Candlesticks studies

Secret life of candlesticks!

Red candles = bearish trend

Green candles = bullish trend

Gray = Neutral or Sideways trend

Open – High – Low – Close (OHLC) vs LOCH

A candlestick  objects holds and store OHLC data; 


The standard order is Open – High – Low – Close aka OHLC, but Google Sheets Candlestick Chart formatting is Low – Open – Close – High aka LOCH. Use Query to format OHLC data to LOCH:

public Candlestick
{ String date = date; double open = open; double high = high; double low = low; double close = close; }

Forex Pair

A Forex pair object contains all the candles. 

Formation(Patterns)

Another way to look at formation is a ‘filter’. The formation matches with the data to identify the pattern. Four Patterns to remember:

  1. Consolidation
  2. Breakout
  3. Trend reversal
  4. Trend continuation

Comparing candles

The formations is the relationship between two or more candles. For example, comparing today’s open with yesterday’ open and the formations  is ‘Lower’. 

Buy strength and sell weakness – Strength is a condition shown by a ‘bullish bar’ blue or green(old empty) candle and weakness condition validated by a ‘bearish candle’ of red color( traditional black candle) . Hence when you go long, make sure of bullish candle day and when selling a red candle.

The Marubozu:

Marubozu “Bald” in Japanese, candlestick pattern with no wicks .
Rule: Whenever the Open = Low and High = close, a bullish marubozu is formed.

Marubozu= (Open = Low)  and (High = Close)

Bearish Open = High, and Close = Low

New High:

New High is formed when closing is smaller than previous period high.
NEW_HIGH = CLOSE > HIGHEST(HIGH(PERIOD = AGGREGATION PERIOD)

New Low:

New Low is formed when closing is smaller than previous period low.

NEW_LOW = CLOSE < LOWEST(LOW(PERIOD = AGGREGATION PERIOD)

Engulfing Candle:

IsEngulfing = (BodyMax > BodyMax[1]) and ( BodyMin < BodyMin[1])

White candle:

IsWhite = open < close;

Black candle:

IsBlack = open > close;

Doji candle:

IsPrevDoji = IsDoji(length)[1];

Body Length of candlestick:

Math.abs(candlestick.open – candlestick.close)

Wick Length of candlestick:

candlestick.high – Math.max(candlestick.open, candlestick.close)

Tail Length of candlestick:

Math.min(candlestick.open, candlestick.close) – candlestick.low

Bullish candlestick:

If  candlestick.open < candlestick.close

Bearish candlestick:

candlestick.open > candlestick.close

Hammer like candlestick:

tailLen(candlestick) > (bodyLen(candlestick) * 2) &&

wickLen(candlestick) < bodyLen(candlestick)

Inverted Hammer Like candlestick:

wickLen(candlestick) > (bodyLen(candlestick) * 2) &&

tailLen(candlestick) < bodyLen(candlestick)

Engulfed candlestick:

 body Len(shortest) < body Len(longest)

Gap lowest, upmost:

Math.max(lowest.open, lowest.close) < Math.min(upmost.open, upmost.close);

Optimized Trading Zones (OTZ)

The Resistance attempts to stops the price from rising further. Resistance is comparable to Demand Zone where  traders expect maximum supply , because of imbalance. The resistance level is always above the current market price.

The Support attempts to prevents the price from going any further. Why? Because, here a trader expects maximum demand (in terms of buying). At the support line price is ‘supposed’ to bounce back. The support level is always below the current market price.

The following two tabs change content below.
Avatar

jsmahay

I feel ethereal! Storm inside me!
Avatar

Latest posts by jsmahay (see all)

Avatar

jsmahay

I feel ethereal! Storm inside me!

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: