the candlestick forecaster

Copyright 2000 Highest Summit Technologies Sdn Bhd.All Rights Reserved.

The Candlestick Forecaster

Samurai Edition

User Manual


LICENCE AGREEMENT

THE CANDLESTICK FORECASTER software constitutes a CD havingcopyrighted computer software accompanied by a copyrighted user manualin which all copyrights and ownership rights are owned only by HighestSummit Technologies Sdn Bhd (HST).

HST grants to you a non-exclusive license to use a copy of The CandlestickForecaster software on a single computer and the terms of this grant iseffective unless violated.

You may call and discuss with us by telephone any questions about theinstallation and use of The Candlestick Forecaster software by calling ouroffice at (603) 245-5877, fax us at (603) 245-6792 or email us [email protected]. We reserve the right to discontinuetechnical support at anytime without notice to you.

You are not entitled to sub-license, rent, lease, sell, pledge or otherwisetransfer or distribute the original copy of The Candlestick Forecastersoftware. Modification, disassembly, reverse engineering or creatingderivative works based on the software or any portion thereof is expresslyprohibited. Copying of the manual is also prohibited. Breach of theseprovisions automatically terminates this agreement and subjects you tofurther legal implications.

The Candlestick Forecaster is warranted for ninety (90) days from the dateof purchase to be free of defects in materials and workmanship undernormal use. To obtain replacement of any material under this warranty, youmust return the inaccurate CD or copy of the manual to us within thewarranty period or notify us in writing within the warranty period that youhave found an inaccuracy in The Candlestick Forecaster software and thenreturn the materials to us. This limited warranty covers the original user (thepurchaser) and HST makes no other express warranties.

ANY AND ALL IMPLIED WARRANTIES RELATING HERETO ARELIMITED IN DURATION TO THIS NINETY-DAY WARRANTY PERIOD.REPLACEMENT OF CD OR THE MANUAL IS YOUR EXCLUSIVEREMEDY AND SOLE MEASURE OF RECOVERABLE DAMAGES.

THE CD AND THE MANUAL IS LICENSED “AS IS” WITHOUTWARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDINGBUT NOT LIMITED TO THE IMPLIED WARRANTIES OFMERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.HST DOES NOT WARRANT THAT ANY FUNCTIONS CONTAINED INTHIS PACKAGE WILL MEET YOUR MANUAL REQUIREMENT OR THAT


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WE SHALL HAVE NO LIABILITY TO YOU OR ANY THIRD PARTYREGARDING THE CANDLESTICK FORECASTER SOFTWARE INWARRANTY, CONTRACT, AND TORT OR OTHERWISE. IN NO EVENTWILL HST BE LIABLE FOR ANY DIRECT, INCIDENTAL, SPECIAL,INDIRECT, GENERAL OR CONSEQUENTIAL DAMAGE OR LOSS OFANY NATURE (SUCH AS DAMAGE TO PROPERTY, DAMAGESRESULTING FROM INACCURACY, INCOMPLETENESS, SOFTWAREINSTABILITY, CLAIMS FROM USER OR THIRD PARTIES LOSS OFPROFITS OR FINANCIAL INJURY TO PERSONS) WHICH MAY ARISE INCONNECTION WITH THE USE OR INABILITY TO USE THE PROGRAMOR MANUAL. THIS CLAUSE SHALL SURVIVE FAILURE OF ANYEXCLUSIVE REMEDY.

IMPORTANT NOTEInvestments involve risks, including possible loss of principal and otherlosses. This program is designed to provide a training tool for theunderstanding of technical analysis of the financial markets. It is licensed tothe End-User with the understanding that HST is not engaged in renderingany investment or other professional advice. If investment or otherprofessional advice is required, the services of a competent professionalperson should be sought. HST will not be responsible for any losses or lostprofits resulting from investment decisions based on the use of thisprogram, information obtained through use of this program, or otherwise.

The laws of Malaysia govern this agreement. In the event a provision of thisAgreement shall be held unenforceable, it shall be deemed severable fromthe remaining provisions and shall in no way affect the validity orenforceability of this Agreement.

Copyright 2000 Highest Summit Technologies Sdn Bhd. All RightsReserved.


INDEX

CHAPTER 1: INTRODUCTIONWELCOME ………………………………………………………… 1DOCUMENT CONVENTIONS ……………………………………. 3

CHAPTER 2: GETTING STARTEDHARDWARE REQUIREMENTS …………………………………... 5PRE-INSTALLATION CHECK LIST ………………………………. 6INSTALLING THE SAMURAI ……………………………………. 7LAUNCHING SAMURAI FROM WINDOWS ……………………. 7CANDLESTICK FORECASTER MAIN SCREEN ………………... 8SETTING THE PROGRAM DEFAULT …………………………… 9ACCESSING SAMPLE DATA …………………………………….. 10

CHAPTER 3: OVERVIEWTRADING WITH CANDLESTICK ANALYSIS …………………... 11

WHAT CANDLESTICKS REPRESENT? ……………………. 14SAMURAI CANDLE TOOLS …………………………………….... 17

THE CANDLE BOX ………………………………………….. 17THE ANALYSIS WINDOW …………………………………... 18THE CANDLEWATCH …………………………………….. 19THE CANDLEVISION ……………………………………... 20PROFIT TESTING MODULE ………………………………… 21TRADER'S LOG ………………………………………………. 22

CHAPTER 4: NAVIGATING THROUGH SAMURAIMOVING AROUND IN SAMURAI ……………………………….. 23THE MENUS ………………………………………………………... 24

THE FILE MENU ……………………………………………... 25THE DISPLAY MENU ………………………………………... 25THE OPTIONS MENU ………………………………………... 26THE QUICK ARROW MENU ………………………………... 26THE CANDLEWATCH MENU ……………………………. 27THE CANDLEVISION MENU …………………………….. 27THE DOWNLOAD MENU ……………………………………. 28THE WINDOWS MENU ……………………………………… 28THE HELP MENU ……………………………………………. 29

KEYBOARD SHORTCUTS ………………………………………... 30SPEED BUTTONS ………………………………………………….. 31RIGHT MOUSE BUTTON POP-UP MENUS ……………………… 32

BEGIN ANALYSIS ……………………………………………. 32CHART OPTION ……………………………………………… 33LIBRARY OPTIONS ………………………………………….. 34TECHNICAL INDICATORS …………………………………. 35


CANDLEWATCH …………………………………………... 36CANDLEVISION …………………………………………… 36

CHAPTER 5: GATHERING & MODIFYING DATADAILY DATA UPDATES ………………………………………….. 37MANUAL ENTRY FROM DISK …………………………………... 38

EDIT SPECIFIC PRICE DATA ………………………………. 38

CHAPTER 6: MANIPULATING CHARTSLOADING CHARTS ……………………………………………….. 39CHANGING THE FILE TYPE ……………………………………... 39GROUPING …………………………………………………………. 42

SETUP CHART TABS ………………………………………... 42CHANGING THE APPEARANCE OF THE CHART ……………... 44

TECHNICAL INDICATORS ………………………………… 45LIBRARY SETTINGS ………………………………………… 46CHART OPTIONS …………………………………………….. 47DIRECTORY SETTINGS …………………………………….. 48

COMPRESSING DATA …………………………………………….. 49CHANGING THE INDICATORS DISPLAYED ON YOUR SCREEN.. 51

DISPLAYING TECHNICAL INDICATORS ………………… 51STOCHASTIC OSCILLATOR …………………………... 52MOVING AVERAGES …………………………………... 53RSI – RELATIVE STRENGTH INDEX …………………. 54RMI – RELATIVE MOMENTUM INDEX ……………… 55WILLIAMS PERCENT RETRACEMENT ………………. 56DISPLAYING VOLUME ………………………………… 57LEGENDS ………………………………………………… 58

SAVING CUSTOM PAGES AND PRINTING CHARTS …………. 59SAVING CUSTOM PAGES …………………………………... 59PRINTING CHARTS ………………………………………….. 60

KEEPING NOTES WITH TRADER'S LOG ……………………….. 62

CHAPTER 7: ANALYZING CHARTSMANIPULATING THE CANDLE POINTER ………………………. 63ANALYZING A CANDLE …………………………………………. 63USING CANDLEWATCH ……………………………………….. 65

SELECTING FILES TO WATCH ……………………………. 66STARTING THE CANDLEWATCH ………………………. 68THE CANDLEWATCH REPORT …………………………. 70

USING CANDLEVISION ………………………………………... 72STARTING THE CANDLEVISION ……………………….. 73CANDLEVISION FLAGS ………………………………….. 76

WHAT ARE CANDLEVISION FLAGS? ……………... 76EXPLANATION OF VISION FLAGS …………………... 77DEMARK SEQUANTIAL FLAGS ………………………. 79


WHY VISION FLAGS ARE IMPORTANT ……………… 80WHEN TO USE VISION FLAGS ……………………….. 80

PROFIT TESTING MODULE ……………………………………… 81SETTING THE OPTIONS …………………………………….. 82

CHAPTER 8: TECHNICAL SUPPORTCANDLE ASSIST …………………………………………………... 85

APPENDIXCUSTOM PAGES …………………………………………………... 87MAIN MENU AND HOT KEYS FUNCTIONS …………………… 88NEW TOOL BAR FUNCTIONS …………………………………… 89EXTENDED PATTERN GROUPS .………………………………… 93

CONFIRMATION …………………………………………….. 93CONTINUATION ……………………………………………... 95

A BUY SCENARIO ………………………………………. 96CONFLUENCE ………………………………………………... 98

CLUES AND SUGGESTION FROM CANDLESTICKS ………….. 100THREE LINE NEW PRICE BREAK ……………………………….. 102

THREE LINE NEW PRICE BREAK TRADING RULES ……... 103TOM DEMARK SEQUENTIAL PATTERNS ……………………... 105

THE SETUP …………………………………………………… 105TAKAHIRO HIKITA PATTERNS …………………………………. 107TRENDING CANDLE/BODY REVERSAL PRINCIPLE …………. 108

A TRENDING CANDLE (TC) ………………………………... 108A BODY REVERSAL (BR) …………………………………... 109AN UPWARD TREND ………………………………………... 110A TREND REVERSAL ………………………………………... 111A BULLISH TREND ………………………………………….. 112A BEARISH TREND ………………………………………….. 113GAP IN TREND ……………………………………………….. 114TREND-STOP LEVEL ………………………………………... 115VALID TC/BR ………………………………………………… 115

ADVANTAGES AND PROPERTIES OF THE TC/BR SYSTEM …... 116TRADING TIPS WITH THE TC/BR SYSTEM ……………………. 118

GLOSSARYBASIC CANDLE FORMATIONS ………………………………….. 121RECOGNISING DAILY CANDLE PATTERNS …………………... 122THE EMPTY (WHITE OR RED) POLE LINES .…………………... 122PATTERN DESCRIPTION …………………………………………. 122PATTERN INTERPRETATION ……………………………………. 125FULL (BLACK) POLE LINES ……………………………………... 128PATTERN DESCRIPTION …………………………………………. 128PATTERN INTERPRETATION ……………………………………. 130THE LINE AND STAR CANDLE ………………………………….. 133


PATTERN DESCRIPTION …………………………………………. 133PATTERN INTERPRETATION ……………………………………. 134MULTIPLE CANDLE PATTERNS ………………………………… 137PATTERN DESCRIPTION …………………………………………. 137PATTERN INTERPRETATION ……………………………………. 142


CHAPTER 1: INTRODUCTION

WELCOMETO

THE CANDLESTICK FORECASTER SAMURAI

Candlestick charting was probably first used to describe theprice movements of the Japanese rice market in mid of 1700s,Although some believe the chart may have been developed acentury later for use in the silver market in Yokohama. Anycharting technique endeavors to convey numeric information ingraphical format. Candlestick charts accomplish this with typicaloriental elegance, conveying a great deal of information clearlyand succinctly. By using Candlestick charts, traders can grasppatterns and price movements at a glance.

The Candlestick Forecaster Samurai (which we will refer to inthis User’s Guide as Samurai) has been specifically designedto work in Windows 95/98/2000. It has been meticulouslycrafted to give you the optimum in speed and efficiency withoutsacrificing the accuracy of the program’s BUY/SELLrecommendations.

The Candlestick Forecaster Samurai is an advanced patternrecognition system that filters Western technical oscillators andother mathematical algorithms into its analysis to producesimple, easy-to-understand messages about future marketprice moves. This program reads over 25 different type of datafiles to easily integrate with your existing trading software. Incomputer vernacular, Samurai is a highly advanced, pre-trainedexpert system that incorporates fuzzy logic based reasoningsystems.


Highest Summit Technologies began developing this programin 1990 and has continued to provide high quality software toolsspecifically designed to incorporate Japanese candlestick pricepatterns to an ever growing population of savvy traders.

This program contains a patter library that consists of over1300 complex price patterns and technical indicator’s patterns.These patterns, and this program’s ability to identify them, willbe your key to success when trading.

You will quickly learn to identify each variation of the pricepatterns and what each pattern means to you by reading theindicator windows that appear during the analysis of a chart.These window will present all of the relative informationregarding the specific pattern that was found and any particulartrading information relevant to the pattern and the market,including protective stop loss levels.

Other features included within this program will assist you besaving countless hours of analysis work each day. TheCandleWatch and CandleVision features are designed toquickly automate your daily scanning and back-test your entiredatabase of markets/stocks for price formations, buy and sellsignals, and other signals.


DOCUMENT CONVENTIONS

The following is a list of terms, signs, and styles usedthroughout the Candlestick Forecaster Samurai User’s Guide.

CONVENTION DESCRIPTION

Samurai Refers to the CandlestickForecaster SamuraiÔ Edition

Windows Operating system / platform:Microsoft Windows95/98/2000

Click To locate the item ofreference, move the mousepointer to the specified itemand single click on the itemwith the left mouse button.. (Ingeneral, all references to themouse button are intended toindicate the left button unlessotherwise specified.)

Double-click To locate the item ofreference, move the mousepointer to the specified itemand double click on the itemwith the left mouse button.


CHAPTER 2: GETTING STARTED

HARDWARE REQUIREMENTS

The Samurai has been developed using the latest applicationdevelopment tools for Microsoft Windows 95/98/2000.Therefor, this software application will take full advantage ofyour computer’s resources.

Ideally, the Samurai should be run on a Pentium processor butwill operate on lesser systems. The minimum recommendedhardware requirements to properly operate The Samurai are asfollows:

IBM (or 100% IBM Compatible) computer system with:133Mhz (or better) processor16 Megabytes of RAM10 Megabytes of available hard drive spaceVGA or SVGA Monitor

Additional Peripherals:Any Windows supported printer

Although the suggested minimum hardware requirements mayexceed your computer’s capabilities, The Samurai may stilloperate properly on your computer. It may react a bit slowerthough, because of reduced processing speed and availableRAM.

If you believe your computer system does not include therequired hardware to run this program, contact your localcomputer dealer to inquire about upgrading your system. Inmost cases, an upgrade of the processor and RAM is all that isrequired. If your computer is an old model, it may be in yourbest interest to look into a new computer system.


Often, upgrading these older systems can be more costly thanpurchasing a new system from your computer dealer. Also,some computer dealers will take your old system in partial tradefor the new system.

PRE-INSTALLATION CHECK LIST

You should know a few things before you begin installing thisprogram to help you along. These items will assist you in asmooth installation and easy operation of the program in thefuture.

First, this program will require approximately 15 megabytes ofhard disk space to completely install. Use the WindowExplorer or My Computer to verify that your hard disk hasadequate available disk space. If your hard disk does not haveenough free disk space, you may need to delete some files tomake enough available disk space to install this program. Ifyour hard disk does have enough free disk space, then youmay continue.

Next, insert the installation CD into your CDROM drive. Theinstallation will start automatically. If it does not start, pleaseselect RUN from your Windows Start Menu, and run theSETUP.EXE file inside this CD. The installation process isnormally quick and painless. The installation process(described on the following pages) has been designed to allowyou to follow the on-screen prompts and should be self-explanatory. However, if you feel uncomfortable, STOP and callthe technical support department at +603-245-5877 (Malaysia).


INSTALLING THE SAMURAI

The installation of Candlestick Forecaster Samurai will takeapproximately five to ten minutes, depending on your systemresources.

INSTALLING WITH WINDOWS 95/98/2000

1. Insert the Samurai installation CD into CD-ROM drive.2. Autorun will start the installation program for you. (There are

some cases where your computer does not start theAutorun function. If that happens, please select RUN fromyour Windows Start Menu, and run the SETUP.EXE fileinside this CD.)

LAUNCHING SAMURAI FROM WINDOWS

As with all Windows programs, the Samurai installationprogram will create a program group, which contains the icon tostart the Samurai program. Follow the instructions below toload and execute the Samurai program.

LAUNCHING FROM WINDOWS 95/98/2000

1. Click on START button.2. Click on the PROGRAMS item.3. Click on the CANDLESTICK FORECASTER item.4. Click on the Candlestick item with the icon below:


CANDLESTICK FORECASTER MAIN SCREEN

Samurai puts a great deal of information on the screen for you.The following illustration gives you an overall idea of wherethings are and what they look like.


SETTING THE PROGRAM DEFAULT

Before you begin using this program’s advanced features, you arerequired to complete a simple setup procedure that tells this programwhere to find your data files and what preferences you may have forthe western technical and chart settings

1. Click on the OPTION menu items.2. Click on SETUP DEFAULT OPTIONS, or press CTRL-D.3. Once the Default Settings screen appears, click on the

DIRECTORY SETTINGS tab.

4. Click on the File type that matches your data files and then usethe directory box to select the proper data directory.

Note:You may setup as many types of data files as you wish. If you havemore than one type of data file, you should continue to setup all ofthem before you continue using this program. If you are using ASCIIfiles, remember to include the Default File Extension you wish touse.


5. When you are finished setting your Default File Type andDirectory Settings, click on the OK button.

ACCESSING SAMPLE DATA

The program also comes packed with some sample data(Metastock format) which you can use to familiarize yourselfwith this program. These sample data are located in theC:\CSFWIN\SAMPLES directory.


CHAPTER 3: OVERVIEW

TRADING WITH CANDLESTICK ANALYSIS

Japanese Candlestick Analysis presents a short term leadingindicator for market reversals. Because of the fact thatcandlesticks most accurately identify the short-term reversals ofany market, this technique best adapts to traders who aretypically looking for short-term moves. The candlesticks oftenidentify market reversals a few days before most Westerntechnical oscillators. This means Candlesticks should provideyou with an edge over other traders who are not using them.This software has been designed to automate the analysis ofcomplex price patterns so you won’t need to spend countlesshours completing the process yourself. The unique method theSamurai uses of prompting you with detailed analysis for eachprice pattern allows you to continually learn the different priceformations and their meanings. With time and study on yourpart, you will be able to instantly recognize hundreds ofcomplex price patterns on your own.

The Samurai program also incorporates Western technicalindicators into its analysis so that you can better estimate theprobability of each price pattern’s occurrence. If the Samuraitells you that one pattern may have a greater chance ofsuccess than another, it is taking into account certainconditions, which exist with the Western indicators. In theSamurai, you may choose to enable or disable the visualdisplay of each technical indicator, but the program willcontinue to utilize all the indicators in its analysis. It will simplydo so in the background, unobtrusively.


Changing the technical indicator settings will affect the analysisresults. Sometimes, traders prefer to trade the long-term trendof individual markets, thus they may change the technicalindicators to match their trading style. If they then decide totrade the short-term trend, the long-term indicator settings willrequire modification. The Samurai handles these changes bystoring your preferred technical settings in a unique file that iscontinually used for the specific market or issue. Thus, whenyou change the technical indicator to your preferred settings,you should store them in a Custom Page so that they can beretrieved for future use. You can always change these settingsif you decide to and re-save them back to the Custom Pagewhen finished, or you can revert to the default settings for thetechnical indicators.

If you are more of an intermediate or long term trader, thisprogram allows you to compress any daily chart into a weeklyor monthly chart. This provides you with the ability to betteridentify the long-term trend reversals that often mature intodrastic price movement. Remember, candlesticks can beapplied to any time frame (daily, weekly or monthly). Even aftera day chart has been compressed to a weekly chart, thecandlesticks will accurately predict the market reversals asclearly as if it were a daily chart. It is best to use both the dailyand weekly charts to identify key market reversals. Sometimesthis program may not find a signal on a daily chart, yet a clearsignal will be found within the weekly to balance the priceactivity over time ratio by using the daily and weekly charts.


The Samurai is totally unique from its competition because ofthe extended candlestick patterns that are included within itslibraries. The developers began coding all of the commoncandlestick patterns into the library from the very beginning ofthis software product’s evolution. In an attempt to make it asfluid as possible, the developers included these extendedpattern groups because they were designed to present the userwith patterns or information about the current trend with everynew trading session. These extended pattern groups aredetailed in Appendix.


WHAT CANDLESTICKS REPRESENT?

The candle “body” is a rectangular box drawn between thesession open and close prices. Vertical lines extending from thetop and bottom of this box or body reach to the session highand low prices. These lines are sometimes referred to as“shadows” or “tails”. If the trading session closed higher thanthe previous session (in other words, an “up” day), the candlebody is represented with a particular color. Usually, “up” daysare represented with white or unfilled candle bodies. “Down”days, in which the session closed lower than the previoussession, are filled with another color, generally black.

As you can see from the above illustration, traders can quicklygrasp a great deal of information about a trading day from evena single candle. The color of the candle body tells us whetherthe bulls or the bears took charge of any given trading session.The size of that body tells us how decisively that particularbattle was won. The smaller the candle body the more balancethe power struggle between buyers and sellers.


There are a few basic candle formations, illustrated by a singlecandle, which are worth describing at this point. Thesignificance of each formation and the patterns that may evolvearound these formations are detailed in Appendix.

When opening and closing prices are the same (or almost thesame for practical purposes) for any given session, the candletakes on a particular formation known as a doji (do-gee). Thiseasily recognized formation represents a true balance orequilibrium between bulls and bears.

Another important formation to look for is the Hammer (or theHanging Man, depending upon which direction the market isheaded). This formation is represented by a long shadow/tail,underneath a fairly small candle body with no/almost no,shadow above the body. Following a price decline, this patternrepresents the increasing strength of the buyers. (The priceopened near the high, sold off during the session, but closednear the high again).


The Hanging Man follows a price up-trend. in this case, thelength of the tail represents the efforts of the sellers to bring theprice down. The price still closes near the open, but the tailserves as a warning signal of a potential shift in direction.

As you can readily see, even a cursory familiarity withcandlestick charting is extremely useful to traders. Variouscombinations of candles quickly provide an in-depth priceanalysis. Coupled with Western technical indicators,candlestick analysis becomes an invaluable weapon in thetrader’s arsenal.


SAMURAI CANDLE TOOLS

THE CANDLE BOX

The CandleBox is a formidable piece of the Samurai arsenal.This interactive window displays an image of the candle itself(color, size of body and shadow), and all of the price andtechnical indicator data for any individual candle on the activechart. There is no need to actually select a particular candle,you simply need to position the mouse pointer over the candleyou want to analyze, and the CandleBox will display therelevant information. As you move the mouse pointer fromcandle to candle, the information in the CandleBox willchange to reflect the new position.

The bottom of the CandleBox contains the Signal and FlagBar. This feature is tied directly to the CandleVision featureand is described in detail in Chapter 7.


THE ANALYSIS WINDOW

The Analysis Window is one of the strongest features of theSamurai. Unlike the Candlebox, which displays the rawnumerical data, the Analysis Window provides you with expertinterpretation of what those number means. The AnalysisWindow is as close as you can come to having a trading expertsitting besides you explaining each trading day to you!

To analyze a single trading day on your chart, simply click onthe day you want this program to analyze, and click on thebutton below

or by pressing Function number 6-(F6) key. The AnalysisEngine will scan the selected location for all patterns anddisplay them to you, one by one.


THE CANDLE WATCH

The CandleWatch is a unique feature that allows you toselect and scan any combination of your data files for tradingsignals, in an automated process. The CandleWatch isspecifically helpful for investors that track large numbers ofstock or commodities. This feature allows you to savethousands of hours of analyzing individual charts for effectivecandlestick patterns.

The CandleWatch feature will scan your entire database forcurrent or past signals. The CandleWatch will produce areport of all, or any particular signals you wish to view. Thesereports provide you with an easy means of identifying specificbuy or sell signals, as well as a means of creating a hard copyof past signals that you can refer to. The CandleWatch alsoreports other types of signals, such as bottom, tops, bullish orbearish reversals and breakout signals. Therefor, you can oftenfind stocks or commodities generating effective trading signalsdays before the big price move happens.

Ideally, you would complete a “Daily CandleWatch” scaneach day for the stock issues and/or commodity contracts youwish to track. After the CandleWatch function has finishedscanning your selected files, you need to generate a fewreports to what patterns could be found. From these you willattempt to isolate the individual candlestick signals, which arepresenting you with the best potential for a profitable trade.Remember, the daily Watch is more likely to generateintermediate to long term signals.


You may create as many file lists as you want, with as many oras little of your database files as you want. But, you must haveat least one list of files to watch before you can begin aCandleWatch.

CANDLE VISION

The CandleVision is a feature of Samurai, which allows youto scan or back-test all, or a specific portion of historical pricechart for price patterns contained within the program libraries.This feature is commonly used to quickly scan an area of priceactivity you might want to study, to back-test trading signals forprofitability, or to get a quick detailed glance on the chart’spattern activity.

The CandleVision feature uses your Western Technicalsettings and Library Option settings when completing itsanalysis. So, you may want to make sure these values andoptions are set accordingly for the test before you start.

CandleVision allows you to automatically search a block ofhistorical data for any type of candlestick pattern. This featurealso builds a complete database of all the information and textmessages generated by our copyrighted libraries which isuseful when attempting to back -test the candlestick patternsaccurately predicted market reversals, test for profitability andmore.


CandleVision includes many different types of reports whichallows you to review any pattern found or condition that mighthave affected the result of a signal. A unique fact about theCandleVision is when it completes its task, it associatesdifferent types of colored makers to each candlestick. Thesemarket will appear in the Signal and Flag Bar of theCandleBox and will assist you in instantly digesting theresults of the historical scan for patterns.

PROFIT TESTING MODULE

The Profit Testing Module allows you to test all of thecandlesticks, and other signals that were included in theCandleVision, for profitability.

After you have completed a CandleVision on a particular chart,you can open the Profit Testing Module and determine whichtrades were winners (or losers). This module has severalvariable factors which can be controlled by the user that willmake the profitability analysis as accurate as possible for eachindividual trader and each individual chart.

The user can control the following variables:

1. Dollar Per Point Movement§ Since many traders watch both stocks and commodities,

this number will vary depending upon which chart isbeing analyzed. For a Futures chart, this number wouldreflect the number of contracts traded (Dollar amount fora price move from $1 to $2.). For a stock chart, thisnumber would reflect the number of shares traded.


2. Commission Per Trade§ This number reflects the dollar amount paid per trade.

For Options trader, this would be the amount paid perround turn.

3. Slippage Per Trade§ This number reflects the percentage of slippage allowed

per trade.

As you can see, the Profit Testing Module will make calculatingprofits and losses easy, even for those traders that dislike doingmathematical calculations. You can easily plug in the variablesand let your computer do the work.

Another feature of the Profit Testing Module is the reportingoptions. You can choose to have the results of the analysisreported in the form of a written report, which can be put toprint, or in the form of a graph, or both.

TRADER’S LOG

The Trader’s Log is a word processing utility embedded directlyinto the Samurai program. This utility, which functions exactlylike a standard word processor or text editor, allows you todocument your thoughts and analysis of individual chartswithout leaving the program.


CHAPTER 4: NAVIGATING THROUGH

SAMURAI

MOVING AROUND IN SAMURAI

There are a number of ways to move around within Samurai.The Main Menu, located at the top of the screen, allows you toaccess all the program features easily. There are also keyboardshortcuts associated with many of the menu features. Once youhave become familiar with the program, you will probably findthat keyboards shortcuts become second nature.

We have also included a Right-click pop-up menu, which allowsadditional control of the program. The pop-up menu containsmany of the options within the main menu, so you can accessmost features from either menu. Below the main menu you willsee two series of icons called Speed Buttons (ShortcutButtons). These Speed Buttons will take you directly intocertain Samurai functions, without having to go through themain menu. All of the buttons include hints. When you movethe mouse pointer over a button and wait a few seconds, thehint will appear telling you what the button does.


THE MENUS

Samurai uses a standard Windows menu format as theprinciple means of navigating through the program. As withother Windows applications, you can access all of theprogram’s features from within the menu structure. Simply clickon the menu, pull the mouse down through the list of availableselections and click on the function you want to use.

Sometimes you will see a symbol, pointing off to the right,alongside a particular menu selection (as you can seealongside the Open File Type selection of the File menu in theupcoming example). This indicates that there are additionalmenu items associated with this selection. Simply slide themouse pointer in the direction of the arrow, until you see theadditional menu choices and click on the selected once.

Alongside many of the menu items, you will see the symbols forthe keyboard shortcuts for that particular action.

Advanced and power users of the Samurai may find thatmanipulating the menus, sub menus and drop down menus isoverly time consuming. Besides simple keyboard shortcuts,which may require that you memorize more procedural detailsthan you can to, we have also included a series of SpeedButtons to facilitate your work.


THE FILE MENU

The File menu allows you to locate and specify types of files toopen, close, print charts and to modify the actual price datafields contained in those files.

THE DISPLAY MENU

The Display menu is used to manipulate some of the visualoptions of the chart. With this menu you can turn on and off anyof the Western Technical indicators, the volume display and theCandleBox. You can also compress a chart to Daily, Weekly,Monthly or Yearly data from the Display menu and to requestthe Analysis Results (which is the same as pressing F6).


THE OPTIONS MENU

The Options menu allows you to organize your thoughts and tocustomize your charts. You can modify certain aspects of thechart you are viewing and to save those specifications to“Custom Pages”. You can arrange charts on Chart Tabs,access your Trader’s Log, setup your directories and defaultoptions.

THE QUICK ARROW MENU

The Quick Arrow menu allows you to display BUY and SELLarrows on chart base on P.I. System Trader library.


THE CANDLEWATCH MENU

As we stated earlier, CandleWatch is the feature whichallows you to scan through all selected data for trading signalseach day. CandleWatch can be performed as often as youwish, but it is highly recommended that you perform thisfunction daily. You can select a set of charts to scan and save,modify or delete the chart list from this menu as well asbeginning the CandleWatch itself and generating customreports. This is explained in more detail in Chapter 7 -Analyzing Candles.

THE CANDLEVISION MENU

CandleVision is the function, which allows you to back-testall or some of your historical price charts for patterns identifiedby the extensive Samurai libraries. (For more details, seeChapter 7 - Analyzing Candles)


THE DOWNLOAD MENU

This menu allows you to setup and initiate your specificdownload software by setting the User Defined menu option.This allows you to initiate your download software directly fromthe Samurai without having to exit or minimize the program.

THE WINDOWS MENU

This menu gives you control over the arrangement of windowson your screen. You can arrange the windows vertically,horizontally, or you can cascade them so that they overlap,thus allowing you to put more charts on the screen. Thesefunctions are duplicated exactly in the Speed Buttons (SeeSpeed Button discussion).

THE HELP MENU

This menu will direct you to the user manual of CandlestickForecaster. By clicking at Contents, you will be able to openand read the manual in help file format.


KEYBOARD SHORTCUTS

While developing the Samurai program, we retained many ofthe old keystrokes you may be familiar with from the DOSapplication. For example, F6 still brings up the analysiswindows, F8 turns on or off Stochastic and F9 turns on and offMoving Averages. However, there have been some changesmade, so you will still need to learn a few of the differencesbetween the DOS keystrokes and the Samurai keystrokes.

Keyboard shortcuts are specified next to the particular menuitem they are associated with. This way, you don’t really haveto memorize the shortcuts. You will always have a reference inthe menus of the Samurai program.

FUNCTIONS SHORTCUT KEYSave Custom Page F3Stop Level F5Analysis Results F6Volume F7Show Stochastic F8Show Moving Average F9Show Williams % Retracement F10CandleBox Window Ctrl + BSetup Default Option Ctrl + DEdit Chart Data Ctrl + EIndicator Window Ctrl + IShow RMI Ctrl + MOpen Chart Ctrl + OProfit Testing Ctrl + PShow RSI Ctrl + RSetup Chart Tab Ctrl + TBegin Vision Ctrl + VBegin Watch Ctrl + W


SPEED BUTTONS

In order to facilitate your ability to move around in Samurai, wehave incorporated a number of Speed Buttons. These buttonsare located directly below the main menu.

The graphical depiction on these buttons represents the taskthat the button performs. However, if you find that any button’sfunction is unclear, you can position your mouse pointer overeach button and a balloon message will appear describing itsfunction.

Click once on the button and you will bypass the menu and godirectly into the specified function.


RIGHT MOUSE BUTTON POP-UP MENUS

Another convenient means of getting around in Samurai is viathe right-mouse button pop-up menu. This menu can beaccessed any time you are not actively engaged in anotherSamurai function. (For Example, you cannot access the pop-upmenu from within the Directory Settings function). Simply clickthe right mouse button and the menu below will appear on yourscreen.

BEGIN ANALYSIS will take you directly into the analysiswindow.

CHART OPTION has the following sub-menu which will pop-upwhen you drag the mouse pointer down to Chart Options.

As you can see, from this menu you can access all of thevarious options for viewing, customizing and saving yourcharts.


LIBRARY OPTIONS has the following sub-menu which willpop-up when you drag the mouse pointer down to LibraryOptions.

This menu gives you the ability to determine which library ofpatterns and analysis techniques Samurai will apply to thechart(s) you select. More information on each these libraryoptions can be found in the Appendix of this User’s Guide.

TECHNICAL INDICATORS has the following sub-menu whichwill pop-up when you drag the mouse pointer down to technicalindicators.

This menu shows you which indicators will be represented onyour charts(s).


CANDLEWATCH has the following sub-menu which will pop-up when you drag the mouse pointer down to Candle Watch.

NOTE: The select file options also has a sub-menu as shownhere.

CANDLEVISION has the following, which will pop-up whenyou drag the mouse pointer down to Candle Vision.


CHAPTER 5: GATHERING & MODIFIYING

DATA

DAILY DATA UPDATES

For the time being, Samurai does not have it’s own data updateutility, user have to look for their own end-of-day data fromnearest database provider. To make things running faster, wehave included a utility to call up your data downloadingsoftware. All you have to do is just enter the location of yourexe file to execute. And the program will remember it for you.

To setup, follow these steps:

1. Click on DOWNLOAD menu.2. Click USER DEFINED.3. Click SETUP.

To execute your downloader software, follow these steps:

1. Click on DOWNLOAD menu.2. Click USER DEFINED.3. Click LAUNCH NOW.


MANUAL ENTRY FROM DISK

EDIT SPECIFIC PRICE DATA

You can manually edit the specific price data on your charts.

1. Click on the FILE menu.2. Click on EDIT CHART DATA.

The following window will appear, displaying the Date, Open,High, Low, Close and Volume numbers for each candle onyour chart. Use the directional arrows at the bottom of thewindow to move from candle to candle. You can then positionyour pointer on any of the price fields, click the mouse buttonand edit the entry. You can also create new candles by clickingon the Add New button on the right side of the window.


CHAPTER 6: MANIPULATING CHARTS

LOADING CHARTS

After you have finished setting your default file type anddirectory settings, you can start loading your charts.

NOTE: Remember that since the Samurai can read many typesof data files, you must still tell this program what type of filesyou wish to open every time you change file types. After youhave selected an initial file type, the program remembers yourselection and will assume you are opening the same type of fileunless you tell it differently.

CHANGING THE FILE TYPE

1. Click on the File menu item.2. Click on OPEN FILE TYPE.3. Select the desired file type from the available options.


4. A standard file directory window will appear. Use the DRIVEand DIRECTORIES boxes to move about your hard drive(s)to find the directory where your data files are located.

NOTE: You may have files in multiple directories. If this is thecase, you can move between directories by clicking on theDIRECTORY box. If you are using Metastock, WordenBrothers or Telescan files, Samurai knows how to handlethese files types and will only display files in the files list boxwhen you have chosen a directory that contains one of thesespecific file types.

5. Once you have located your data file directory, you will seea listing of all the files in that directory in the box under FILENAME. Double click on the file you wish to open. (Or youmay single click on the file and then click the OK button.)

NOTE: Large data files may take some time to completely loadand display. If you have selected a file to download and theSamurai appears to be doing nothing, it is probably completingthe calculation of the Western technical indicators andpreparing the chart for display. Be patient with large data files.


GROUPING

Samurai contains a tabbing feature which allows you to group chartson the screen according to any parameters you wish, and then toswitch from one group to another by clicking on the appropriate tab atthe bottom on your screen.

SETUP CHART TABS

Chart tabs, located at the bottom of the screen, provide you with ameans to group your charts and to navigate among the opened chartson your screen. You can have a varying number of charts per tab(dependant on screen size, number of pixel, etc.), but for ease ofviewing, it is recommended that you limit the number of charts pertab to 4.

These tabs are used to control your page layouts. You may have up to255 individual tabs. Whenever you want, you can add, delete ormodify existing tabs through the SETUP CHART TABS option.

1. Click on the OPTIONS menu.2. Click on SETUP CHART TABS, or press CTRL + T. Samurai

will bring up the TAB CONTROL window (see example on nextpage), which will allow you to make any modifications you wishto your chart tabs.


3. Click on FINISH after you complete each modification.4. Click on OK button when you have made all the changes you

wish to make.

You can now click on a chart tab at the bottom of your screen andthen open the chart that you want to include in that group.


CHANGING THE APPEARANCE OF THE CHART

When viewing a chart, you may wish to control some of the ChartOptions , such as colors, number of bars on the screen, the WesternTechnical Settings and the Library Settings. All of these settings arecontained within the Samurai Setup Default Options screen (thesame screen you used to setup your default directories). Samurai willbring up the tabbed notebook window that contains the defaultsettings. Use the tabs on the top of this window to move between thedifferent default options. Once you have finished, click on OK tostore your settings for this particular chart, or click on the small boxlabeled DEFAULT to apply your settings to all of your charts.

1. Click on the OPTIONS menu (or click on the speed buttonbelow).

2. Click on SETUP DEFAULT OPTIONS (or press CTRL + D).

When the CSF SAMURAI SETTINGS window appears, you willnotice the screen is a tabbed dialog box containing four tabs, each ofwhich allows you to change specific chart options.


TECHNICAL INDICATORS

This tab provides control of the Western Technical indicator settings.


LIBRARY SETTINGS

This tab provides control of the interpretive library options, which areused within the analysis of a chart.


CHART OPTIONS

This tab provides control of the chart and candle color scheme, thenumber of points per screen, the grid lines and grid style.


DIRECTORY SETTINGS

This tab provides control of the default directory settings, which tellthe program where to look for your data.

When you have finished making changes on each page, click on theOK button.


COMPRESSING DATA

Compressing a chart is required when you want to view a Weekly,Monthly, Yearly or 3 Line Price Break chart. (See “BeyondCandlesticks” by Steve Nisson (Wiley, 1994), for more informationon the Three Line New Price Break chart.) The compression featurewill take the entire daily price chart and build a new price chart basedon your selected type of compression. Variable compression allowsyou to convert a daily chart into a candlestick chart where each singlecandle represents a number of trading days other than one day percandle. For example, a variable compression of 3 would create acandlestick chart where each single candle represents 3 trading dayscombined.

1. Click on the DISPLAY menu.2. Click on COMPRESS CHART.

The COMPRESS CHART menu will require you to select thecompression type that you wish to use, If you choose VARIABLE,you will be required to input the number of days you wish tocompress to.


Samurai will compress and bring up the new chart. Now you can useany of the program’s features to analyze the compressed chart in thesame way as you would on a daily chart.


CHANGING THE INDICATORS DISPLAYED ONYOUR SCREEN

DISPLAYING TECHNICAL INDICATORS

1. Click on the DISPLAY menu.2. Click on TECHNICAL INDICATORS.

You will then see a submenu listing all the Technical Indicators. Useyour mouse to click on any of the indicators to toggle them on or off.


Stochastic Oscillator

The Stochastic oscillator command toggles the stochasticoscillator graph on and off. For information on setting theStochastic oscillator values, see Setup Technical Settings.

Displaying stochastic oscillator:

1. Click on Display menu.2. Click Technical Indicators.3. Click Show Stochastic.ORPress on the speed button with the word STOORPress on the F8 keyboard key.

Stochatic oscillator toggled on


Moving Averages

The Moving Averages command toggles the Moving Averagesgraph on and off. For information on setting the MovingAverages values, see Setup Technical Settings.

Displaying Moving Averages:

1. Click on Display menu.2. Click Technical Indicators.3. Click Show Moving Averages.ORPress on the speed button with the word M.AORPress on the F9 keyboard key.

Moving Averages toggled on


RSI – Relative Strength Index

The Relative Strength Index command toggles the RSI graphon and off. For information on setting the RSI values, seeSetup Technical Settings .

Displaying Relative Strength Index:

1. Click on Display menu.2. Click Technical Indicators.3. Click Show RSI.ORPress on the speed button with the word RSIORPress on the Ctrl+R keyboard key.

RSI toggled on


RMI – Relative Momentum Index

The Relative Momentum Index (RMI) command toggles theRMI graph on and off. For information on setting the RMIvalues, see Setup Technical Settings.

Displaying Relative Momentum Index:

1. Click on Display menu.2. Click Technical Indicators.3. Click Show RMI.ORPress on the speed button with the word RMIORPress on the Ctrl+M keyboard key.

RMI toggled on


Williams Percent Retracement

The Williams % R (retracement) command toggles the Williams% R graph on and off. For information on setting the Williams %R values, see Setup Technical Settings.

Displaying Williams % R:

1. Click on Display menu.2. Click Technical Indicators.3. Click Show Williams % Retracement.ORPress on the speed button with the word WillRORPress on the F10 keyboard key.

Williams % R toggled on


DISPLAYING VOLUME

After you have loaded a chart, you can use the DISPLAY menu toturn on or off the VOLUME display.

1. Click on the DISPLAY menu.2. Click on VOLUME.

Volume toggled ON

Volume toggled OFF


LEGENDS

If you click on either Indicator Window when they are displayed atthe bottom of the screen, you will toggle the legend on and off. Youmay find that the legend tends to take up too much space on yourscreen to leave on all the time. Toggle it on when you need to look atthe information and then toggle it back off.

Legend displays the last value of current indicator.


SAVING CUSTOM PAGES AND PRINTINGCHARTS

SAVING CUSTOM PAGES

After you have loaded a chart and set the chart options to yourpreferences for this particular chart, you can choose to save thischart’s individualized settings to a Custom Page. This custom pagecan include the visual, technical indicators and library settings. Then,each time you call up that specified chart, the same settings will beapplied.

1. Set the chart options as described in Chapter 6, ManipulatingCharts.

2. Click on the OPTIONS menu.3. Click on CUSTOM PAGES.4. Click on SAVE CUSTOM PAGE, or press F3.

The Custom Page file will be saved for future use. If you want tochange these settings in the future, simply change the values andresave the Custom Page.

If you want to delete the currently saved custom page, chooseREMOVE CUSTOM PAGE and the file associated with the customsetting (not the actual data), will be deleted.


PRINTING CHARTS

Printing charts from Samurai is handled in the same manner as anyother Windows application. Go to the FILE menu and select PRINTSETUP. Make sure that the appropriate printer, paper size and pageorientation are selected.


Once you have completed the Print Setup, go to the FILE menu andselect PRINT. The Samurai will then print the active chart with thename of the chart at the top of the page.


KEEPING NOTES WITH TRADER’S LOG

Under the OPTIONS menu, you will find a feature calledTRADER’S LOG. This is a text editor, which you can accessdirectly from within Samurai that will allow you to keep personalnotes about each chart.

Trader’s log functions like any other Windows compatible text editor(i.e. Notepad), and comes with it’s own set of speed buttons tofacilitate your work.


CHAPTER 7: ANALYZING CHARTS

MANIPULATING THE CANDLE POINTER

The Candle Pointer is the vertical bar that allows you to pointto individual candles. This bar can be moved to differentcandles by pointing to a candle with the mouse pointer andclick, or by using CTRL + LEFT ARROW or CTRL + RIGHTARROW.

Note: You can only point to one candle at a time per chart.

ANALYZING A CANDLE

Samurai has two analysis features, the Analysis Window andCandleBox . The Analysis Window displays the findings ofthe Samurai’s Candlestick Pattern Recognition Library,while the CandleBox shows price and technical indicatorinformation. Here, we are going to deal with the AnalysisWindow.

When you have moved the pointer to a candle that you wish toanalyze, there are several different ways that you can ask theSamurai to interpret it for you.

1. Move the pointer to the candle that you wish to analyze.2. Click on the DISPLAY menu.3. Click on ANALYSIS RESULTS, or press F6.


You can also bring up the Analysis Window from the pop-upmenu.

1. Move the pointer to the candle you want to analyze.2. Click with your RIGHT mouse button.3. Click on START ANALYSIS .

The quickest way to bring up the Analysis Window is to simplyclick on the speed button below.

The Analysis Window for the specific candle you haveselected will appear. If you select OK, the Analysis Windowwill move forward to the next candle pattern found. If you clickCANCEL, the analysis will not continue.

The Analysis Window is one of the strongest features of theSamurai. It provides you with a wealth of information as well asan easy-to-understand description of what that informationmeans. The Analysis Window is like having your ownpersonal trading expert!

USING CANDLEWATCH


The CandleWatch should be used each trading day. Everyday the market’s activity will potentially produce new tradingsignals that the Samurai can identify. Therefor, a dailyCandleWatch is required to keep you up to date with themarkets activity quickly and easily.

Remember that daily candlestick analysis is usually very shortterm. When a signal is generated from a daily CandleWatch ,you should expect the signal to mature in 3 to 7 trading days.Anytime before the expected 3 to 7 days have expired, a newsignal may form that cancels the previous signal. For example,let’s say a buy signal formed on 1st January 1996, this wouldmean that we should expect this market to continue goinghigher for about the next 3 to 7 trading days. We would buylong positions and watch the trade. Next, on 5th January 1996,a sell signal forms. We’re about 4 days into our last trade andwe may have seen some profit from it, but now we are seeing asell signal that cancels the previous buy signal. At this point, weshould get out of our long positions and go short. The market isexpecting that this sell signal will mature within the next 3 to 7trading days.


SELECTING FILES TO WATCH

The SELECT FILES option, found by clicking on the WATCHmenu, allows you to create and maintain the list of historicaldata files you want the CandleWatch to track each day. Youmust complete this task before you can execute aCandleWatch . The list of file names CandleWatch willlook at must correspond to your existing historical database list.If you make any changes to the historical database, you mustre-select the files for the CandleWatch so both lists of filesare identical.

The instructions on the next page will walk you through theprocess of selecting the files for the CandleWatch .

1. Click on the WATCH menu.2. Click on SELECT FILES.3. Click on CREATE.

The SELECT FILES window will appear. This screen allowsyou to choose selected files to be added to a new group, whichyou will later run a Watch for.


Click on the file that you want to include in yourCandleWatch and then click on the > button. If you wish toinclude all the files that are in the Source List, then click on the>> button.

Note: To remove a file from the Destination List and return itto the Source List, repeat the above procedure using thebuttons with the left pointing arrow.

4. When you are finished, click on OK.

This will bring up the window shown on the next page whereyou will be asked to give your new group of files a uniquename. You can set up as many groups of files as you wish, buteach group must have a different name. Be sure to choose afile name that will tell you what is included in that group.

Once you have named your watch file, click on OK.


STARTING THE CANDLEWATCH

Now that you have completed the SELECT FILES procedure,you can begin the actual CandleWatch .

1. Click on the WATCH menu.2. Click on BEGIN WATCH.3. The OPEN WATCH FILE screen (shown below) will appear.

Select which watch file you want to include in your analysis.

4. When you have finished selecting the Watch file to includein your analysis, click on OK .

5. Now the WATCH OPTIONS screen will appears.


After you have selected the date and watch types that you wantfor this particular CandleWatch , click on OK.

Note: Because you are able to put in a date other than today’sdate, you can tell the Samurai to run a CandleWatch for anyday in the past. This feature allows you to take a vacation andbe secure in the knowledge that you will be able to generate aCandleWatch Report when you get back home for each daythat you were gone. This feature is useful to anyone who likesto keep a compete history on hard copy to look back on.


Samurai will now begin executing the CandleWatch . Aprogress indicator window will appear to show youapproximately how far into the analysis you are. TheCandleWatch may take some time to complete, especially ifyou are watching many counters. You may cancel theCandleWatch at any time if you do not wish to continue.

THE CANDLEWATCH REPORT

Once you have completed a CandleWatch , you can preparea report to put all the information obtained through this analysisinto black and white.

1. Click on the WATCH menu.2. Click on CUSTOM REPORTS.

When the CUSTOM REPORTS window appears, you will needto choose which signal type you want to include. Use themouse to click on the radio button next to each signal that youwish to include. When you have finished, click on the OKbutton.


Now the Samurai will begin preparing the CandleWatchReport. The number of signals you have chosen to include andthe size of your watch files will determine how long thisprocedure takes. Be patient if the report does not instantlyappear on your screen.

Once the report appears on your screen, you have the option ofreviewing it right away or putting it to print to be viewed later.Be aware that these reports can run into many pages of printedmaterial for each report. If you prefer, you can save thesereports to your hard drive or to a floppy disk.

Click on this speed button to save the current report.Click on this speed button to open a saved report.

Note: These files are not saved as text files, therefor, can onlybe opened in the Samurai program. Not in a text editor.


USING CANDLEVISION

Once you have loaded a chart, you may wish to execute theCandleVision feature to back-test an area of price data or toquickly report the types of trading signals that are found withina given time period. The CandleVision will allow you toquickly scan a single chart for pattern formations and create adetailed database of all trading signals found while scanning.The report generated from this database can be viewed onscreen or put in print.

CandleVision is a tool that can be used to identify whattypes of candlestick patterns form over time that are consistentpredictors of future price moves. Many times, with the use ofthe CandleVision features, traders will identify a fewcandlestick patterns that have a high degree of accuracy andthus present exceptional trading possibilities.

Another CandleVision feature called Profit Testing will testall the candlesticks and other signal for profitability.


STARTING THE CANDLEVISION

To use CandleVision , you must first open the chart that youwant to run a vision for. Click on the candle that will representthe ending date for the CandleVision .

1. Click on the VISION menu.2. Click on BEGIN VISION.

This will bring up the BEGIN VISION window where you will beprompted to enter the number or trading sessions to include inthe CandleVision . The number that you input will be thenumber of trading days prior to the candle where you placedthe pointer. The CandeVision will look only at the time framethat you specified. (For instance, if you want to look at theperiod from 01/01/1996 through 01/31/1996, place the pointeron the candle for 01/31/1996 and enter 23, the number oftrading days between these two dates, in the Begin Visionwindow.)


Once you have decided the time frame you want theCandleVision to use, click on OK button.

The status window shown below will appear on your screenwhile CandleVision is doing the analysis.

The status window will disappear when the CandleVisionhas finished and be replaced with the Custom Report window.Here you will need to choose which signals and pattern typesyou wish to have included in the report. Simply click in the smallradio button next to each signal that you want the signal to beshown. When you have finished, click on the OK button. If youare analyzing a large number of trading sessions, it may takesome time for the program to prepare the report and display iton screen. Be patient. When the report is shown on screen, youcan either review it right away or print it for review in the future.Be aware that large reports will require many printed pages.The bottom right of your screen will tell you how many pagesthe report consists of.


CANDLEVISION FLAGS

WHAT ARE CANDLEVISION FLAGS?

CandleVision flags are visual markers that appear in theSignal and Flag Bar of the CandleBox after you had run aCandleVision . These flags can be a variety of differentshapes and colors. Each color/shape combination has aspecific meaning as described on the next two pages. (See theAppendix of this User’s Guide for more detailed explanations ofthe various flags). As you move your mouse pointer fromcandle to candle on the chart, you will see the flags associatedwith each candle appear in the bar at the bottom of theCandleBox . Only those candles that were included in yourCandleVision analysis will show flags. For example, of youran a 10 days Vision, only the most recent 10 day’s candles willhave flags associated with them even though your chart mayhave 90 days worth of data showing on it.


EXPLANATION OF VISION FLAGS

The following is a brief explanation of the various flags and thelocation where they can be found in the Signal Bar of theCandleBox . For more detailed explanations, see theAppendix of this User’s Guide.

GREEN ∧∧Represents where BUY and BUY CONFIRMATION signalhave formed.

GREEN ••Represents BULLISH REVERSAL signal has been formed.

GREEN =Shows the WESTERN TECHNICAL OSCILLATORS haveissued BULLISH signal.

RED ∨∨Represents SELL and SELL CONFIRMATION signals haveformed.


RED ••Represents BEARISH REVERSAL signals have formed.

RED =Shows the WESTERN TECHNICAL OSCILLATORS haveissued BEARISH signals.

BLUE ••Shows a DOJI STAR REVERSAL pattern has formed.

BLUE +Shows a DOJI CANDLE pattern has formed.


DeMark Sequantial Flags

GREEN (1-13)The green numbers ranging from 1 to 13 representOVERSOLD or BULLISH CONFLUENCE signals. When theseflags begin to appear, you should watch for a BUY signal toform shortly after.

RED (1-13)The red numbers ranging from 1 to 13 representOVERBOUGHT or BEARISH CONFLUENCE signals. Whenthese flags begin to appear, you should watch for a SELLsignal to form shortly after.

These Vision Flags are one more way the Samurai has ofpresenting the analysis results to you.


WHY VISION FLAGS ARE IMPORTANT

CandleVision flags allow you to quickly view what types ofcandlestick patterns, and other trading signals, could be foundon a specific trading day. The result is a clear representation ofthe Samurai’s ability to identify profitable trades. Also, theCandleVision flags are an excellent means for any trader tobecome more familiar with an individual chart. Once you havegotten a feel for the meanings of the different flags, you will beable to simply point to a candle on any chart that you have runa CandleVision for and look in the Signal and Flag Bar ofthe CandleBox to understand what that particular candlemeans. You will be able to clearly see where each buy and sellsignal formed without having to look at each candle on thechart and interpret it’s meaning on your own.

WHEN TO USE VISION FLAGS

Use the CandleVision and the Vision Flags whenever youwant to quickly review the trading signals for any individualchart. Often times you will find that the CandleVision flagspresent precise signals where you thought there might not beany signal.

Also, the CandleVision flags are an ideal means ofperforming detailed analysis on trading systems such as theTom DeMark and Geert Strubbe systems which are forwardfrom propagated. (This means that they work forward fromsometime in the past toward today rather than working formtoday backwards). Each time a chart is loaded, the Samuraiidentifies each instance where the patterns of the Sequentialand TC/BR systems are found for each data point on the entirechart. This is the only way to ensure that this analysis is correctand accurate.

PROFIT TESTING MODULE


One of the Samurai’s most powerful tolls is the Profit TestingModule. After you have run a CandleVision , you can run aprofitability test for the trades, which occurred during the periodfor which you ran the Vision.

STARTING THE PROFIT TESTING MODULE

1. Click on the VISION menu.2. Click on PROFIT TESTING.

OR

Click on the speed button

This will open up the Profit Testing Module and display thescreen shown below.


SETTING THE OPTIONS

Click on the OPTIONS button to bring up the following screen.

On this screen you will need to enter the dollar per point value,the amount of commission you are charged per trade, and thepercent allowed per trade for slippage.

Once you have entered these values, click on OK. This willreturn you to the first Profit Testing screen. You are now readyto run a profitability test.


Click on the TEST button and wait a few seconds while theProfit Testing Module performs the profitability analysis. Thestatus bar on the button of this screen will show you theprogress of the analysis.

Once the analysis has been completed, the result will show onthe screen. (See the illustration on the following page.)

From this point you can choose to produce a report by clickingon the REPORT button. This report will look very similar to aCandleWarch report. You can choose to print this report orsave it to disk for viewing later in the same way that you wouldprint or save a CandleWatch report. (See page 70-71, THECANDLEWATCH REPORT.)


You can also choose to have the Profit Testing Modulepresent the profitability analysis in the form of a graph byclicking on the GRAPH button. This will bring up a graph similarto the one shown below.


CHAPTER 8: TECHNICAL SUPPORT

CANDLE ASSIST

As a registered user of this software program, you are entitledto request assistance from our Technical Support department.Our technical support staff includes computer programmers,traders and often the actual developers of this softwareprogram. In the event that we can not assist you with aproblem, we will attempt to find someone who can assist you,such as your data vendor, software developer or hardwaretechnician.

Technical Support Hours:9:00 AM to 5:00 PM (GMT +8) Monday through Friday.(Special appointments can be scheduled before of afternormal business hours if needed).

Technical Support Phone Numbers:Phone : 603-2455877 (8 lines)Fax : 603-2456792

Technical Support on the Internet:Internet Address: http://www.highestsummit.come-Mail: [email protected]

Technical Support by Mail:Highest Summit Technologies Sdn Bhd161A, Jalan Maharajalela,50150 Kuala Lumpur, Malaysia.

Malaysia Office:Highest SummitTechnologies Sdn Bhd161A, Jalan Maharajalela,50150 Kuala Lumpur,Malaysia.

CyberJaya Office:Cyberview Project Office,63000 Cyberjaya,Selangor D. Ehsan,Malaysia.

U.S. Office:1507 N. Cahuenga Blvd,Hollywood, Calif. 90028(Cahuenga & SunsetBlvd.)


APPENDIX

CUSTOM PAGES

The version 2 build provides you some new features, as well asa new GUI layout and look. We have designed the program tomake it easier for you to use, a swell as new hot keys to triggerfrequently used functions. The custom page feature will allowyou to load the last set of charts loaded in the prior session.This will speed the use and analysis of the program, and makeit helpful to you, the trader.

Custom Pages: This option allows the user to define anynumber of pages with any number of charts to be displayed onscreen on a page. This function will load the users last savedconfiguration of pages and charts.


MAIN MENU AND HOT KEYS FUNCTIONS

Samurai uses a standard Windows menu format as theprinciple means of navigating through the program. As withother Windows applications, you can access all of theprogram’s features from within the menu structure. Simply clickon the menu and, while keeping the mouse button depressed,pull the mouse down through the list of available selections untilthe one you want is highlighted. When you release the mousebutton, the highlighted selection is activated. Sometimes youwill see a carrot symbol, pointing off to the left or right,alongside a particular menu selection (as you can seealongside the Open file Type selection of the File menu in theupcoming example).This indicates that there are additional menu items associatedwith this selection. Simply slide the mouse pointer in thedirection of the arrow, while keeping the mouse buttondepressed, until you see the additional menu choices. Whilestill holding the mouse button down, position the pointer overthe appropriate menu item. When that item is highlighted,release the mouse button to activate your selection. Beside themenu items, you will see the symbols for the keyboardshortcuts for that particular action. Advanced and power usersof the Samurai may find that manipulating the menus, submenus and drop down menus is overly time consuming.Besides simple keyboard shortcuts, which may require that youmemorize more procedural de-tails than you care to, we havealso included a series of Speed Buttons to facilitate your work.


NEW TOOL BAR FUNCTIONS

Open ChartThis button is a shortcut to FILE-OPEN CHART. It brings upopen dialog depending on which file type you last opened.

Compress ChartThis button is the shortcut of DISPLAY-COMPRESS CHART. Itwill bring up Chart Compression Form for you.

PrintThis function allows you to print the active chart.

Technical SettingsThis button will bring you to the Technical Indicators settingpage. From there you can set the Western Technical Indicatorsvalue.

Chart OptionsThis button will bring you to the Chart Options setting page.From there you can change the chart appearance according towhat you prefer.

Show Bars/CandlesThis option allows the user to display data as either a Westernbar chart, of Japanese candlestick chart.


Increase Bars on ChartThis option allows the user to define the number of candlesdisplayed on screen on a single chart. This function will putcandles closer together to display more candle per chart.

Decrease Bars on ChartThis function will put candles farther apart to display lesscandles per chart.

Analysis ResultsThis button brings you to the analysis window. By pressing on asingle candle and pressing this button will brings up theanalysis result for that particular candle.

Begin CandleWatchThis button will execute the CandleWatch.

Begin CandleVisionThis button will execute the CandleVision.

Profit TestingThis button will direct you to the Candlestick Forecaster sub-module called Profit Testing Module where you can test theparticular chart for profitability.

Trader’s LogThis button brings up another sub-module of CandlestickForecaster, which functions like a Notepad that allows tradersto take their own notes.


CandleBoxThis button brings up the CandleBox, which will show you theprices/value of each candle and Western Technical Indicators.

These three buttons will arrange charts in a tab by cascade/tilevertically/tile horizontally.

HelpThis function opens the help file for Candlestick Forecaster

Show StochasticThis option allows the user to display the Stochastic lines onthe chart. To toggle back to a candlestick chart without thisdisplay, click STOK icon again.

Show Moving AverageThis option allows the user to display the Moving average lineson the chart. To toggle back to a candlestick chart without thisdisplay, click MA icon again.

Show R.S.IThis option allows the user to display the Relative StrengthIndex line on the chart. To toggle back to a candlestick chartwithout this display, click RSI icon again.

Show R.M.IThis option allows the user to display the R.M.I indicator on thechart. To toggle back to a candlestick chart without this display,click the R.M.I icon again.


Show Williams % RetracementThis option allows the user to display the Williams %R on thechart. To toggle back to a candlestick chart without this display,click the WillR icon again.

Show MACDThis option allows the user to display the MACD lines on thechart. To toggle back to a candlestick chart without this display,click MACD icon again.

Show Bollinger BandsThis option allows the user to display Bollinger bands on thechart. To toggle back to a candlestick chart without this display,click the BB icon again.

This option allows the user to compress a daily chart to either aweekly or monthly chart. There are times when patterns may befound in a weekly or monthly chart, although no pattern is foundin a daily. To use this function, first have a daily chart loaded onthe screen. Then click either the weekly or monthly icon. Thechart will now compress to the desired time frame. To return toa daily chart just click the daily button.


EXTENDED PATTERN GROUPS

CONFIRMATION

The confirmation pattern group is designed to re-issue any buy,sell, top, bottom or reversal signal. This group also assistsconservative traders by providing them with a signal which ismore likely to mature into a profitable trade by eliminating someof the inherent risk that is present with the more aggressivesignals. Within this program, any signal that has not beenconfirmed is considered an aggressive signal.


Aggressive signals typically include more risk and are designedto issue an entry price level that is often within the first 5% ofthe expected future price move. When acting upon theseaggressive signals, we recommend that you use a protectivestop to attempt to limit your initial risk within the trade.Confirmation signals will toggle a “CONSERVATIVE” trade andgenerally provides the user with a higher degree of probabilitythat the predicted trade will mature into an effective andprofitable trade. But the user must understand that he/she willbe giving up a little bit more than the aggressive trader becauseof the delayed entry and exit signals .


CONTINUATION

The continuation pattern group picks up where the confirmationgroup leaves off. The continuation patterns provide detailedinformation about a price move that has been predicted by aprevious candlestick pattern. As the trend continues to move inthe predicted direction, the continuation signals track the trendand the conditions of the Western technical oscillators so thatthe trader can be aware of these conditions. When the trendbegins, the continuation patterns will inform you to stay long orshort and continue to trail your protective stop, so that you canmaintain the actualized profit and protect yourself from theunforeseen reversals. When the trend is beginning to stagnate,or consolidate, the continuation patterns will warn traders thatthe trend could begin to reverse; stay with your current positionand trail your protective stop, so that we can maximize thepotential profit for this trade. Continuation signals can rangefrom 3(three) to 15 (fifteen) candles in length.

The example below will illustrate how you would use theConfirmation and Continuation signals.


A BUY SCENARIO

Assume that the current price of the market you have beentracking has slowly, and diligently, been moving lower over thepast 9 weeks. The first thing that you should realize is that thismarket is exhibiting signs that the average trend move is moreof a long-term trend. Knowing this, you should remember toconstantly monitor a daily and a weekly chart for this market.Often times, when a chart exhibits a long-term trend average,the weekly chart will produce the best candlestick signals. Thelong-term trend is more defined and easier to understand. Also,the weekly chart tends to filter-out the incorrect short-term buyand sell signals that are likely to form within the daily chart.Today, within the daily chart, you find and Engulfing BullishLine (Buy Signal). First, identify if the market has begun to forma bottom yet, or determine if this could be a warning sign ofwhat might be in the future. If the market has already begun toform a bottom, in the form of a rounded bottom orconsolidation, near a previous major support price level, thenyou might consider taking an aggressive stance and buy intothis market. You should also remember to place a protectivestop so that if the market continues lower tomorrow you willhave attempted to limit your losses. A conservative traderwould wait to see a confirmation signal of the Engulfing BullishLine on the next cycle or trading. This confirmation signal wouldbe your entry signal. You would still place a protective stopnear the lows of this buy signal to help prevent unwantedlosses. From this confirmation signal onward, you would expectto see continuation signals appear if the market begins to rally.If expected trend matures and rallies, the continuation signalswill keep you informed on the conditions that the Westerntechnical oscillators are exhibiting and begin to warn you whenits expects the trend to reverse. If the market continues toconsolidate or trade lower, you should re-evaluate your positionand look for other pertinent signals.

In this example the market had shown signs that it recentlyentered a long-term bearish trend. Because of this, your are


recommended to continually monitor the weekly chart becauseit will more clearly identify the overall trend and is likely toproduce a greater chance for profitable trading. If the marketsyou choose to trade do not exhibit these types of long termtrend moves, or your are primarily a short/intermediate termtrader, you should focus your analysis on daily charts. The dailycharts are ideal for catching the short-term trend reversals. Asa rule of thumb, you should always remember to keep a properperspective of price movement over time. To do so, werecommend constantly tracking both daily and weekly charts forsignals.

In the case of a sell signal or reversal signal, you should usethe same techniques to initiate your position and to protect yourinterests and money. The only difference is that you mightweigh the different Western technical oscillators andcandlestick patterns uniquely for each scenario.


CONFLUENCE

Confluence is a term that we use a little differently that thestandard Webster’s definition. Within this program, the termConfluence means to have agreement with other patterns, or toaid in confirming other patterns. So typically, you would watchfor Confluence patterns to form before during and after the buyor sell patterns are found. You can interpret these signals as awarning sign of what might be in this markets future becausethese patterns commonly appear over a broad time frame afterthe market has made a substantial move.


An example of when to place more emphasis on these patternsis when to but or sell signal is found at the same time that aconfluence pattern forms that is indicating same potential trendmove. For example, an Engulfing Bearish Line (Sell Signal) anda Crossing Bearish Stochastic oscillator (Bearish Confluence).In this example, it shows a greater potential for a bearish pricemove in the future.

All of these advanced patterns group work together with theclassic candlestick patterns and the Western technicaloscillators to produce a very fluid and informative tradingsystem. These patterns also assist you by warning when thecurrent trend is exhausting and about to reverse. They becomean integral part of this program ability to predict upcomingevents and are essential to maintain profitable trading positionsafter the initial buy/sell signals have formed.


CLUES AND SUGGESTION FROM CANDLESTICKS

To provide you with a little more about the benefits ofcandlestick trading and to assist you in applying this techniqueto the markets/stocks that you trade, the following is a series ofhints and suggestions that you may choose to follow whentrading:

I. Candlesticks are short term leading indicators thattypically predict market reversals right preceding achange in trend.

II. Candlesticks work best with stocks and commodities thathave good trading volume and good trading range (i.e.active issues). We do not recommend that you give asmuch weight to a trade if the market is very thinly traded– your signals as they will not be a reliable. In theseinstances, we recommend that you compress the dailychart to a weekly chart to compensate for the lowvolume. This will smooth and not exaggerate the overalltrend. This will result in a longer term trading approachto trading this type of thinly traded market. It wouldprobably be helpful for you to spend some time lookingat how well this program could identify the majorreversals before you put any real money into trading thismarket.

III. When you have identified a stock or commodity that isexhibiting signs of overall long term trend, you shoulduse the weekly chart to assist in identifying major marketreversals. Remember that the weekly chart will filter outmany of the incorrect short term reversal signals within adaily chart and present a clearer picture of the actualprice trend.


IV. Always watch for Doji’s, Hangman, Hammers andShooting Stars (or Inverted Hammers). These singlecandle types have proven to be very reliable reversalindicators. Remember to wait for confirmation beforeacting on these signals. If you do not wait forconfirmation, this aggressive stance within the marketwill increase both your risk and reward; protective stopsare therefore part of any highly defined strategy.


THREE LINE NEW PRICE BREAK

The “Three Line New Price Break” chart is a variation of thestandard candlestick chart and is very similar to the “Point andFigure” chart. The purpose of this chart is to assist ineliminating the potential short-term reversal signals that arecommon on a Daily candlestick chart. This type of chart wasdeveloped to be easy to understand and use by generating fewsignals with a much higher probability of success.We have found that this style of charting is very effective forstocks of commodities that exhibit an intermediate or long-termtrend capacity (such as Soybean Oil, Wheat, Oats, Bonds andsome currencies). Most “Blue Chip” stocks or highly liquidcommodities (such as the SP 500, OEX or Gold) do notproduce the best result using this type of charting. By using theCandle Vision, you are able to test the signals that aregenerated to determine the effectiveness of this chartingtechnique for individual stocks or commodities.


When using this charting method to trade, there are a fewsimple rules and phrases that may assist you in making propertrading decisions. These rules and phrases are directtranslations from Japanese to English. Most of this informationcame directly from Seiku Shimizu’s book titled “The JapaneseChart of Charts”. He goes into great detail to explain how toeffectively trade with the “Three Line New Price Break” chart.The following detailed information will assist you inunderstanding most of the common terms and tradingtechniques for using the “Three Line New Price Break” chart:

§ Three Line New Price Break Trading Rules:

One should not trade on the first turn (the first line that indicatesa reversal in direction), but should wait for the second line.If the second line is the same color as the first turning line, thenone should buy or sell the market respectively. This techniqueis very important to understand in order to maximize theeffectiveness of entry and exit positions.“Black Shoes” and “Red Necks” after a change in pricedirection, are an indication that the current price trend is likelyto continue. As Mr. Seiki Shimizu discloses, buying or sellingthe market typically occurs when “Black Shoes” or a “RedNeck” appears. (Remember Rule # 2)

A red or black “Sweater and Pants” occurs when the turningline breaks above or below the previous four (4) new pricelines. The “Sweater and Pants” formation can also occur whena series of consecutive large range lines appear within adefined trend.


A “Red Hat” or “Chip Hat” occurs at the ceiling of a market andcan be identified by its small size after a sizeable bullish priceadvance and a black line that follows the “Red Hat”. The “RedHat” is symbolizing the decreased ability of the buyers toadvance the current price. This decreasing strength mightsometimes warn of a possible reversal.

“False Movement” occurs when a single turning line is drawnand no follow-through of the trend is seen. No second or thirdline of the same color following the first turning line wouldindicate this lack of follow-through. A recovery of the initialtrend normally occurs after a “False Movement” line.

One should not rely on just the chart alone, but look at thefundamental and news-related information that may havecaused a new line to be drawn.

§ Two of the most common phrases used with thischarting technique:

1. If a neck pops out the red sweater and pants with blackshoes, then buy. (Formation 1-4-5)

2. If the feet come out of the black pants while wearing ablack sweater and a red hat (“chip”), then sell.(Formation 3-2-1)

We suggest using this effective charting technique with astandard Daily or Weekly candlestick chart.


TOM DEMARK SEQUENTIAL PATTERNS

Sequential is a market timing technique developed by ThomasR. DeMark. Thomas R. DeMark has been developing technicalsystems for the better part of 20 years. His methods have beenincorporated, and used successfully, by such great traders asGeorge Sorros and Paul Tutor Jones. He has been an advisorto such financial barons as Leon Cooperman and LawrenceTish. Thomas R. DeMark has shaped the investment strategiesat some of the largest trading houses of the world.His systems of pattern recognition blend perfectly withJapanese candlestick technical analysis. And as such, we arepleased to introduce this technique into our existing library,which will create a more dynamic and profitable outcome.This technique actuality is a unique complex pattern. Thistechnique determines exhaustion of a current trend therebydefining a pivot or reversal point. When terse pivot points arefound with a candlestick pattern the probability of success isgreatly enhanced.

§ The Setup

Sequential begins with a countdown, which will eventuallyreach number nine - (9). To calculate the first part of sequential(“Making a Nine”), we first compare the current day’s close tothe close of sessions prior. If the current close is higher theDeMark sequential count becomes one (1). On the followingcycle, that close is compared to the close of four (4) sessionsago. If the close is higher, the DeMark sequential count movesto two (2). This will continue until nine - (9) consecutive cyclesare made.


If at any point, the close is not higher, the count stops andbegins again.

If the nine- (9) consecutive higher closes are made, thiscompletes a pattern termed “Making a Nine”. This pattern iscalled an “Intersection”. At this point, Tom DeMark believes thatone of two things will happen:

1. If the sell setup is complete, the market will reverse atthis point.

2. If the market continues to trade higher and breaksthrough the intersection, we then begin a “Countdown”

The “Countdown” is composed of comparing the current day’sclose to the close of two sessions prior. This countdown doesnot need to be in consecutive order (day after day). Once atotal of thirteen (13) closes greater than the high two daysearlier occurs, a sell signal is generated.

One can apply the following rules to combine the DeMarkSequential with Japanese candlestick patterns. During adefined trend, when the sequential count reaches eight (8) ornine - (9), look for bullish reversal and buy signals during adown trend or bearish reversal and sell signals during downtrend. If the current trend remains intact. Look for candlestickpatterns such a bullish or bearish continuation begins thesequential countdown to thirteen (13). This indicates that thetrend has crossed through the “Intersection” and will continue.When the count reaches thirteen (13), one should findcandlestick patterns indicating a reversal and act accordinglywith great confidence.


The contained information was derived from the works ofThomas R. DeMark, His recently published book “The NewScience of Technical Analysis” published by John Wiley &Sons, is a milestone achievement. We wish to personally thanTom DeMark for his input, as well as, permission to incorporatehis dynamic techniques into this trading application.

TAKAHIRO HIKITA PATTERNS

Takahiro Hikita is one of the foremost authorities on Japanesetrading techniques including the Sakata Five, what we in thewest call candlestick chart and patterns. In Yokohama, Japan,he has been researching these patterns for over forty years.Takahiro Hikita has been using the Candlestick ForecasterMaster, along with the programs he has personally developedfor the Macintosh called the KABUTO SUPER POWER. Hehas been kind enough to make offer his knowledge andwisdom.


TRENDING CANDLE/BODY REVERSALPRINCIPLE

The Trending Candle / Body Reversal Principle is a patternrecognition system discovered, analyzed and presented by Mr.Geert Strubbe, owner of Runatec Technician of JapaneseCandlestick Charting and is a European distributor for theCandlestick Forecaster. Our sincere thanks to Mr. Strubbe forallowing us to benefit from his knowledge and expertise.

I. A Trending Candle (TC)

We have a Trending Candle (TC) when the total length of thebody of the candle is larger than the total length, includingshadows (high-low), divided by two.

In formula form: ABS (open-close) > (high-close) / 2

Another way of defining the TC is: the total length of the body ofthe candle must be larger than the sum of the shadows.

The first definition is handy for use in a formula and the secondone makes it easier to understand visually.


II. A Body Reversal (BR)

A Body Reversal is formed on the day prices close past thebody of the previous candle.

A BR down takes place when today’s close is lower than theopening price of the previous white candle or the close of theprevious white candle.

A BR upwards takes place when today’s close is higher thanthe opening price of the previous black candle or the close ofthe previous white candle.

The closing price of the last candle is below the body of the previouscandle. The size of the body is of no interest.

Instead of comparing the latest (or any) candle with the candlesjust before it, we now compare the Trending Candles in thechart to get buy and sell signal.


III. An Upward Trend

Let’s say the first candle is white TC. Then the trend staysupward for as long as the closing price of one of the nextcandles stays above the opening price of the first white TC. Ifone of the following candles is also a white TC, it one takesover from the previous TC and the trend-stop level goes up tothe downside of the body of the last TC.

We continue this process until we have a close under the bodyof the last white TC.

Above, we have three white Trending Candles. The trend-stoplevel keeps going up from the bottom of the body of the first TCto the bottom of the second TX and up again to the bottom ofthe body of the last white TC.


IV. A Trend Reversal

A Trend Reversal occurs when there is a Body Reversal of thelast Trending Candle that was defining the current trend. If theBR is caused by a TC then we have a trend-change from up todown or vice versa. The new trend-stop level will then be theopening price of the Trending Candle making the BodyReversal.

If the Body Reversal is caused by a candle that is not aTrending Candle then the trend changes to neutral. A newtrend starts with the appearance of the next TC that follows.

The example above shows that the principle is NOT sensitive totime. Only when the price has made a sufficient move do weget the reversal.


V. A Bullish Trend

When we have a bearish trend, a Trending Candle only takesover from the previous Trending Candle if it closes higher thanthe previous TC.

Example: The TC at point B does not take over from the TC atpoint A because the TC at point B does not close below theclose at point A.


VI. A Bearish Trend

When we have a bearish trend, a Trending Candle only takesover from the previous Trending Candle if it closes lower thanthe previous TC.

Example: The TC at point B does not take over from the TC atpoint A because the TC at point B does not close below theclose at point A.


VII. Gap in Trend

When there is a gap after the Trending Candle then we movethe trend-stop level from the opening price of the TC to thebottom of the gap if we are in an up-trend or the top side of thegap if we are in a down-trend.

When the current TC forms a gap with the previous candle thenwe move the trend-stop level from the opening price of the TCto the bottom of the gap if we are in an up-trend or the top sideof the gap if we are in a down-trend.

Let’s look at the same example. The TC at point A makes agap with the previous candle. The trend-stop level moves fromthe opening price of the TC to the bottom of the gap marked bythe line.


VIII. Trend-Stop Level

The trend-stop level can not be moved lower during a up-trend.The trend-stop level can not be moved higher during a down-trend.

If we did not have these rules, then the trend-stop level wouldmove up from point A to point B and then on to point C. Thiswould be unlogical. When we have black TC’s moving upward,the trend-stop level stays at point A.

IX. Valid TC/BR

To have a valid TC/BR, it is sufficient that the close of thecurrent candle is equal to or past the opening price of the lastTC defining the current trend.


ADVANTAGES AND PROPERTIES OF THE TC/BRSYSTEM

1. There are no formula in the system. This makes it simple touse and follow. Your analysis can be made very swiftly andaccurately. All you need to remember is the trend-stop [riceto make your decisions. All signals are given because of theprice reaching or exceeding certain levels, not because ofthe result of a formula.

2. The system is not affected by time. If the price doesn’tmove, then the indicator doesn’t move. This is somethingother indicators, based on formulas, have great difficultywith. Sometimes a trend change can take weeks, at othertime, a few days. No formula can cover this problem.

3. Compared to the “break system”, it has the advantage ofrecognizing the importance and influence of the openingprice and the color of the bodies. A break line only looks atthe close of each trading session. When we have a bullishtrend and one day the price opens much lower, due tocertain news factors, but by the closing bell recovers mostof the losses then a break line will make a turn. The TC/BRsystem will not generate a sell signal because we still havea white candle.

4. The TC/BR system does not have an “oversold” or“overbought” level. This is considered an advantage. Itmeans the system can be used with equal effectiveness inlong bull or bear markets.

5. The system will generate re-entry points. Something that’sunique and of great use for futures and options traders.


6. All signals can be viewed onscreen making the system verystrong, visually. The chart doesn’t get overloaded with lines.

7. The system incorporates the importance of the gaps(windows). Gaps have proven in the past to function assupport and resistance levels, a property only candlestickanalysis can exploit.

8. The key element in the candlestick analysis is the searchand deduction of turning points. All these patterns have theelement of countering or overlapping built into them. TheTC/BR system follows the same principles but uses them tocompare the different TC’s in the chart.


TRADING TIPS WITH THE TC/BR SYSTEM

1. Short-term traders can use all the signals given on onechart. With every “trending Candle Takeover” you can addto existing positions. At the point where you get the BodyReversal you either close out all the existing positions if theBR is made by an average candle or close all and revere ifthe BR is made by a trending Candle in the other direction.

2. For those that like to have some confirmation of the signals,the weekly chart will be very effective if used with the TC/BRsystem. Using TC/BR system, you look for the buy and sellsignals in the weekly chart. Once you have a signal, youenter the market on the first signal given in the weekly chartmoving in the same direction. New positions can then betaken as described in point 1. If the last candle in the weeklydoes not make a “Takeover” or TC/BR, then do not take onnew positions. This way you stay out of a sideways movingmarket.


If you use the weekly chart for confirmation, you shouldplace the trend-stop at the opening price of the last TC inthe weekly chart. As soon as you get a close in the dailychart past the trend-stop level set by the weekly chart, youshould close all existing positions. This is a very effectivetrading system for stock and options traders who like to usespreads.

3. If you put signal flags on the screen, you will notice a wavepattern in the market. By comparing the bottoms and topsmade between the reversal points, you get extraconfirmation about the current trend or a trend change. Ifthe tops keep going lower, then the main trend staysbearish. If the bottoms keep going higher, then the maintrend stays bullish. This is logical and what the flags,generated by the TC/BR system, do is make is clear wherethe reversal points are and make the waves better defined.Buy signals given by a bullish TC/BR that follows a higherbottom are very effective. The same is true for sell signalsgiven by a bearish TC/BR that follows a lower top.


GLOSSARY

BASIC CANDLE FORMATIONS

A candlestick chart is simply a collection of single candlesticksrelating price movement over time. Each candlestick representsa given time frame’s price movement, or trading session.Almost like pieces to a puzzle, the smaller pieces relate to thelarger picture.

There are three basic candle types:I. A white, or empty, candle indicates that the closing price

was higher than the opening price for the tradingsession.

II. A black, or full, candle indicates that the closing pricewas lower that the opening price for the trading session.

III. A doji occurs when the opening and closing prices wereequal, or very close to equal.

The chart below shows these three basic candle types.

O = OPENH = HIGHL = LOW

C = CLOSE


RECOGNISING DAILY CANDLE PATTERNS

Candlesticks or bars can be defined as a cycle with open, high,low and close. The gap between OPEN and CLOSE is calledREAL BODY. When the market closed below open, the realbody is usually filled with black color and called as BLACKCANDLE. The opposite way, when the market close aboveopen, it will not be filled with any color (white) or possible fillswith red and called WHITE CANDLE. Line between HIGH tothe real body and CLOSE to the real body are calledSHADOW.

THE EMPTY (WHITE OR RED) POLE LINES

§ PATTERN DESCRIPTION

SHORT WHITE LINEThis candle is created when the close is greaterthan the open with a less than average dailyrange. The close should be equal or less thanthe low and the close should be equal to orgreater than the high.

WHITE SPINNING TOPThis candle is created when the close is greaterthan the open with a less than average dailyrange. The open should be about one thirdgreater than the low and the close should beabout one-third from the high.


WHITE LOWER SHADOWThis candle is created when the close is greaterthan the open during an average or large range.The close must be equal to or less than 5% ofthe high. The lower shadow must be at leastequal to, if not greater than the length of thebody.

WHITE UPPER SHADOWThis candle is created when the close is greaterthan the open during a less than average range.The upper shadow must be at least equal to, ifnot greater than the length of the body.

WHITE UMBRELLA LINEThis candle is created when the close is greaterthan the open during an average or large range.The close must be equal to or less than 5% ofthe high. The lower shadow must be at leasttwice the length of the body. This formation iscalled a hammer if it occurs at the bottom of themarket or hanging man if it is found at the top. Itcan be recognized by the tight opening andclosing ranges.

LONG WHITE LINEThis candle is created when the close is greaterthan the open during a greater than averagerange. The close must be near to, but not equalto the low.


LONG “MARUBUZO” WHITE LINEThis candle is created when the close is greaterthan the open during a greater than averagedaily range. The close must be equal to the highand the open must be equal to the low.

LONG “OPENING BUZO” WHITE LINEThis candle is created when the close is greaterthan the open during a greater than averagedaily range. The close must be near to but notequal to the high and the open must be equal tothe low.

LONG “CLOSING BUZO” WHITE LINEThis candle is created when the close is greaterthan the open during a greater than averagedaily range. The close must be equal to the highand the open must be near to but not equal tothe low.

INVERTED WHITE UMBRELLA LINEThis candle is created when the close is greaterthan the open during a large range. The openmust be equal to, or more than 5% of the low.The upper shadow must be at least twice thelength of the body.


§ PATTERN INTERPRETATION

SHORT WHITE LINECandlestick Signal: Moderate candle.Proper action: Look at pattern, this candlecould dorm into a star if gapped above or belowprior candle.

WHITE SPINNING TOPCandlestick signal: Uncertain direction.Proper action: Look at pattern, this candlecould form into a star if gapped above or belowprior candle.

WHITE LOWER SHADOWCandlestick signal: Moderate candle.Proper action: Look at pattern, this candlecould form into a star if gapped above or belowprior candle.

WHITE UPPER SHADOWCandlestick signal: Moderate candle.Proper action: Look at pattern, this candlecould form into a star if gapped above or belowprior candle.


WHITE UMBRELLA LINECandlestick signal: This candle is called ahangman or hammer, a strong candle, use if it’sapart of an advanced pattern.Proper action: This candle can issue a buy orsell signal, if you have confirming candle thefollowing day. Wait for confirmation signal.

LONG WHITE LINECandlestick signal: Ideal if found in bullishcontinuation pattern.Proper action: Excellent candle if found withengulfing bullish or piercing line advancedpattern.

LONG “MARUBUZO” WHITE LINECandlestick signal: Ideal if found in bullishcontinuation pattern. Strongest white line.Proper action: Excellent candle if found withengulfing bullish or piercing line.

LONG “OPENING BUZO” WHITE LINECandlestick signal: Ideal if found in bullishcontinuation patter.Proper action: Excellent candle if found withengulfing bullish or piercing line advancedpattern.


LONG “CLOSING BUZO” WHITE LINECandlestick signal: Ideal if found in bullishcontinuation pattern. Also called a belt hold line.Proper action: Excellent candle if found withengulfing bullish or piercing line advancedpattern.

INVERTED WHITE UMBRELLA LINECandlestick signal: This candle is called ashooting star or inverted hammer, a strongcandle, use if it’s a part of an advanced pattern.Proper action: This candle can issue a buy orsell signal if you have a confirming candle infollowing day. Wait for confirmation signal.


FULL (BLACK) POLE LINES


SHORT BLACK LINEThis candle is created when the close is lessthan the open with a less than average range.The close should be equal or less than the lowand the close should be equal to or greater thanthe high.

BLACK SPINNING TOPThis candle is created when the close is lessthan the open with a less than average range.The open should be about one third less thanthe high and the close should be about one thirdgreater than the low.

BLACK LOWER SHADOWThis candle is created when the close is lessthan the open during an average or large range.The open must be equal to, or no less than 5%of the high. The lower shadow must be at leastequal to the length of the body.

BLACK UPPER SHADOWThis candle is created when the close is lessthan the open during an average or large range.The close must be equal to or no greater than5% from the low. The upper shadow must be atleast equal to the length of the body.


BLACK UMBRELLA LINEThis candle is created when the close is lessthan the open during an average or large range.The open must be equal to or no more than 5%more than the high and the lower shadow mustbe at least twice the length of the body. Thisformation is called a hammer if it occurs at thebottom of the market or hanging man if it isfound at the top. It can be recognized by thefairly tight opening and closing ranges.

LONG BLACK LINEThis candle is created when the close is lessthan the open during a much greater thanaverage range. The close must be near to butnot equal to the low and the open must be nearto but not equal to the high.

LONG “MARUBUZO” BLACK LINEThis candle is created when the close is lessthan the open during a much greater averagerange. The close must be equal to the low andthe open must be equal to the high.

INVERTED BLACK HAMMERThis candle is created when the close is lessthan the open during a much greater averagerange. This candle is characterized by a tightopening and closing range, found at or near thebottom of the candle.


LONG “OPENING BOZU” BLACK LINEThis candle is created when the close is lessthan the open during a much greater averagerange. The close must be near to but not equalto the low and the open must be equal to thehigh.

LONG “CLOSING BOZU” BLACK LINEThis candle is created when the close is lessthan the open during a much greater averagerange. The close must be equal to the low andthe open must be near to but not equal to thehigh.


SHORT BLACK LINECandlestick signal: Moderate candle.Proper action: Look at pattern, this candlecould form into a star if gapped above or belowprior candle.

BLACK SPINNING TOPCandlestick signal: Uncertain direction.Proper action: Look at pattern, this candlecould form into a star if gapped above or belowprior candle.


BLACK LOWER SHADOWCandlestick signal: Moderate candle.Proper action: Look at pattern, this candlecould form into a star if gapped above or belowprior candle.

BLACK UPPER SHADOWCandlestick signal: Moderate candle.Proper action: Look at pattern, this candlecould form into a star if gapped above or belowprior candle.

BLACK UMBRELLA LINECandlestick signal: This candle is called ahangman or a hammer, a strong candle. Use ifit’s part of an advanced patternProper action: Wait for confirmation if noadvanced pattern is found.

LONG BLACK LINECandlestick signal: Ideal if found in a bearishcontinuation pattern.Proper action: Excellent candle if found withengulfing bearish or dark cloud cover advancedpattern.


LONG “MARUBUZO” BLACK LINECandlestick signal: Ideal if found with bearishcontinuation pattern. Strongest black line.Proper action: Excellent candle if found withengulfing bearish or dark cloud.

INVERTED BLACK HAMMERCandlestick signal: This candle is called ashooting star or inverted hammer, a very strongcandle, use if it’s a part of an advanced pattern.Proper action: This candle can issue a buy orsell signal if you have a confirming candle at thefollowing day. Wait for confirmation signal.

LONG “OPENING BOZU” BLACK LINECandlestick signal: This candle is called ashooting star or inverted hammer, a very strongcandle, use if it’s a part of an advanced pattern.Proper action: This candle can issue a buy orsell signal if you have a confirming candle at thefollowing day. Wait for confirmation signal.

LONG “CLOSING BOZU” BLACK LINECandlestick signal: Ideal if found with bearishcontinuation pattern. Strong black line.Proper action: Excellent candle if found withengulfing bearish or dark cloud. Also called abelt hold line.


THE LINE AND STAR CANDLE


FOUR PRICE DOJI LINEThis candle is created when the open, high, lowand close are all equal.

GRAVESTONE DOJI LINEThis candle is created when the open, low andclose are all equal and below the high.

LONG LEGGED SHADOW DOJIThis candle is created when the open and closeare equal during a larger than average range.The body line (open and close) must be at themid-range of the high and low.

DRAGONFLY DOJI LINEThis candle is created when the open, high andclose are equal during an average or largerdaily range. The body line (open and close)should be at or no more than 25% less than thehigh.

SMALL DOJIThis candle is created when the open, andclose are equal during a smaller than averagedaily range. The body line (open and close)should be at the mid-range of the high and low.


SMALL BLACK DOJIThis candle is created when the open and closeare almost equal during a smaller than averagerange, and the close must be less than theopen. The body line (open and close) should beat the mid-range of the high and low.

SMALL WHITE DOJIThis candle is created when the open and closeare almost equal during a smaller than averagerange, and the close must be greater than theopen. The body line (open and close) should beat the mid-range of the high and low.


FOUR PRICE DOJI LINECandlestick signal: Possible major marketreversal, wait for confirmation.Proper action: Excellent candle if it hasgapped above or below to become a star.

GRAVESTONE DOJI LINECandlestick signal: Possible major marketreversal. Wait for confirmation.Proper action: Very good if found with anoverbought market.This type of “Doji Line” is interpreted as aconsolidation, which could signal a shift inmarket momentum and direction.


LONG LEGGED SHADOW DOJICandlestick signal: Possible major marketreversal.Proper action: This type of “Doji Line” isinterpreted as a consolidation with increasingforce. The extreme daily range could besignaling a major trend change.

DRAGONFLY DOJI LINECandlestick signal: Possible major marketreversal, wait for confirmation.Proper action: Excellent candle if it hasgapped above or below to become a star.

SMALL DOJICandlestick signal: Possible major marketreversal, wait for confirmation.Proper action: Excellent candle if it hasgapped above or below to become a star.The “Doji Star” indicates the possibletermination of a trend. This type of “Doji Line” isinterpreted as a consolidation with a decreasein force because of the small daily range. Thiscould be signaling a major market top orbottom.


SMALL BLACK DOJICandlestick signal: Possible major marketreversal, wait for confirmation.Proper action: Excellent candle if it hasgapped above or below to become a star.The “Doji Line: indicates the possibletermination of a trend. This type of “Doji Line” isinterpreted as a consolidation with a decreasein force because of the small daily range. Thiscould be signaling a major market top orbottom.

SMALL WHITE DOJICandlestick signal: Possible major marketreversal, wait for confirmation.Proper action: Excellent Candle if it hasgapped above to become a star.


MULTIPLE CANDLE PATTERNS


SHOOTING STARThis candle pattern is created when an invertedumbrella line appears above the top of the realbody of the previous day’s candle. This patterncan continue forming into many other advancedpatterns.

DARK CLOUD COVERThis candlestick pattern is created when a whitecandle followed by a black candle and the blackcandle’s open is above the previous day’s high.The low of the black candle should fall aboutmid range of the white candle’s real body, andmust not have a lower low than the previousday’s open.

ENGULFING BULLISH LINE “Tsutsumi line”This candlestick pattern is created when anyblack line is followed by a long white body thathas a higher high, and a lower low.


ENGULFING BEARISH LINE “Tsutsumi line”This candlestick pattern is created when anywhite line is followed by a long black line thathas a higher high, and a lower low.

PIERCING LINEThis candlestick pattern is created when anywhite line is found after a long black line. Thewhite line must open below the low of theprevious day and the close must be above theprevious day’s midpoint and below the previousday’s high.

THREE RIVER MORNING DOJI STARThis candlestick pattern is created when a dojistar is formed in between a black and a whitecandle. The high of the doji candle must belower than the lows of both the black and whitecandles beside it.

THREE RIVER EVENING DOJI STARThis candlestick pattern is created when a dojistar is formed in between a black and a whitecandle. The low of the doji candle must behigher than the highs of both the black andwhite candles beside it.


BULLISH HARAMI LINEThis candlestick pattern is created when a smallwhite line is surrounded by a black candlepreceding it.

BEARISH HARAMI LINEThis candlestick pattern is created when a smallwhite line is surrounded by a black candlepreceding it.

UP TREND MEETING LINESThis candlestick pattern is created when a whiteline is followed by a black line. As the nameimplies they must each close at the same point.

DOWN TREND MEETING LINESThis candlestick pattern is created when a blackline is followed by a white line. As the nameimplies they must each close at the same point.

UPSIDE GAP TWO CROWSThis candlestick pattern is created when thelatest two candles are black bodies following along white line. The first black body must openabove the high of the long white line and createa gap. The second black line must close lowerthan the first black line. The low of the secondblack line should fill the gap created by previoustwo candles.


BULLISH WINDOWThis candlestick pattern is created when themost current candle has low above the previouscandle.

BEARISH WINDOWThis candlestick pattern is created when themost current candle has high below theprevious candle.

DOUBLE DOJI STARSThis candlestick pattern is created when the twomost current candles are doji’s and havegapped above or below the candle they follow.

BEARISH SIDE BY SIDE LINESThis candlestick pattern is created when a blackcandle is followed by two consecutive candleswith each high below the black candle theyfollow.

TWEEZER TOPThis candlestick pattern is created when two orthree consecutive candles have equal highs.


TWEEZER BOTTOMSThis candlestick pattern is created when two orthree consecutive candles have equal lows.Shows bullish support at low price.

BULLISH HARAMI CROSSThis candlestick pattern is created when anydoji line falls within the real body of the previouswhite candle.

BEARISH HARAMI CROSSThis candlestick pattern is created when anydoji line falls within the real body of the previousblack candle.

HAMMERThis candlestick pattern is created when anumbrella line appears after a downtrend. Thispattern is potentially bullish and may indicate apossible market bottom. Look for confirmationbefore buying.

INVERTED HAMMERThis candlestick pattern is created when aninverted umbrella line appears after adowntrend. Like the hammer, it is potentiallybullish and may indicate a possible marketbottom. Look for confirmation before buying.



SHOOTING STARCandlestick signal: Sell signal, if followed by alower close, and technical confluence.Proper action: Best if market is overbought.Look for another bearish advanced patterns.

DARK CLOUD COVERCandlestick signal: Bearish sell signal,possible reversal if market is overbought.Proper action: Look for lower Close onfollowing candle to sell.

ENGULFING BULLISH LINE “Tsutsumi line”Candlestick signal: Buy signal, possiblereversal.Proper action: Look for higher Close to buy.Best if found following a new or contract low.

ENGULFING BEARISH LINE “Tsutsumi line”Candlestick signal: Sell signal, possiblereversal.Proper action: Look for lower Close to sell.Best if found following a contract or new high.


PIERCING LINECandlestick signal: Possible buy signal.Proper action: Good buy indicator if found aftera downtrend. Wait for higher close to confirm abuy.

THREE RIVER MORNING DOJI STARCandlestick signal: Buy signal.Proper action: Enter long position providedwhite candle’s close is above the black candle’shigh. Place sell stop below the low of the doji.

THREE RIVER EVENING DOJI STARCandlestick signal: Sell signal.Proper action: Enter short position providedblack candle’s close is below the white candle’slow. Place buy stop above the high of the doji.

BULLISH HARAMI LINECandlestick signal: Indecision in market.Proper action: Wait for next signal. Possiblereversal. Wait for confirmation. Use thepreceding and succeeding candles to establishdirection.


BEARISH HARAMI LINECandlestick signal: Indecision in market.Possible reversal.Proper action: Wait to sell on confirmation ofsignal.

UP TREND MEETING LINESCandlestick signal: Possible reversal.Proper action: Wait for next signal. Possiblemarket short-term correction. Use the previouscandle and the next candle for direction.

DOWN TREND MEETING LINESCandlestick signal: Short-term support.Proper action: Wait for next signal. Possiblemarket short-term correction. Use the previouscandle and the next candle for direction.

UPSIDE GAP TWO CROWSCandlestick signal: Sell signal, if followed by alower Close during an overbought market.Proper action: Look for lower prices. Possibletop if found following a new or contract high.


BULLISH WINDOWCandlestick signal: Current trend intact.Bullish continuation signal when market is notoverbought.Proper action: If market is oversold, this canbe a good buy signal. Look for stability of trendif gap stays Close.

BEARISH WINDOWCandlestick signal: Current trend intact.Bearish continuation signal when market is notoversold.Proper action: If market is overbought, this canbe a good sell signal. Look for stability trend ifgap stays Close.

DOUBLE DOJI STARSCandlestick signal: Possible major marketreversal.Proper action: Wait for confirmation. This typeof doji pattern is interpreted as a marketconsolidation, with an increase in the likelihoodof a major trend change in the market’smomentum.


BEARISH SIDE BY SIDE LINESCandlestick signal: Short-term trend isbearish.Proper action: Wait for next signal. Look forstability of trend if high is not broken. Bearishsignal if high is not broken.

TWEEZER TOPCandlestick signal: Short-term trendresistance, bearish.Proper action: Wait for next signal. Look forstability of trend if high is broken. Bearish signalif high is not broken.

TWEEZER BOTTOMSCandlestick signal: Short-term trend support,bullish.Proper action: Wait for next signal. Look forstability of trend if low is broken. Bullish signal iflow is not broken.

BULLISH HARAMI CROSSCandlestick signal: Indecision in market.Possible reversal.Proper action: Wait for next signal forconfirmation. Possible reversal. Best if foundduring an oversold market and a contract ornew low.


BEARISH HARAMI CROSSCandlestick signal: Indecision in market.Possible reversal.Proper action: Wait for next signal forconfirmation. Possible reversal. Best if foundduring an overbought market and a contract ornew high.

HAMMERCandlestick signal: Possible reversal, buy onconfirmation.Proper action: Look for higher close above theblack candle to buy.

INVERTED HAMMERCandlestick signal: Possible reversal, buy onconfirmation.Proper action: Look for higher close above theblack candle to buy.

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