welcome to this candlestick chart trading video part 2
and if you missed part one feel free to go look at it they have to finish this
one
they're not in any particular order and you can watch that one second
alright today we're going to talk about a different Japanese candlestick pattern and this
is not really a traditional candlestick chart pattern I just call it a spike top or he
spake bottom reversal candlestick formation so it's very similar to those of
you who are familiar with the traditional Japanese candlesticks to the
shooting star or to the hammer and but I just create a little more leeway around
it
not quite a strict in my rules and I'm looking for the logic the market logic
of the pattern so here's the market logic
first of all this is essentially what it looks like right there so that be a
speak top bar and the thing that we're looking at here is that the market opens
here and then it tests these price levels so there's bidding is asking for
some buying or selling
but by the time that bar closes it comes all the way back down here and the bar
closes at the same price level it started now for aspect hyperspace bottom
bar sometimes their duties like this other times they have narrow real bodies
so it doesn't have to open and close at the exact same place but it does have to
open and close near the bottom of the bar so that is one of the keys is that
first of all
rule one is it has to both open and closed in the bottom twenty percent of
the range of the bar
so essentially the logic here is that the market found value here it opened
wear it close from the last bar
see generally traditionally in a shooting star little gap up and they
considered a higher probability trade is
fit gets up in the open the next day that happens more on daily charts that
with an intraday chart like this and that may be true that me do it but again
I'm just simplifying candlesticks
so they test all these prices up here and they reject them in market profile
terms that is called a rejection of value
so these prices from here to here
the market has tested them and by the end of that are during that time frame
said no the workplace has decided that we don't think the markets that valuable
and that therefore is a bearish signal because these prices have been rejected
and so it is considered a bearish pattern and then the market goes down
from there
so Marcus always trying to establish what is a fair price for whatever
markets being treated so when we talk about the term market logic
that's what I mean how do Marcus people in a bid bid and offer or an auction
setting work how do they logically work
now another thing that is very helpful is if rule number two the range of that
bar is twenty percent greater than the range of the last 20 bars twenty percent
or greater than the range of the last 20 bars so narrow range bars
we don't want those so for example over here we got a little narrow range bar
and that's a speak top bar but it's not really very significant because from the
high to the low of the bar can really cover enough range for to reject enough
price value of price levels so it's really meaningless it's really just a
neutral bar
anything that is a narrow range bar I consider to be a neutral bar
another thing is in the context here we have a spec top bar and I'm but look
where it is
it's already down here and this is the problem
so this is real three and Rule three is that we want it to be at a cycle high or
a cycle low and in this case it comes in the middle of a half cycle from a single
height of the cycle 0 and therefore it's not something that I would trade because
it is a bearish bars are very signal but it comes too late in the range of the
half cycle and I want to catch it at a cycle high or a cycle low so let's
by the way if you're interested in my cycle indicator if you don't have one
you should have won but if you don't then I'm let me know send me an email
and i'll be happy to send you information about how to get mine for
free my YouTube friends they could be my cycle indicator in my tutorial on it for
free
so here's just a couple more examples there is another one of the nice spike
high bar
here's an end puts in the cycle high-spec low bar
put some cycle low again it's rejected these prices and rejected these prices
and therefore that's what makes it
signaling a high signaling a low now you should notice too that these are just
short-term signals so and this is true in my opinion of all candlestick
patterns
sometimes people ask me well how long are these signals good for you and for
me they're good for one half a cycle which is you can see is rather short
term that would be a cycle high 60 low cycle highest that glow cycle high cycle
oh they do not determine trend so their short-term signals and trend by
definition is always a long-term signal
there's another one big one so now we got a real wide range one there
and again it's rejected test it all these prices and said nope
we can't get enough buyers up they're not people buying to get enough traction
going and therefore what happens if the market goes down
alright so if you like this video and you're watching it on YouTube please
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comments also i'm giving away one of my favorite trade strategies it's called
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