Fibonacci retraces
Often a retrace will test the zone between .618 and .786
Attached Imageshttp://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=14729&stc=1&d=1211039461 http://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=14730&stc=1&d=1211039467
Well said Dave. The EUR/USD is looking to move toward that .618 and .786 Fibonacci resistance zone. Extending the Fibonacci drawing tool from the bottom of the swing back towards the top reveals these "hidden" levels of resistance.
We can trade Long with a stop below the long wicks in the 1.5500 area with a target between 1.5576 (61.8% Fibo Resistance) or 1.5601 (78.6% Fibo Resistance).
Reversal candlestick patterns at either of these levels provide a shorting opportunity as the EUR/USD may fail to make a higher swing high. We could see 1.5446.
See the attached chart:Attached Thumbnailshttp://www.learncurrencytrading.com/fxforum/attachment.php?attachmentid=14780&stc=1&thumb=1&d=1211236949
很有收益！
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CANDLESTICK TERMS AND DEFINITIONS
Above Average VolumeHarami (Bearish)Morning Doji Star (Bullish)Advance Block (Bearish)Harami (Bullish)Moving AveragesAdvance Block (Bullish)Harami Cross (Bearish)Piercing Pattern (Bullish)Candlestick LinesHarami Cross (Bullish)Rising Three (Bullish)Dark-cloud cover (Bearish)Inverted Hammer (Bullish)Shooting Star (Bearish)Doji star (Bearish)Long Green Real BodyStar (Bearish)Doji star (Bullish)Long Red Real BodyStar (Bullish)Engulfing Pattern (Bearish)Major Price ResistanceTasuki Gap (Bearish)Engulfing Pattern (Bullish)Major Price SupportTasuki Gap (Bullish)Evening Star (Bearish)Mat-hold pattern (Bearish)Three Crows (Bullish)Evening Doji Star (Bearish)Mat-hold pattern (Bullish)Three White Soldiers (Bearish)Falling Three (Bearish)Minor Price ResistanceThrusting Line (Bearish)Hammer (Bullish)Minor Price SupportThrusting Line (Bullish)Hanging man (Bearish)Morning Star (Bullish) http://www.candlestickshop.com/glossary/imageMEN.JPGAbove Average Volume--a total daily volume of shares traded which is greater than the average of the daily volumes over the previous few days. Examples:DWTI
http://www.candlestickshop.com/glossary/imageEMB.JPGAdvance Block (Bearish)--a three candlestick pattern in which the last two candlesticks show weakening upside drive.
http://www.candlestickshop.com/glossary/imageE4E.JPGAdvance Block (Bullish)--a three candlestick pattern in which the last two candlesticks show strengthening downside drive.
http://www.candlestickshop.com/glossary/imageATO.JPGCandlestick Lines--a traditional Japenese chart which consists of a real body, representing the open and close, and upper and lower shadows, representing the high and low of the day.
http://www.candlestickshop.com/glossary/imageU1E.JPGDark-cloud cover (Bearish)--a bearish reversal signal.In an uptrend, a long green candlestick is followed by a long red candlestick that opens above the prior green candlestick's high.The second candlestick must close well into the first candlestick’s real body.
http://www.candlestickshop.com/glossary/image298.JPGDoji star (Bearish)--a doji line which gaps from a long green candlestick. Examples: MCWS
http://www.candlestickshop.com/glossary/imageTHF.JPGDoji star (Bullish)--a doji line which gaps from a long red candlestick.
http://www.candlestickshop.com/glossary/imageACT.JPGEngulfing Pattern (Bearish)--a bearish engulfing pattern occurs when selling pressure overwhelms buying pressurereflected by long red real body engulfing a small green real body in an uptrend.
http://www.candlestickshop.com/glossary/imageIMI.JPGEngulfing Pattern (Bullish)--a bullish engulfing pattern occurs when buying pressure overwhelms selling pressurereflected by long green real body engulfing a small red realbody in an downtrend.
http://www.candlestickshop.com/glossary/imageNNC.JPGEvening Star (Bearish)--a top reversal pattern where the first is a tall real body, the second is a small real body (green orred) which gaps high to form a star.The third is a red candlestick which closes well into the first session's green real body.
http://www.candlestickshop.com/glossary/imageUI7.JPGEvening Doji Star (Bearish)--the same as an evening star except the middle candlestick is a doji instead of a small real body.
http://www.candlestickshop.com/glossary/image1S1.JPGFalling Three (Bearish)--comprised of five candlesticks, a tall red real body candlestick preceded three small green real bodies which hold within the first session's range.Then a red candlestick closes at a new low.
http://www.candlestickshop.com/glossary/image080.JPGHammer (Bullish)--a bottoming candlestick line where a small real body (red or green) at the top of thetrading range with a very long shadow with little or no upper shadow. Examples:FSCO
http://www.candlestickshop.com/glossary/imagePNL.JPGHanging man (Bearish)--a small real body (green or red) with little or no upper shadow.It is a bearish reversal patternwhen appearing during an uptrend. Examples: PFSW
http://www.candlestickshop.com/glossary/imageN44.JPGHarami (Bearish)--a two candlestick pattern in which a small real body holds within the prior session's unusually large realbody.The harami implies that the preceding trend is getting ready to conclude.
http://www.candlestickshop.com/glossary/imageMHT.JPGHarami (Bullish)--a two candlestick pattern in which a small real body holds within the prior session's unusually large realbody.The harami implies that the preceding trend is getting ready to conclude. Examples: PLCM, CPTL, ABY
http://www.candlestickshop.com/glossary/imageEBD.JPGHarami Cross (Bearish)--a harami with a doji on the second session instead of a small real body.
http://www.candlestickshop.com/glossary/imageIA0.JPGHarami Cross (Bullish)--a harami with a doji on the second session instead of a small real body.
http://www.candlestickshop.com/glossary/imageTOS.JPGInverted Hammer (Bullish)--a candlestick that has a long upper shadow and a small real body at the lower end of the session.It is a bullish bottom reversal signal. Examples:DWTI
http://www.candlestickshop.com/glossary/imagePN2.JPGLong Green Real Body (Bearish)--a relatively long real body with closing price far above the opening price.
http://www.candlestickshop.com/glossary/imageMOV.JPGLong Red Real Body (Bullish)--a relatively long real body with closing price far Below the opening price. Examples: FCS, CBCX, AHAA, ASDV
http://www.candlestickshop.com/glossary/imageAH7.JPGMajor Price Resistance--an area of price where a stock hits resistance, reverses direction, and then retests the same general area of resistance a second time. Examples: PFSW
http://www.candlestickshop.com/glossary/imageF4L.JPGMajor Price Support--an area of price where a stock hits support, reverses direction, and then retests the same general area of support a second time.
http://www.candlestickshop.com/glossary/image7VU.JPGMat-hold pattern (Bearish)--a red candlestick is followed by a small green real body which gaps lower.Then there are two small green candlesticks which are followed by a bearish red candlestick.
http://www.candlestickshop.com/glossary/imageC3O.JPGMat-hold pattern (Bullish)--a green candlestick is followed by a small red real body which gaps higher.Then there are two small red candlesticks which are followed by a strong green candlestick
http://www.candlestickshop.com/glossary/imageHCV.JPGMinor Price Resistance--an area of price which previously acted as support, but now serves as price resistance. Examples:USWB, HIG
http://www.candlestickshop.com/glossary/imageI0Q.JPGMinor Price Support--an area of price which previously acted as resistance,but now serves as pricesupport. Examples: FCS, GSLI, CPTL, AHAA
http://www.candlestickshop.com/glossary/imageGQ0.JPGMorning Star (Bullish)--a candlestick pattern where the first is a long red real body, the second is a small real body (green or red) which gaps lower to form a star.The third is a green candlestick that closes well into the first session's red real body.
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Morning Doji Star (Bullish)--the same as a morning star except the middle candlestick is a doji instead of a small real body.
Moving Averages (Simple)--calculates the average value of price over a period of time. As the stock price changes each day, its average price moves up and down.For example, the 10 Day Simple Moving Average would be the sum of the price over the past 10 days divided by 10.The average is called 'Moving' because each new day is added to the total while the earliest date is removed from the calculation.
http://www.candlestickshop.com/glossary/imageQIT.JPGPiercing Pattern (Bullish)--a long red candlestick is followed by a gap lower during the next session.This session finishes as a bullish green real body which closes more than halfway into the previous sessions real body.
http://www.candlestickshop.com/glossary/imageCVO.JPGRising Three (Bullish)--comprised of five candlesticks, a tall green real body candlestick preceded three smallred real bodies which hold within the first session's range. Then a green candlestick closes at a new high.
http://www.candlestickshop.com/glossary/imageD5L.JPGShooting Star (Bearish)--a candlestick with a long upper shadow with little, or no lower shadow, and a small real body near the lows of the session.
http://www.candlestickshop.com/glossary/imageTGL.JPGStar (Bearish)--a small real body which gaps away from the previous long body.
http://www.candlestickshop.com/glossary/imageBML.JPGStar (Bullish)--a small real body which gaps away from the previous long body
http://www.candlestickshop.com/glossary/imageK4O.JPGTasuki Gap (Bearish)--a red real body gaps lower followed by a green candlestick of about the same size, which opens in the red’s real body, and then closes above the red’s real body.
http://www.candlestickshop.com/glossary/image6GG.JPGTasuki Gap (Bullish)--a green real body gaps higher followed by a red candlestick of about the same size, which opens in the green’s real body, and then closes below the green’s real body.
http://www.candlestickshop.com/glossary/imageLGQ.JPGThree Crows (Bullish)--three relatively long consecutive red candlesticks which close near or on their lows.
http://www.candlestickshop.com/glossary/image9HH.JPGThree White Soldiers (Bearish)--three relatively long consecutive green candlesticks which close near or on their highs Examples:HIG, ACS
http://www.candlestickshop.com/glossary/imageFRH.JPGThrusting Line (Bearish)--a red candlestick which closes in the prior green's real body, but still above the middle of the prior session's real body.
http://www.candlestickshop.com/glossary/imageA8I.JPGThrusting Line (Bullish)--a green candlestick which closes in the prior red's real body, but still below the middle of the prior session's real body. Examples:GSLI
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Candlestick vs. Western Charts The Western bar chart is made up of four parts components, open, high, low, and close.
The vertical bar depicts the high and low of the session, while the left horizontal line represents the open and the right horizontal line represents the close. http://www.candlestickshop.com/seminar/Candle1.gif
Figure 1The Japanese Candlestick Line (Figure 2) uses the same data (open, high, low, and close) to create a much more visual graphic to depict what is going on with the stock.
The thick part of the candlestick line is called the real body.
It represents the range between the session’s opening and closing prices.
If the real body is red, it means that the close of the session was lower than the open.
If the real body is green, it means that the close was higher than the open.
The lines above and below the body are the shadows.
The shadows represent the session’s price extremes.
The shadow above the real body is called the upper shadow and the shadow below the real body is called the lower shadow.
The top of the upper shadow is the high of the day, and the bottom of the lower shadow is the low of the day. http://www.candlestickshop.com/seminar/Candle2.gif
Figure 2One of the main differences between the Western Line and the Japanese Candlestick line is the relationship between open and closing prices.
The Westerner places the greatest importance on the closing price of a stock in relation to the prior periods close.
The Japanese place the highest importance on the close as it relates to the open of the same day.
You can see why the Candlestick Line and its highly graphical representation of the open to close relationship is such an indispensable tool for the Japanese trader.
To illustrate the difference, compare the daily chart plotted with Western Lines (Figure 3) with the exact same chart plotted with Japanese Candlestick lines (Figure 4).
In the Western bar chart as with the Japanese Candlestick chart, it is easy to interpret the overall trend of the stock, but note how much easier it is to interpret change in sentiment on a day to day basis by viewing the change in real body color in the Japanese Candlestick chart. http://www.candlestickshop.com/seminar/Candle3.gif Figure 3 http://www.candlestickshop.com/seminar/Candle4.gif Figure 4
Trader's sentiment One of the greatest values of the candlestick chart is the ability to read market sentiment regarding a stock. To illustrate consider the following example of a stock traded from the eyes of a Western chart trader and then from the eyes of a candlestick chart trader. Western Chart TraderAt the close of the day's session you observe that the stock closed well above your entry price (2), which leaves you very content with your trade.
After the close of day 2, you open the financial section of the paper and check the closing price of the stock and observe that not only is your stock well above your entry price, but also has gained slightly (it is worth mentioning
that most western papers only publish closing prices while Japanese papers publish both opening and closing prices).
On day 3 you open and the newspaper to check the close and notice a slight dip in your stocks price but you do not panic, because you are still well in the money.
You convince yourself that the stock has only dipped slightly relative to the entry day close (day 1), and should resume its up trend on the next day.
On day 4, you check the close and notice that the stock has fallen significantly relative to the prior days close.
You are now concerned about protecting the profits that you had previously bragged about just days before.
On the beginning of day 6, you call your broker (or logon to your online trading account) and place a market order to sell at the first opportunity.
At the day 5 markets open, the stock opens sharply lower and continues to fall.
Your order is executed at a price several points below where you entered.
You then shrug off the trade as an unpredictable misfortune, and move on to the next trade.
http://www.candlestickshop.com/seminar/Trader5.gif Figure 5Candlestick Chart Trader Now suppose you are a candlestick chart trader trading the same stock using a candlestick chart (Figure 6).
At the beginning of Day 1 you enter the stock based on a candlestick pattern entry signal (we will discuss proper entries in detail latter in this unit).
At the close of the day's session you observe that the stock closed well above your entry price (2) which leaves you very content with your trade, but also moves you into a state of caution for signs of a change in trend or reversal.
After the close of day 2, you observe the candlestick formed for the day and notice that the real body is small indicating that there was a tug of war between the bears and the bulls.
You also observe that the real body is read in color indicating that the stock closed lower than the open indicating that the bulls actually lost the tug of war to the bears.
Based on these observations you conclude that the bullish rally in the stock has ceased, and the bullish sentiment of the market regarding the stock is changing.
You decided to sell your position at the days close, or at the market open on the next day to lock in your profit.
If this were a stock in the midst of an overall downtrend, you may decide to short the stock under the low of the day 2 bearish candlestick.
As you can see the candlestick chart trader has the advantage over the western chart trader in that he can use the signals generated in each candlestick to
help foretell the changing sentiments of the market regarding a stock.
The open to close relationship revealed in the candlestick is more effective than the close-to-close relationship commonly used by western traders. http://www.candlestickshop.com/seminar/Trader6.gif Figure6
Supply and Demand
A stock's price will adjust to higher or lower prices based strictly on supply and demand principles.
In Figure 7 is shown a diagram of a green candlestick.
The green color of the candlestick indicates that the closing price of the stock at the end of the day is higher than the opening price at the beginning of the day.http://www.candlestickshop.com/seminar/Supply7.jpg Figure 7As you will see, the candlestick's color and size provide very important clues regarding the TRADER'S SENTIMENT toward a given stock's future price.
Notice that 'trader's sentiment' is the key phrase here.In short term trading, it is critical for the trader to have a clear understanding of what other traders are thinking.As you will see, the most direct way to get that understanding is through proper interpretation of the candlestick.
Let's look at an example. In Figure 8 is shown a candlestick of XYZ Company, which opened at 25 and closed at 25 3/8.
http://www.candlestickshop.com/seminar/Supply8.jpg Figure 8 The candlestick is green in color, which gives us a quick visual signal that the stock price has rallied higher during this period.
How can we use this information to help us understand what other traders are thinking? To answer this question, we will follow the candlestick's changes step by step to understand the mechanism which is driving the stock price to move higher.
In Figure 8, we see the stock opens at 25, and then quickly rallies to 25 1/8. The reason the price moves to 25 1/8 is because there is a high demand to buy the stock at 25 1/8, and a short supply of sellers offering stock at 25 1/8.
Once all of the stock available at 25 1/8 is snatched up, the next group of sellers steps up to offer their stock at 25 1/4.
All of the 25 1/4 stock is quickly snatched up because there are still a larger number of traders willing to buy at 25 1/4 than sellers willing to sell stock at 25 1/4.
Once the 25 1/4 stock is gone, the next group of sellers steps up to offer theirstock at 25 3/8.The 25 3/8 stock is quickly snatched up too.
This process will repeat itself until the buyers loose interest in buying the stock resulting in a reduction of demand.
The result of combining these steps is a green candlestick with an opening price of 25, rallying to a closing price of 25 3/8.
During the rally period; however, the astute candlestick reader will be able to observe the long green color of the candlestick, and deduce that buyer demand is high.
Now there is only one reason why traders would increase demand by stepping up to buy the stock, and that is because they think that the stock will go up in the
near future.So by observing the candlestick color and size, the astute candlestick reader is able to deduce exactly what other traders are thinking, and that is that they think the stock price will go higher in the future.
In Figures 9 & 10 we show an example of how the same principle in reverse applies to the analyses of a red candlestick.http://www.candlestickshop.com/seminar/Supply9.jpg Figure 9The red color of the candlestick indicates that the closing price of the stock at the end of the day is lower than the opening price at the beginning of the day.
In Figure 10, we see the stock opens at 25 3/8, and then quickly drops to 25 1/4.
http://www.candlestickshop.com/seminar/Supply10.jpg Figure 10The reason the price moves to 25 1/4 is because there are many sellers looking to unload there stock at 25 1/4, and a low number of buyers willing to buy at 25 1/4.
Once all of the buyers have bought the stock at 25 1/4, the next group of buyers steps up to bid for stock at the lower price of 25 1/8.
The desperate sellers quickly sell all of the stock at 25 1/8, and then the next set of buyers step up at the price of 25.
This process will repeat itself until all of the sellers have unloaded all of the stock that they want to sell, resulting in a reduction of supply.
The result is a red candlestick with an opening price of 25 3/8, falling to a closing price of 25. During the stock's price fall; however, the astute candlestick reader will be able to observe the long red color of the candlestick, and deduce that demand for the stock is low.
Now there is only one reason why traders would increase the supply of stock to sell, and that is because they think that the stock will go down in the near future.
So by observing the candlestick color and size, the astute candlestick reader is able to deduce exactly what other traders are thinking, and that is that they think the stock price will go lower in the future.
Buy on Greed, Sell on Fear
There are only two forces behind the supply and demand forces that drive a stock's price higher or lower.
Those forces are the emotional forces of fear and greed.To illustrate this point we refer to Figure 11.http://www.candlestickshop.com/seminar/Fear_a11.gif Figure 11
Suppose you are a trader observing the bullish rally of Stock XYZ at the beginning of the 3rd bullish green candlestick, and considering an entry.
You have witnessed the stock rally huge for two days and know that each trader who entered on the first two days is now a big winner.
Based on the emotion of greed you decide to enter at that beginning of the 3 day, and mentally count your profits as the price rallies to a new high.
After the stock closes, you brag to your friends at the golf course regarding the great trade that you made that day.
You go home from the golf course and celebrate the victory with your spouse and maybe even discuss how you will use the extra money that you have earned through the trade.
Now keep in mind that the profit is only on paper and not one penny has been earned yet.
The next morning you check the price of your position, with expectations that your bullish stock will rocket to the moon! Now imagine the emotion that goes through your mind when your position not only fails to go higher, but also opens below your entry price.
What is the emotion that flows through your body as you not only see your profits erode before your eyes, but now rob your account of precious capital?
The emotion that you will experience is undoubtedly fear and will prompt you to scramble to liquidate your position as soon as possible to minimize your losses.
Now consider that there were also 2 or 3 thousand additional traders who entered the same stock at around the same price with the hopes of the gaining the same
profit.
All of these traders will be tripping over themselves trying to get out of the stock.
As was illustrated in the previous section, this increase in fear results in an increase in supply of the stock relative to the increase in demand, and triggers the sharp decline in the price.
The deeper the red candlestick cuts into the bullish green candlesticks, the more traders are thrown into loosing positions, and thus the further the price decline.
Perhaps you are beginning to realize the power of emotions in price movements of a stock.
The technical analyst through candlestick reading is trained to read this greed and fear emotions in the market and capitalize on them.