12 Signals to Master Any Market

The Kicker signal is the most powerful signal of all. It works equally well in both directions. Its relevance is magnified when occurring in the overbought or oversold area. It is formed by two candles. The first candle opens and moves in the direction of the current trend. The second candle opens at the same open of the previous day, a gap open, and heads in the opposite direction of the previous day's candle. The bodies of the candles are opposite colors. This formation is indicative of a dramatic change in investor sentiment. The candlesticks visually depict the magnitude of the change.

The Japanese say that whenever a Doji appears, always take notice. A well-founded rule of Candlestick followers is that when a Doji appears at the top of a trend, in an overbought area, sell immediately. Conversely, a Doji seen at the bottom of an extended downtrend requires buying signals the next day to confirm the reversal. Otherwise, the weight of the market could take the trend lower.

The Doji signal is composed of one candle. It is formed when the open and the close occur at the same level or very close to the same level in a specific time frame. In Candlestick charting, this essentially creates a "cross" formation. The horizontal line represents the open and close occurring at the same level. The vertical line represents the total trading range during that time.

The Piercing Pattern is composed of a two-candle formation in a downtrending market. The first candle is black, a continuation of the existing trend. The second candle is formed by opening below the low of the previous day. It closes more than midway up the black candle, near or at the high for the day.

The Morning Star Signal:
What good is stock market advice if you still don't know how to read a stock chart? This video will help you to identify the Morning Star signal and the trading criteria used for successful implementation. We hope this is helping you along your way to successful stock market trading.

The Evening Star Signal:
The Evening Star signal is a top reversal signal. It is exactly the opposite of the Morning Star signal. Like the planet Venice, the evening star, it foretells that darkness is about to set or that prices are going to go lower. It is formed after an obvious uptrend. It is made by a long white body occurring at the end of an uptrend., usually when the confidence has finally built up. The following day gaps up, yet the trading range remains small for the day. Again, this is the star of the formation. The third day is a black candle day and represents the fact that the bears have now seized control. That candle should consist of a closing that is at least halfway down the white candle of two days prior. The optimal Evening Star signal would have a gap before and after the star day.

The Inverted Hammer signal is comprised of one candle. It is easily identified by the small body with a shadow at least two times greater than the body. Found at the bottom of a downtrend, this shows evidence that the bulls are stepping in, but the selling is still going on. The color of the small body is not important but the white body has more bullish indications than a black body. A positive day is required the following day to confirm this signal.

The Hanging Man signal is comprised of one candle. It is easily identified by the presence of a small body with a shadow at least two times greater than the body. It is found at the top of an up trend. The Japanese named this pattern because it looks like a head with the feet dangling down.

One of the most visually compelling signals is the Hammer signal. The Hammer signal is easily recognized by the lower shadow (the tail) protruding to the downside after an extended downtrend.

The Hammer is comprised of one candle. It is easily identified by the presence of a small body with a shadow at least two times greater than the body. Found at the bottom of a downtrend, this shows evidence that the bulls started to step in. The color of the small body is not important but a white candle has slightly more bullish implications than the black body. A positive day is required the following day to confirm this signal.

The Dark Cloud signal is a signal that tells an obvious reversal of a trend. It is named because it looks like a dark cloud over a nice bright sunny uptrend.

The Dark Cloud signal is the bearish counterpart to the Piercing pattern. The first day of the pattern is a long white candle at the top end of a trend. The second day's open is higher than the high of the previous day. It closes at least one-half way down the previous day's candle, the farther down the white candle, the more convincing the reversal. Remember that a close at or below the previous day's open turns this pattern into a Bearish Engulfing pattern.

The Bullish Harami is an example of visual statistical analysis. Upon witnessing a Bullish Harami at the end of a downtrend, an investor has a good idea of what to expect. This major signal becomes a vital information packed analytical tool.

The Harami is an often seen formation The pattern is composed of a two candle formations in a downtrending market. The body of the first candle is the same color as the current trend. The first body of the pattern is a long body, the second body is smaller. The open and the close occur inside the open and the close of the previous day. It's presence indicates that the trend is over.

The Japanese definition for Harami is pregnant woman or body within. The first candle is black, a continuation of the existing trend. The second candle, the little belly sticking out, is usually white, but that is not always the case. The location and size of the second candle will influence the magnitude of the reversal.

A Bullish Engulfing signal is one of the major signals. When the elements out of a Bullish Engulfing signal are broken down, an investor can clearly understand what was going on in investor sentiment to cause a reversal. 400 years of observations from Japanese rice traders has recognized the Bullish Engulfing signal as a very high probability reversal signal.

The Engulfing pattern is a major reversal pattern composed of two opposite colored bodies. The Bullish Engulfing signal forms after a downtrend. It opens lower than the previous day's close and closes higher than the previous day's open. Thus, the white candle completely "engulfs" the previous day's black candle.

The Bearish Harami is one of the major signals that exhibits common sense in a graphic depiction. Candlestick analysis provides a clear understanding of what happens to investor sentiment at the reversal areas. The elements that create a Bearish Harami produce clear insights into what was going on in investor minds at a reversal.

The Bearish Harami is the exact opposite of the Bullish Harami. The pattern is composed of a two-candle formation. The body of the first candle is the same color as the current trend. The first body of the pattern is a long body; the second body is smaller. The open and the close occur inside the open and the close of the previous day. Its presence indicates that the trend is over.

A simple description of the Bearish Engulfing signal reveals why the signal works very well as a candlestick sell signal. This is the stock market data that an investor should be using for both technical analysis as well as fundamental analysis. The information conveyed in this signal creates an extremely high probability that the buying is over. It also reveals an opportunity for establishing a good short position.

The Bearish Engulfing pattern is a major reversal pattern composed of two opposite colored bodies. The Bearish Engulfing Pattern is formed after an uptrend. It opens higher than the previous day's close and closes lower than the previous day's open. Thus, the black candle completely "engulfs" the previous day's white candle. Engulfing can include either the open or the close be equal to the open or close of the previous day, but not both.

The Shooting Star signal is composed of one candle. It is easily identified by the presence of a small body with a shadow at least two times greater than the body. It is found at the top of an uptrend. The Japanese named this pattern because it looks like a shooting star falling from the sky with the tail trailing it.