Upper
Shadow

Real
Body

Lower
Shadow

Candlestick Line

Candlestick lines and charts — tra-
ditional Japanese charts whose individual lines look like candles, hence their name.   The candle- stick line is comprised of a real body and shadows.   See “Real
body” and “shadow.”

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Candlestick Formations

Bullish    Bearish

Belt Hold Lines

Belt-hold line — there are bullish and bear-
ish belt holds.  A bullish belt hold is a tall white candlestick that opens on its low. It is also called a white opening shaven bottom. At a low price area, this is a bullish signal. A bearish belt hold is a long black candlestick which opens on its high. Also referred to as a black opening shaven head.  At a high
price level, it is considered bearish.

Candlestick Formations

Bullish    Bearish

Counterattack Lines

Counterattack lines — following a black
(white) candlestick in a downtrend (up- trend), the market gaps sharply lower (higher) on the opening and then closes unchangedfromthepriorsession’sclose. A pattern which reflects a stalemate be-
tween the bulls and bears.

Candlestick Formations

Dark-Cloud Cover

Dark-cloud cover — a bearish reversal sig-
nal. In an uptrend a long white candlestick is followed by a black candlestick that opens above the prior white candlestick’s high.   It then closes well into the white
candlestick’s real body.

Candlestick Formations

Long
Legged
Grave- Stone

Doji

Doji –a session in which the open and close
are the same (or almost the same).  There are different varieties of doji lines (such as a gravestone or long-legged doji) depending on where the opening and closing are in relation to the entire range.  Doji lines are among the most important individual candle- stick lines.  They are also components of
important candlestick patterns.

Candlestick Formations

Bullish
Bearish

Engulfing Patterns

Engulfing patterns — there is a bullish and bearish engulfing pattern.   A bullish engulfing pattern is comprised of a large whie real body which engulfs a small black real body in a down- trend. The bullish engulfing pattern is an impor- tant bottom reversal. A bearish engulfing pattern (a major top reversal pattern), occurs when sell- ing pressure overwhelms buying pressure as refleccted by a long black real body engulfing a
small white real body in an uptrend.
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Candlestick Formations

Doji Star

Doji star — a doji line which gaps from
a long white or black candlestick.  An important reversal pattern with confir-
mation during the next session.

Candlestick Formations

Evening Star

Evening star — a major top reversal
pattern formed by three candlesticks. The first is a tall white real body, the second is a small real body (white or black) which gaps higher to form a star, the third is a black candlestick which closes well into the first session’s white
real body.

Candlestick Formations

Evening Doji Star

Evening doji star — the same as an
evening star except the middle candle- stick (i.e., the star portion) is a doji instead of a small real body. Because there is a doji in this patter, it is consid- ered more bearish than the regular
evening star.

Candlestick Formations

Hammer

Hammer—animportantbottomingcandle-
stick line. The hammer and the hanging man are both the same line, that is a small real body (white or black) at the top of the session’s range and a very long lower shadow with little or no upper shadow.  When this line appears during a downtrend it becomes a bullish hammer. For a classic hammer, the lower shadow should be at least twice the height of the real body.

Candlestick Formations

Hanging Man

Hanging man — an important top reversal. The hanging man and the hammer are both the same type of candlestick line (i.e., a small real body (white or black), with little or no upper shadow, at the top of the session’s range and a very long lower shadow). But when this line appears during an uptrend, it becomes a bearish hanging man. It signals the market has become vulnerable, but there should be bearish confirmation the next session (i.e., a black candlestick session with a lower close or a weaker opening) to signal a top. In principle, the hanging man’s lower shadow should be two or three times the
height of the real body.

Candlestick Formations

Harami

Harami — a two candlestick pattern in which a small real body holds within the prior session’s unusually large real body.  The harami implies the immediately preceding trend is concluded and that the bulls and bears are now in a state of truce. The color of the second real body can be white or black.  Most often the second real body is
the opposite color of the first real body.

Candlestick Formations

Harami Cross

Harami cross — a harami with a doji
on the second session instead of a small real body. An important top (bot- tom) reversal signal especially after a tall white (black) candlestick line.  It is
also called a petrifying pattern.

Candlestick Formations

Inverted Hammer

Inverted hammer — following a down-
trend, this is a candlestick line that has a long upper shadow and a small real body at the lower end of the session.  There should be no, or very little, lower shadow.  It has the same shape as the bearish shooting star, but when this line occurs in a downtrend, it is a bullish bottom reversal signal with confirma- tion the next session (i.e., a white candlestick with a higher close or a higher opening).

Candlestick Formations

Morning Star

Morning star — a major bottom reversal
pattern formed by three candlesticks. The first is a long black real body, the second is a small real body (white or black) which gaps lower to form a star, the third is a white candlestick that closes well into the first
session’s black real body.

Candlestick Formations

Morning Doji Star

Morning doji star — the same as a morning star except the middle candle- stick is a doji instead of a small real body.  Because there is a doji in this pattern it is considered more bullish
than the regular morning star.

Candlestick Formations

Piercing Pattern

Piercing pattern — a bottom reversal signal.   In a downtrend, a long black candlestick is followed by a gap lower during the next session.   This session finishes as a strong white candlestick which closes more than halfway into the prior black candlestick’s real body. Com- pare to the on-neck line, the in-neck line,
and the thrusting line.

Candlestick Formations

Tops

Bottoms

Tweezers

Tweezers top and bottom — when the same
highs or lows are tested the next session or within a few sessions.  They are minor reversal signals that take on extra importance if the two candle- sticks that comprise the tweezers pattern also form another candlestick indicator. For example, if both sessions of a harami cross have the same high it could be an important top reversal since there would be a tweezers top and a bearish harami
cross made by the same two candlestick  lines.

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Disclaimer: Futures, forex, stock, and options trading is not appropriate for everyone. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can guarantee profits or ensure freedom from losses. No representation or implication is being made that using the 17 Money Making Candlestick Formations methodology or system will generate profits or ensure freedom from losses.

I am not going to bore you by telling you things that are not important. Like my sister always say and I quote “Keeping it simple is the best rule for any game”. I have been trading for quite sometime now and I must tell you, the journey has been so interesting.

Although when I started, it wasn’t easy but due to the passion, I found my way in. Along the line, I became a fund manager for some private investors which I decided to call it quit few months ago because I was relocating. It wasn’t easy because I was always looking for trades. The experience has made me to decide that I would only manage funds for maybe a financial institution if given the opportunity.

Very Simple Strategy

Timeframe: Any (but I recommend from 15 minutes chart and above) Indicators: Moving averages (Exponential)
i. Period 5 (Yellow)
ii. Period 10 (Magenta)
iii. Period 15 (Red)
iv. Period 65 (White)

MACD (Default settings)

You can also change the colors to Red and Dark Turquoise as shown below.

Entry Signals
The signals are classified into 5 sentiments for the indicators i. Bullish
ii. Bearish
iii. Consolidation
iv. Bullish Consolidation v. Bearish Consolidation
Which means that the moving averages and the MACD can give signals based on any of the 5 sentiments. Although, we have four Exponential moving average indicators but, I will classify them as two different
indicators i.e, 5, 10 and 15 as one and then 65 as another indicator for our signals.

We now we have:

Indicator 1 – EMA (5, 10, 15) Indicator 2 – EMA (65)
Indicator 3 – MACD with Red and Dark Turquoise colors.

SIGNALS FOR EACH INDICATOR

Indicator 1: Whenever  there  is  a  crossover  of  the  three  EMA  (5,  10,  15),  then  wait  until  they  split distinctively according to the periods or colors as shown on the chart, then a BUY or SELL is confirmed depending on the direction at that point in time (Bullish or Bearish).

If they are all together, that means consolidation.
Indicator 2: Check the angle of the 65 EMA Upward angle: Bullish (BUY)
Downward angle: Bearish (SELL) Flat: Consolidation (NO TRADE)

Indicator 3: MACD

Red line is the MACD signal line
Dark Turquoise bars are the MACD cloud
Zero level (0.00) separates BUY/SELL regions

If the Red line is above the zero level (0.00), that means BUY (Bullish) but if it is below the zero line it means SELL (Bearish).

If the Dark Turquoise bars are above/below the zero line, that means BUY (Bullish)/SELL (Bearish).

If the MACD signal line (Red line) is inside the MACD cloud (Dark Turquoise), above/below the zero (0.00)
line, that means BUY(Bullish)/SELL(Bearish).

If the MACD signal line (Red line) comes out from the MACD cloud (Dark Turquoise) above/below the zero
(0.00) line, that means Bullish consolidation/Bearish consolidation.

Now, let me bring everything together. You must make sure that you consider these five sentiments before taking a trade:

i. Check the three EMA (5, 10, 15).
ii. Is the market trading above or below the white line (65 EMA)?
iii. Check the angle of the white line (65 EMA).
iv. Check if the MACD signal line (Red line) is above/below the zero(0) level v. Check if the MACD signal line (Red line) inside the MACD cloud.

Let’s apply all the rules on the market and see:

As you can see on the chart above, the 3 EMA (5, 10, 15) separated (SELL) and the candles are below the white line (SELL). The white line (65 EMA) was angling down (SELL) and at the same time the MACD signal line (Red line) was below the zero level (0.00) (SELL) and entering the MACD cloud (Dark Turquoise) (SELL).

For every signal, make sure the five sentiments shows BUY/SELL before you take a trade.

Exit Signals

You can pullout from a trade when the MACD signal line (Red line) comes out of the MACD cloud for short time traders or when the signal line crosses above/below the zero level (0.00) in an opposite direction of our trade for position traders. Look at the chart below: