Michael C. Thomsett, Business and Investment Writer, Nashville, Tennessee, USA

• Chapter 1: The Basic Candlestick  1 The Origin and Meaning of the Candlestick  2 Strengths and Weaknesses of Candlesticks  7 Paper Trading as a Testing Ground  12 The Skills Every Trader Needs  15 Candlesticks: General Observations Concerning Their Use  19 Expanding the Information Pool Effectively  22 Chapter 2: Single Stick Signs  27 Uptrends and Downtrends  28 The Significance of a Candlestick’s Shape  31 Variations on the Bullish Long Candlestick  33 The Mistake Pattern  35 The Spinning Top, Hanging Man, and Hammer  41 Line Signals  44 The Significance of Tails  45 Chapter 3: Double Stick Moves  49 Two Reversal Moves: Engulfing and Harami  50 More Reversals: The Inverted Hammer and Doji Star  56 Gaps and Lines  60 Neck Lines, Crows, and Rabbits  68 Reversal and Confirming Moves—Relative Values  78 Chapter 4: Complex Stick Patterns  81 Reversal Trend Change Patterns  82 Inside and Outside Formations  88 Reversal Stars and Abandoned Babies  91 Line and Gap Continuation Signals  95 Tower Tops and Bottoms  105 Chapter 5: Reversal and Continuation Pattern Analysis  109 Strong Top and Bottom Signals  111 Stars, Kicks, Swallows, and Sandwiches  117 Matching and Star Reversals  126 Ladders and “Major” Reversals  130 Sakata’s Five Methods  134 Price Patterns with Low Reliability  142 Strong Price Line Reversals  150 Recognizing the False Signal  165 Chapter 6: Volume and Volatility  169 Volume as a Price Indicator  169 Volume Indicators  174 Testing Price Volatility  183 Triangles and Wedges  185 Chapter 7: Buy and Sell Set-Up Signals  193 Price Spikes and Reaction Swings  196 Percentage Swing Systems  200 Short-Term Gapping Behavior  202 Anticipating the Trend During Consolidation  206 The False Indicator  210 Support and Resistance in the Swing Trade  214 Chapter 8: Swing Trading with Candlesticks  219 A Swing Trading Overview  220 Quantifying Price Movement with Candlesticks  223 The Importance of Convergence and Divergence  226 Primary Trends and Candlestick-Based Entry or Exit  230 Set-Up Criteria and Action Points  234 Selling Short in Swing Trades  239 Chapter 9: Spotting Trends and Using Trendlines  243 Identifying the Trendline  244 Trendlines and Confirmation Signals  249 Applying Moving Averages to Candlestick Analysis  252 The Channel Line  254 Chapter 10: Technical Indicators  257 The Value of Confirmation  258 A Review: Technical Analysis Basics  261 The Significance of Gaps  264 A Framework for Interpretation: Support and Resistance  267 Overbought and Oversold Indicators  270 Relative Strength Index (RSI)  270 Stochastics  272 MACD  273 Bollinger Bands  274 The Potential of Candlestick Signals  278 Glossary  281 Index  297

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