we might actually see a reversal here towards the upside but it is important to notice here that just because the Dodi candles appears after a downtrend the Dodges are not a reversal pattern so these patterns does not indicate a reversal to the upside it basically only indicates that we are starting to see uncertainty and that we are starting to see indecision in the market so if you for example see a sideways movement like this and after the side main sideways movement you see a few Dody candles appear as you can see the dirty candles can look a bit different they can look in many other in many different ways but as you can see if we see some doji candles appearing here after a sideways movement what does

44:49 this tell us about the price well it doesn't really tell us anything because we had already a very indecisive movement and that the doji candles appears and as you know the Dodie candles implies in decision so in this case it just reinforces that neither the Bulls or the bars are in control of the market last but not least if we have an uptrend here and then we see a few Dodie candles appearing here this is an indication that the uptrend might be losing steam but this is not a reversal signal this simply just means that the trend or the movement is starting to get uncertain so now guys let's see I'm back here into the charts and take a look at an example so as you can see in this case we had a strong movement towards

45:36 the downside as you can see we had multiple strong momentum candles here towards the downside but then we started started to see some bullish channels appearing after these two bullish candles you can see here that the market started to print multiple doji candles so remember what does this tell us about the price well it basically tells us that the movement here towards the downside is losing speed the bars are losing control and that the market is now moving into some uncertain territory you may of course wonder how do we trade the doji candles well one important thing here is that most of the times the doji candles actually gives us a signal to not trade to not trade at all many

46:23 times we want to stay away from markets that look something like this you can see in this type of environments the price is highly random and they are hard to trade however there are of course some use cases let's say that you short to the market right here so you were in a short position betting that the market would go down if you are in a short position right here and then you see doji candles starting to appear on the chart depending on your trading strategy this could actually be a signal that you might want to exit your trade and lock in some profits because as we talked about this is a signal that the market is starting to lose steam but now guys the time has come for the bullish engulfing pattern this is one of my

47:08 favorite bullish reversal patterns meaning that this pattern right here indicates a reversal to the upside just super super quick before we continue but we're taking a look at the bullish engulfing pattern and continue this video guys if you are enjoying this video so far it would be super super awesome and helpful if you can show that by dropping a like on on the video it really helps out more than you think guys and it also makes me know that you guys are liking these type of content you know I really enjoy making this longer educational videos so if you guys want to see more of them don't hesitate to show that by dropping a like but now guys let's take a look at how does the bullish engulfing pattern look like well the bullish engulfing pattern now we are talking about a two channel stick

47:53 pattern so the bullish engulfing pattern consists of two candles the first candle has a small real body so this should be you know relatively small and here the color of the pattern is actually important so for the bullish engulfing pattern we do want to see a red candle as the first candle so candle a here we want to see a small red candle for the next candle candle B we want the Candlestick to open below the previous candle and close above the previous candle so this is why this is this is called a bullish engulfing pattern because as you can see the the green candle sort of engulfs the previous red candle for some asset types such as cryptocurrencies and so on and so on for

48:40 some asset types that trades 24 7 it is okay for the bullish engulfing pattern to open here the green candle to open here at the low of the red one so it is okay to have a pattern that looks like this this right here is the red candle and then the bullish engulfing pattern the next Green candle starts right here and engulfs the red one right here so this one is red and this one is green this example right here is also a valid bullish engulfing pattern the important thing as I said guys this is a reversal pattern meaning that the pattern should appear here after a downtrend so before this pattern appears we need to have a downtrend and the goal of this pattern is to reverse the price here towards the

49:27 upside let's jump back here to the chart and take a look at the real life example right now I'm looking at Netflix on a daily time frame I try to switch it up a bit and the bullish engulfing pattern you can see appeared right here you can see this red candle together with the green one as you can see for this particular pattern let's zoom in here a bit you can see that the most important thing is that the green candle the real body of the green candle should open below the real body of the red candle and close above the real body of the red candle so you see in this case we have a massive massive bullish engulfing as you can see here it's okay for the red candle to have Candlestick Wicks you know below and the red candle can basically have any kind of Candlestick

50:13 Wicks the most important thing is that we want the green candle to open below and close above the red candle the second important thing about the bullish engulfing is as we talked about it needs to appear after a move towards the downside so here you can see we had a move towards the downside and then the bullish engulfing pattern appeared one more thing we preferably want to see here is that we do want to see the building bullish engulfing pattern appearing at a support level and as you can see in this case we actually had some pretty clear support and you can see this one both acted as resistance and support right here so as you can see we had a level that actress resistance broke resistance flip resistors to become support one time two time and then here on the third touch we saw this

50:59 beautiful bullish engulfing pattern let's take a look at a quick trade example use our long position many times we do want to enter here at the channel close of the bullish engulfing for this example I would set my stop loss once again below the lowest point of the pattern remember this red candle is part of the pattern and the lowest point of this red one is all the way down here and as for our profit Target you can use you know either a fixed risk reward ratio but in this case it can actually make sense you can see that we did have you know some support coming in here I'm sorry I'm in resist distance of course so you could put your target just you know below that resistance expecting a potential new

51:45 touch and as you can see in this example the price actually did bounce and we got reacted once again after resistance the fifth Candlestick pattern that every beginner but also every Advanced Trader need to know is the bearish engulfing pattern and this one is as you can guess pretty similar to the bullish engulfing pattern but the opposite in this case we want to first see an uptrend then we want a small green candle to appear this is the first candle of the pattern the next candle needs in this case to open above right open above the green one and close below so it needs to engulf the previous green candle it is okay to have Candlestick Wicks you know the green

52:31 Channel could look something like this perhaps we had some sort of Wick looking like this the red one can also have Wicks here but the important thing is that the red candle needs to engulf the green candle and the goal of this pattern is to see a reversal to a downtrend as you can see right here let's take a look here at a really life example right now we're looking at Google on a daily time frame and as you can see right here a bullish engulfing pattern appeared and one very very interesting thing about this pattern is that as you can see the first part the first candle of this pattern was actually a doji candle and remember from when we talked about doji channels earlier in this video when we see a move towards the upside and a doji candle

53:16 appears this means that the upwards movement is losing steam but this right here is not alone a bearish reversal signal with that said if we combine the doji candle with the next red candle which is the next red candle opened above and closed below the doji so in the this case we have a bearish engulfing pattern that actually included a doji candle once again it is preferable if this pattern appears at a resistance and in this case you can see we did indeed find resistance for multiple multiple days here right here so we can draw a resistance here and we can see that our bullish engulfing indeed came in at the resistance as for our position this is a bearish candle so

54:02 we do want to short here and bet that the price will go down so the most common entry point is to enter at the candle close the stop loss in this case will look a bit left here and we use the market structure so in this case I would set my stop loss above the resistance so above the highest point of the resistance right here you could also go for that tighter stop and set it right here but personally I would set my stop loss list above this point for this particular case as for the profit Target let's keep it simple used for demonstration and use a two to one wrist reward ratio and you can see that in this case we once again locked in some nice profit so in chapter one you learned how to understand Candlestick patterns from a deep and foundational level in Chapter 2 you learn some

54:49 important principles on how to actually use that knowledge to trade Candlestick patterns and now you know five Super useful and super common candidacy patterns so guys I think you are ready for the final chapter in this video my top five Candlestick patterns for advanced Traders [Music] so now guys we have reached the final chapter of this Candlestick course in this chapter we will take a look at my top five Advanced Candlestick patterns and to get as much value as possible from this chapter I highly recommend you guys to watch at least chapter 1 and chapter 2 before diving into this one

55:36 and the reason for this is that in order to understand this you know more advanced patterns we definitely need the knowledge from chapter 1 and chapter 2 and I also really think that if you watch chapter 3 as well you will be able to gain even more from this chapter but now without further Ado let's take a look at these five patterns as well as how we can trade them the first pattern I want to take a look at is called the island reversal and this right here is the bullish version of the pattern we also have a bearish version but let's start here by taking a look at the bullish version so the first thing we need to see for this pattern is that we need to have a downtrend as you can see right here we have multiple strong red candles in a row and we can clearly see that the bars are in control over the

56:23 market what then needs to happen is that we need to see a gap you can see this right here is what we call a gap and this is basically when we have a candle opening four below the previous candle you can see this candle right here created some space right between the previous candle and this is what we call a gap when we have a gap in a downtrend we call it a gap down or a bearish gap and this indicates that the bars have strong conviction and we are seeing a strong downward momentum the second part of this pattern is what we call the Island the island is you know some candlesticks that preferably goes pretty much sideways and we want the island to happen just after the gap down so we want to see a gap down then we want the

57:09 price to move pretty much sideways here for a while and then the final part of this pattern is that we want to see a gap up or a bullish Gap you can see between this green candle right here and the next strong momentum candle we had a strong strong romantic counter right here you can see that we had a gap this right here indicates that the bars completely lost control over this Market remember we had a strong downtrend then the island right here this is a sign of caution for the bars you know a sign that the bearish movement to the downside might be coming to an end but with The Gap up right here this is the signal that the bars are completely losing control and that we might see a strong reversal to the upside now guys let's dive into the chart and take a

57:55 look at a real life example of the island pattern if you want to you can pause the video right here and try to identify the pattern yourself [Music] the island reversal pattern can be seen right here and this right here is not a perfect example but what you have to realize is that first of all Island reversals are pretty rare patterns so you will seldom find you know the perfect pattern and this is true for pretty much all Candlestick patterns that most of the time they will not be you know as clean as they are in the textbooks but what we can notice here is that we do have all the criteria we talked about before the island happened we had a strong movement here towards the downside preferably we maybe want to see an even stronger movement here towards the downside before the pattern appears but this is still a strong

58:40 movement towards the downside and as you can see before the island between this candle right here and this right candle right here we had a gap down indicating that the bars are in full control after this we started to see some sideways movement this right here is the island part of the candle and indicates that the bars are starting to lose a bit conviction here and the downtrend is starting to lose a bit of steam and if you watch chapter 3 you can actually also notice that right here we have a bullish engulfing pattern and as you know this is a bullish reversal pattern indicating a potential reversal to the upside so this is yet another warning sign for the bars however guys the nail in the coffin was right here when we saw a massive massive up Gap confirming the

59:26 island pattern and confirming that the bars have completely lost control now you may wonder how do we actually trade this pattern well let's open up our long position right here and the most common entry point is to enter at the candle close after the Gap up we can actually use our rectangle tool here to Mark the Gap so we see the Gap more clearly and as for your stop loss level we can use a few different methods to set our stop loss many Traders will set the stop loss below the lowest point of the candle where we entered so some Traders prefer to set a tight stop loss below the lower weak here of the Gap up candle so such stop loss around there however some Traders prefer a much wider stop loss and to set your stop loss actually below

1:00:12 the Gap so this gray part right here is the gap so they usually set their stop loss below the Gap and also leave some wiggle room right here but in this case let's say we used our tight stop loss so we have a pretty tight stop loss right here and because we have such a tight stop many times we can allow allow for a bit higher risk reward ratio so we set a risk reward ratio of three and as you can see after this reversal candle the price continued to move up here and we locked in some nice profit the next pattern I want to talk about is the Rising 3 methods and this right here is a continuation pattern and in this case it's a bullish continuation pattern so the goal of this pattern is to continue the trend here towards the upside there are a few things we need to see in order

1:00:57 to have a valid Rising 3 methods first of all before the pattern appears we need to have an uptrend the pattern itself consists of five candlesticks the first candle needs to be a strong green momentum candle so we want to see a green candle with a long real body after the green candle appears we want to see three consecutive red candles and these red candles the body of these red candles should be pretty small so something like here on the picture you can see we have one two three relatively weak bearish candles the fifth candle of the pattern should be yet another strong bullish momentum candle and one important thing about this candle is

1:01:42 that preferably we want this green candle to at least break the highest point of the first red candle so we want to break this point right here and preferably we also want this green candle to break the highest point of the real body of the first green candle so as you can see here on the picture we do want to break this line right here it's after this break and when the fifth candle closes that the Rising 3 methods is confirmed if we visualize this pattern we can actually see that it looks something like this and if you are familiar with short patterns you can actually see that this is pretty much the same thing as a bullish flag and the bullish flag is a bullish chart pattern on the shorter time frame so as you can

1:02:28 see here if we learn to understand candlesticks we can learn to see short patterns happening on the smaller time frames by only looking at candlesticks so this is one reason why it's so so important to have a deep understanding of candlesticks and Candlestick patterns now guys we are very soon ready to jump here into the chart but real quick before we do that guys if you so far or enjoying this video this is definitely the longest and you know most comprehensive video I have ever made and so if you like this video so far it would be super super awesome and helpful if you show that by dropping a like on the video but now guys let's jump back here into the charts and take a look at a real life example of this pattern so right now as we're speaking we're looking at Amazon on a daily time frame

1:03:14 and as you can see if we zoom in here you can see that we first of all we talked recently about gaps and here you can see that we had a massive massive Gap here before this strong momentum candle so this chart is already looking pretty bullish right but if we zoom in even more you can notice that we have a rising three methods pattern right here so as you can see first of all the first candle of the pattern is this green one right here and this one comes after a very strong move towards the upside and that is the first thing we need to see we need to see a strong move towards the upside and then the first candle of the pattern needs to be a strong green candle as you can see yes in this case we did have you know a pretty pretty

1:03:59 long week here but this is still you know a strong enough candle to be the first candle in the Rising 3 methods and as you can see after this candle we had one two and three red candles and all of these red candles have relatively small real bodies yes the bars managed to push the price down but there is no real conviction in this move you can also see that by looking on the Wicks we pretty much have these are called spinning top candles and this right here is exactly what we want to see for the Rising 3 methods if we take a look here at the fifth Channel which you see that we had a strong momentum candle exactly what we want to see and we can also see that the fifth candle closes below the real body of the first red one and we also closed

1:04:45 slightly above the real body of the green candle so all our criteria is met here and we are ready to take our trade so let's go here and open up our long position the most common way to enter The Rising 3 methods is to enter here at the candle close of the fifth candle and many times we do you want to set our stop loss just below the lowest point here of the pattern in this case the lowest point is the Candlestick Wick of the red channel so we set our stop loss below there and as always I also allow for some wiggle room so I set my stop loss a tiny bit you know below this point right here as for our Target level for you know just for demonstration let's keep it simple with a two to one

1:05:31 risk to reward ratio and as you can see in this case yes it took a while but eventually the uptrend continued here and we met our profit Target now guys the time has come for the separating lines pattern and this right here is the bullish version of the pattern but everything I say here is true but the opposite for the bearish separating lines pattern and there are a few things we need to have confirmed in order to have a bullish separating light the first thing you can notice here is that this pattern is a continuation pattern so the goal of this pattern is to once again continue the uptrend so before the

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