today's video on candlestick charting trading is going to be very very basic
we're not going to get into all the details of Japanese candlesticks if you
want to do that just wanna get books out there that will take you through many
different variations of those patterns but what I want to share with you today
is the logic behind those patterns so let's start with the very beginning and
this is Japanese candlestick 101 what is the bar okay so what is a bar well let's
bring up a little picture there and let's show you what about it there it is
that is literally a bar okay well if you're health conscious no that's a bar
that's where we should all be after we're done treating go to the gym go to
the fit bar but if we're traitors okay that's a bar now let's look at the logic
of what this actually means so we're gonna look at two things number one is
the range of the entire bar so from high to low that's very important and then
we're also going to look at the relative position of the open to the clothes
within that range so does it close at the top near the high first of all does
it open near the low and close near the high if so and it has a wide range
overall then that is considered a very bullish one bar pattern so again the two
elements there that are very important are the range of the entire bar from
high to low and where it closes in relationship to that high and low all
right let's go and look at a bearish well that's one bar logic okay now the
opposite of that would be course where it opens near the high closes near the
low and again remember it's very important it's not just that the bar is
red or green this is something I see a lot of people making mistake with
especially beginners because red green they just get in hammered with those
colors do not get an image with those colors they don't mean as much as you
think they do except in their context so in this contact context where you have a
white range bar from high to low or my drawing to ago is the rate from the low
the bar too high that's not a very wide range bar and we close near the low okay
then that does qualify it as a very bearish bar that's one bar logic all
right now as contrast to that now here we have again in wide range bar from
high to low but the real body is very narrow range
but the point of this one is that it closes near the low and therefore that
is a bearish bar this area up here is what we call a rejection of value the
market has rejected those higher prices and it has said nope we're not gonna buy
it those prices and therefore it is a bearish bar right so that's another type
of one bar logic then we can move on and take the opposite of that of course and
notice by the way that now we have a molest when we had a green real body but
it was bearish here we have a red real body but it is bullish so that's why I
say the colors don't mean that much the in certain contexts sometimes they do
sometimes they don't but the bar from low to high is wide range so there's a
lot of price in this case the real body not as wide range and it closes now
closes here so it's closing near the top of the range again you get a long week
at the bottom and what that really means is all these prices were rejected here
if we had our eye for chart depth we're looking at the prices over here in the
right access then all those prices were rejected during this period whatever
period of time that is whether it's a five-minute bar or at daily bar system
in a bar or whatever during that period of time the market participants they
rejected those lower prices and that's what makes it a bullish bar so all these
prices up and rejected and therefore overall this from a 1 bar perspective
which we'll get to in further videos we're going to multiple
series on us well for that one bar at least that is a bullish pattern now to
bar logic we move on to the next phase now we're looking at two bars in just
these two bars in relation to each other so if a bearish bar here followed by a
bullish bar and basically this bar is negating the bar before it and that's
the key issue here so in other word another way of saying this would be that
the green bar invalidates the red bar because the red bar was bearish you know
the green bar the brunette's bar the market participants have said hmm
whatever happened during this last period of time we're no longer
considering that valid and now our sentiment is bullish so within one bar
within one price period the market has changed its mind changed its sentiment
and now it is bullish so that is a 2 bar logic pattern and it is I call it
invalidating the previous bar so we'll get to some of that in the future here
whether one bar validates or invalidates the next one here is just the opposite
example of course so here we've got the bullish bar and then this bar bearish so
the bar on the right the most recent part is invalidating the bar before it
so the side logically look at without necessarily having to learn all the
fancy-schmancy Japanese names again not discounting that at all if you want to
become an expert at candlestick patterns get into all the details that's great go
for it I find that I didn't find just by looking at these basic logical patterns
now here's another logical pattern I got to borrow logic so we've got a bit of
the green bar here a bit of play bullish bar now notice on this one again the
things that we're looking at range to the borrower from low to high
not as much not as much so it's not as bullish closes near the high okay so
that's a bit of a bullish sentiment and by the way another thing you can look at
mr. work closes you can look at the percentage within the bar where closes
so from high to low let's say that that's fifty percent so I would say if
it closes within the top third I considered that bullish to close us
within the bottom third I consider that bearish that's how I do it I divide the
bar into thirds middle is neutral now so that's a bit of
a bullish bar and that's super bullish but a little bit but then this one is
very bearish and why is this very bearish well again it's more wide range
from low to high we get a narrow range bar here or real body but the more
important thing then the range of that is that again rejection of value concept
all these prices up here you want to take it over to your right access these
prices up here were all rejected in other words the market yeah there were
some trades that occurred up there but they couldn't get in that it's really
about supply to man it wasn't enough supply demand imbalance to make it go up
and therefore there weren't enough people who would buy in so just like
anything else what is something worse in the
marketplace well whatever someone is willing to pay for it people we're not
willing to pay more for it wait and here's just the opposite example same
thing but I like to show both bullish and bearish examples so here we had a
getting bit I'll be a bearish bar followed quickly by a very bullish bar
in the reason we know that's more wide range and again rejection of value no
the rejection of value one thing that's very important on this is that if you're
going to apply that rejection of value logic the range of the wick must be very
wide range very wide range so that's why we still need a wide range bar here from
low to high and we need it open and close in the top third and that's what
actually tells you there's a rejection I'll tell you there so those are all
examples of the market in validating the bar before it okay now this one I just
will finish with this one for this video and then we'll follow up with another
video now here we have two bar logic what is this well we have a very nice
wide range bullish bar followed by a narrow range bar now any kind of narrow
range bar at all from high to low I consider just a neutral bar I just
consider them all neutral I know in classic Japanese candlestick patterns
they have all different sorts of meanings I get that or respect that but
to me the markets are so big so massive so international people treating all
different timeframes methodologies indicators all kinds of stuff that
they're a bit messy and so therefore you've got to allow for that messiness
and so anything that is a narrow range bar I just considered a neutral bar I
don't care if it's green I don't care if it's red I don't care if it closes at
the top 3 the bottom 3rd at the bar if it's narrow range from high to low then
I just considered a neutral bar so this bar does not validate or invalidate the
previous one it's just neutral and so therefore the sentiment that we would
have in the market at this time would just not change since we have a neutral
bar that follows the bullish bar our sentiment is still bullish ok just
doesn't change because it's just followed by a neutral bar at the markets
literally just paused for one period so we're gonna stop there and there will be
a part 2 coming out after this where we get into more detail and believe me you
need more detail this is not enough to be trading with we'll talk about volume
we'll talk about the relationship to the candles within the entire chart all of
that and that's what you really need to be treating let we start here at the
very kernel so if you found this video helpful feel free to let me know in the
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