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Nison's Candlestick book

  • #1
  • First Post: Jan 5, 2007 3:44pm Jan 5, 2007 3:44pm
hi there,
Since iam reading Nison's "JAPANESE CANDLESTICK CHARTING TECHNIQUES" iam often confronted with the individual candlestick patterns which i cant apply to forex trading.
The reason is that many of his patterns need gaps between the real bodys.
For example the engulfing patterns have to open below or above the preceding SHADOW. But as is it mostly in forex the opens are the same as the closes, so a engulfing is very very rare, although it is so powerful.
It's difficult to explain what my main problem is, but i hope you can see it.
It's just that i cant take advantage of the candlesticks, because they often need gaps between the close and the opens (or the real body as Nisons says). And i dont want to use only hammers and the shooting star, hanging man, because i think candels represent in a good way the price and are good for forecasting. So are all the other candlestick patterns useless in forex?
I really hope to hear some statements of you to this.
Thank you very much in advance
Greetings
-mike
I'm getting there ... slowly
  • #2
  • Jan 5, 2007 4:02pm Jan 5, 2007 4:02pm
Miketoll,

I recently saw Steve speak in Vegas and he addressed the bullish/bearish engulfing scenario. He did state that in FOREX only the real bodies have to engulf the real body only, not the shadow.

I hope this helps and let us know what you think of the book.

My office is everywhere
  • #3
  • Edited 5:08pm Jan 5, 2007 4:23pm | Edited 5:08pm
thanks for commenting pipmyway, but it's not only the engulfing pattern, it was just an example. What do you do with the bearish hold line for example?
Or what about the evening star?
The star does mostly not gap away from the preceding body, so you have rarly a evening star in forex.
Maybe some comments?
I'm getting there ... slowly
  • #4
  • Jan 5, 2007 5:40pm Jan 5, 2007 5:40pm
just a ramble as the trading week dies down. I really like Steve's book, have it as a handy reference on my TSdesk. One thing i began doing (though my posted charts show darker candle colors for reference) is subduing the candle colors as they relate to the body color. I've found this easy on my eyes when doing some quick trend line and TA work. I came to this after reading various articles by Tom DeMark (and his TA book) on how often times the body open/close is of greater siginificance than the H/L. Your post on Steve's comment adds more value to what DeMark has stated. Thanks for the tidbit!

: ) Thom
  • #5
  • Jan 5, 2007 7:02pm Jan 5, 2007 7:02pm
I've been taking advantage of the real bodies in engulfing patterns too.

I don't know if it's me, but with how fast forex moves, some times using engulfing patterns that totally encase the previous bar/candle can be too late. Often the final bar/candle of the pattern will actually take out the next reasonable target as well, making it useless for trading to me. I like trades where I'm in profit quickly. That requires a close first target that I'm pretty sure will be hit at the least. Using real bodies creates more trades where this is likely.

BTW, as another point...

I'm often using real bodies for my supports and trend lines. And often even for my fib drawing (I use both ways in unison).

Overall , the same thing just seems to apply as always does. ...If you play any of these formations off of good confluence of strong support/resistance, or even just good swings high/low you increase your chances of success tremendously.

,Bundy
Bundy's status today: "Waiting..."
  • #6
  • Jan 5, 2007 8:33pm Jan 5, 2007 8:33pm
Quoting miketoll
hi there,
Since iam reading Nison's "JAPANESE CANDLESTICK CHARTING TECHNIQUES" iam often confronted with the individual candlestick patterns which i cant apply to forex trading.
The reason is that many of his patterns need gaps between the real bodys.
For example the engulfing patterns have to open below or above the preceding SHADOW. But as is it mostly in forex the opens are the same as the closes, so a engulfing is very very rare, although it is so powerful.
It's difficult to explain what my main problem is, but i hope you can see it.
It's just that i cant take advantage of the candlesticks, because they often need gaps between the close and the opens (or the real body as Nisons says). And i dont want to use only hammers and the shooting star, hanging man, because i think candels represent in a good way the price and are good for forecasting. So are all the other candlestick patterns useless in forex?
I really hope to hear some statements of you to this.
Thank you very much in advance
Greetings
-mike
i've only been using candlesticks for a week and it has already shown strong potential. You have to remember that price action has some subjectivity in it. Meaning that, not all patterns will develop perfectly.

For example, a hanging man doesn't necessarily have to have shadow that's 2x the body. When you see similar patterns that are in the book, you have too look at other timeframes to see how price action behave there.

since forex is a 24hr market, you must know that gaps are rare. So if you see a star with no gap, treat it like a star. As Steve said, each market has its own unique profiles.

I believe all the patterns in his book are legit. If you want to be a candlestick master you must learn them, memorize them, and apply them. I'm sure there are people out there who just trade off these prices with support/resistance and are very successful.

Even when he talks about different markets, one thing is for sure, market psychology is the same whether you're from new york, or you live in japan. Price action gives a glimpse of the market psychology and helps you determine the PROBABILITY of it's future movement..
  • #7
  • Jan 5, 2007 8:44pm Jan 5, 2007 8:44pm
Candlesticks are not an exact science. A valid candlestick engulfing pattern or a hammer or a dark cloud cover do not have to necessarily be right by the tick.

Just look at the overall context and you'll be fine.

As to the engulfing patterns, when you trade instruments that don't gap, like FOREX or intraday charts, the engulfing candlestick opens at the close of the previous candlestick and that should be just fine as long as the it engulfs the rest of the body.

Example:

Candlestick 1: open @ 1.3050 close @ 1.3070

Candlestick 2: open @ 1.3070 close @ 1.3040

That is bearish engulfing to me.
  • #8
  • Jan 5, 2007 10:29pm Jan 5, 2007 10:29pm
hello everybody, can you tell me where i can download this e-book? many thanks b4
  • #9
  • Jan 6, 2007 3:34am Jan 6, 2007 3:34am
At first i want to thank you! I think i've got the main idea, which you want to convey to me. But still i have 2 questions:

1. What do you do with e.g. a "counterattack line"? They seem to be impossible, because of the reason i already mentioned (The second body needs a huge gap to close at the preceding close). Do you just ignore them, or is there another way to trade this and similiar patterns?

2.Another thing which is not really clear to me is, that you said that in case of a "dark cloud cover" the 2nd real body has to move deeply in the preceding body, BUT doesn't have to open above the first shadow. (Because also this is very very rare in forex). However when i was reading the book it seemed that Mr. Nison tried to underscore how important it is that the 2nd open is above the first upper shadow (because this is actually what forms the dark cloud cover).
So, are the candle formations still true and particularly SIGNIFICANT candlestick patterns, although i generalize them so much?

Please remember these were also only examples. There are many similiar of these scenarios.
I hope you can help me once again.
Thank you!
-mike

@ochay: I bought the book, i dont know if there's an ebook. But one thing is sure, if there's an ebook, it will be certainly illegal.
I'm getting there ... slowly
  • #10
  • Jan 6, 2007 6:52am Jan 6, 2007 6:52am
http://www.candlecharts.com/dvds/index.html

I recently purchased two candlestick charting videos where Steven Nison addresses all these questions, concerns, and issues, regarding using candlestick patterns for forex trading. It was eye-opening to say the least. Candlestick DO in fact work quite well with forex even though the open and close of most candle are the same. You can still see your morning stars, bullish/bearish engulfing, dark clouds/piercing patters, harami's, etc....

Like bunny said, for the most part you look at the real bodies of the candles. Wicks are good too when looking for hammers, spinning tops & such. The url above is where I got the videos. They are awesoem. I also attended Steve's live forex trading seminar here in New Jersey where we could personally ask him such questions. They do work.
  • #11
  • Jan 6, 2007 8:33am Jan 6, 2007 8:33am
Quoting ItalianSharp
Candlesticks are not an exact science. A valid candlestick engulfing pattern or a hammer or a dark cloud cover do not have to necessarily be right by the tick.

Just look at the overall context and you'll be fine.

As to the engulfing patterns, when you trade instruments that don't gap, like FOREX or intraday charts, the engulfing candlestick opens at the close of the previous candlestick and that should be just fine as long as the it engulfs the rest of the body.

Example:

Candlestick 1: open @ 1.3050 close @ 1.3070

Candlestick 2: open @ 1.3070 close @ 1.3040

That is bearish engulfing to me.
It depends where this happend, it could be a pin bar split in half when the chart changed time frames. That is the first candle reached it's high of 1.3070 in the last second of the period.

Roy
Polishing my crystal ball
  • #12
  • Last Post: Jan 7, 2007 8:15pm Jan 7, 2007 8:15pm
Quoting ItalianSharp
Candlesticks are not an exact science.
Tell that to the Asians that are decendants of those that invented them. The FIRST Indicator that Incorpoates {nea} Displays Price Action.
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