the hAnDbook of technIcAl AnAlysIs
14.6 Chapter Summary
In this chapter, we saw the predictive power of Japanese Candlestick analysis. In
most cases, Japanese Candlesticks are used to forecast potential reversals in the
market. The practitioner should always remember that as with any other form of
technical analysis, Japanese Candlesticks work best especially when it coincides
with significant or historical price levels or barriers.
Chapter 14 Review Questions
- What is the difference between candlesticks and other forms of charting?
- List as many candlestick patterns as you can for each of the four categories of
candlestick patterns, namely: bearish patterns, bullish patterns, reversal pat-
terns, and continuation patterns.
- How do candlestick size and color determine the degree of bullishness and
bearishness?
- What is the difference between intrinsic, extrinsic, trend, and contextual sentiment?
- Explain the difference between a hammer and an inverted hammer formation.
- How are FOREX candlesticks different?
- What is the difference in sentiment between a Doji and a Doji with tremendous
volume?
- How can a bullish Marubozu turn bearish?
referenCes
Bulkowski, Thomas N. 2008. Encyclopedia of Candlestick Charts. Hoboken, NJ: John
Wiley and Sons.
Lambert, Clive. 2011. Candlestick Charts. Petersfield, UK: Harriman House Ltd.
Morris, Gregory L. 2006. Candlestick Charting Explained: Timeless Techniques for Trad-
ing Stocks and Futures. New York: McGraw‐Hill.
Nison, Steve. 1994. Beyond Candlesticks. New York: John Wiley & Sons.
Nison, Steve. 2001. Japanese Candlestick Charting Techniques. New York: New York In-
stitute of Finance (NYIF).
