Candlestick Patterns & Analysis A-Z Masterclass

1. Introduction: Come to this candlestick trading and Analysis master class. My name is Travis Rose. I'm going to be your instructor today for this course. Before we dive into the main content of the course, I wanted to give a quick introduction to tell you a little bit about myself and what actually got me started here as an instructor. With that being said, I am a full time day trader and investor in the stock market, and I have been for the past five or so years now. I'm actually a self taught trader, which means basically that I learned everything the hard way and the hard way being taking a lot of unnecessary losses that I could have very easily avoided had I just followed in the footsteps of somebody that already knew what they were doing and somebody that was already profitable in the market. And that's actually what led me to start creating these courses here and hope that I'll be able to help new traders avoid the same mistakes that I made when I first got started and that so many other new traders make when they first start as well. That's really why the information in my courses is designed to save you countless hours of studying and potentially thousands of dollars in losses that many new traders face due to lack of education. So with that being said, by the end of this course, you should be on a much better path to profitability in the market, whether that be the stock market, the four x market, futures market, and so on and so forth, because at the end of the day, candlesticks and technical analysis can be used in a very valuable information for any market when it comes to trading or investing. So anyway, without further ado with the intro now out of the way, let's go ahead and get into the main topic of the course and start talking about some candlesticks and candlestick charts. 2. What Are Candlestick Charts?: Alright, so to start off this course, I wanted to really start with the basics of candlesticks and really the basics of technical analysis as well before we get into the more complex and more advanced candlestick patterns later on in the course. So that way, if you're brand new to the market and you don't have a really good understanding of what candlesticks are, you're not going to feel lost later on when we do start to talk about these more advanced patterns and these more advanced trading strategies. So with that being said, what exactly even is a candlestick chart? Candlestick charts essentially just tell us the price action summary over a set period of time. And that period of time can really be anything that you imagine. It can be something very short term, like 1 minute. It can be 5 minutes, 10 minutes, 15 minutes, or it can be something longer term like one day, one week, or even one month. And because of that, because we can look at these candlesticks on any different time frame, we can also use them for any type of trading as well. So if you're doing very short term day trading and maybe you're in and out of positions within a few minutes or a few hours, or maybe if you're swing trading and you're holding positions for a few days, a few weeks or even a few months, or even if you're doing long term investing and you're holding positions for multiple years, candlestick charts can be used for those types of trading and can really help you take your technical analysis for those trading and investing types to the next level. Now with that being said, you are typically going to be using shorter timeframes if you're doing a shorter term type of trading. So for example, a 1 minute candlestick chart would be much more useful for a day trader than somebody that is swing trading and holding positions for a little bit longer. So to kind of compare the different time frames, we have three different charts here, each taken on the same day and at the same time for the same stock. Over here on the left side, you see that we have the one day chart, which really just means that each of these candlesticks represents one entire day of price action. Here in the middle, we have the 1 minute chart showing us candlesticks representing 1 minute of price action. And over on the right, we have the five minute chart showing us candlesticks representing 5 minutes of price action. Now, we are going to break down exactly what makes up these candlesticks, and you're going to understand exactly what it means when they look the way that they do. But I just wanted to kind of show you this side by side comparison of different time frames on the same stock. So that way you can really see the difference between different time frames even when you're looking at the same day and at the same time. Now to kind of give you a comparison of a different type of chart style, there's also something known as the line charts, and this is one that many new traders are familiar with. But line charts, unfortunately, are really only going to help you with the overall trend of the price action and are not going to give you quite as much information as candlestick charts do. Now, just to give you an idea of how you can actually switch from one chart style to another, we're over here in the Tinker swim platform now, and if you happen to be on candlestick charts by default, and for some reason you wanted to switch over to a line chart, the way that you would do that is by going to Chart Style at the top, clicking on that, going to Chart type, and then selecting Line. And if you happen to be on line by default, you would do the same thing by clicking on style at the top, then selecting Chart Type followed by candle. Now, also, because I know a lot of new traders and a lot of traders that watch my courses happen to be using the Robin Hood platform on their phone, I also wanted to show you how you can switch from a line chart to a candlestick chart and vice versa on the Robin Hood app. And the way that you do that is by simply clicking on this little icon to the right of the time frame of your chart. And that's going to by default, switch you over to a candlestick chart. And the way that you go back to your line charts then is by once again clicking on the same icon. So as you can see, it is very simple to switch from different chart styles. And unfortunately, many new traders that are using Robin Hood don't even know that they can actually switch over to a candlestick chart. And because of that, they're leaving a lot of information behind. And in a way, you're kind of setting yourself up for failure by trying to take on the market with such limited information. And with that being said, I want to now go over just a few of the candlestick chart benefits that you may be missing out on by using something like a line chart in the first place. And the first of those is, of course, like I've already mentioned, that these candlestick charts are going to give us a lot more information about the overall price action over any set period of time. And again, once I start breaking down the candlesticks for you and explaining what actually makes these up, you're going to understand a bit more about what information is being provided by the candlesticks. But regardless, any information being provided by the charts is going to help you get an edge over your competition anyway. The second big benefit to using a candlestick chart is that they really help you to see chart patterns in different chart formations more clearly. Last but not least, they really help us to also see where there are major levels of supply and demand. Supply and demand actually plays a huge role in the stock market and is actually pretty much the sole reason for prices going either up or down. Having an understanding where there are major levels of supply and demand can be a huge edge in the market and can really help you to get on the right side of a trade. 3. Anatomy of Candlesticks: Now to move on from the candlestick charts and onto the candlesticks themselves, I want to explain a little bit about what actually makes up these candlesticks and kind of start to explain why they look the way that they do. Really, even though candlesticks may look a little bit complex, they're actually pretty simple and they're made up of four simple points. Those points are the open, the high, the low and the close. Now again, because we can look at candlesticks on any different time frame, the open, the high, the low and the closes that make up the candlesticks are going to be different depending on the time frame that you're looking at. These four points actually tell us exactly what the candlestick itself is going to look like. If we take this green candlestick over here on the left, for example, you can see that the open price of this candlestick is down here at the bottom of the green box. The closed price is then going to be at the top of this green box. The high is then going to be the line that sticks up from the and the low is going to be the line that sticks out from the bottom. Now, this line sticking out from the bottom is actually known as the lower wick. And it's pretty easy to remember because of the fact that these are called candlesticks, and candle sticks do, of course, have wicks. Then the line that sticks up from the top, again, representing the high is going to be known as the upper wick, and the colored main section of the candlestick itself is what is known as the real body. And, of course, the real body is going to be green when the open price is lower than the closed price, meaning that the price of the stock went up within that period of time. On the other side of the spectrum, we know that a red candlestick is one that closed at a lower price than it opened, and it's still made up of the three main sections, the upper wick, the real body, and the lower wick. So if we go over to the Tinker Swim platform once again here, the market happens to be open right now. So this is actually real time price action. And what we see is the stock AMD moving in real time. Right here in the middle, we have the 1 minute chart, and over here on the right, we have the five minute chart. So what we can do is just watch this in real time to see how the price fluctuates and see these candles actually open, move up to their high, move to their low, and then close to actually form these candles. So right now what we have is a candlestick that is about 30 seconds into its 1 minute period before it closes. So that means that in 30 seconds or so, we're going to have a new candlestick open. And now that that one closed, we can hover above that candlestick. And actually, if you look at the top of this chart here, you're going to see an O H and L and a C, which represents the open, the high, the low and the close. So the open for this candlestick over this 1 minute time period was $81.67. The high was $0.03 higher at $81.70. The low was down here at $81.57, and then the stock closed at $81.62, which is, of course, below the price that it opened and explains to us why this candlestick is actually red. And you can see, of course, after that one closed, immediately a new one opened, and the open price on this one was $81.65. And because this one is green, we know, of course, that it closed at a higher price than it opened, and you can see up here next to the sea that it did close $0.02 above where it opened at $81.67. 4. Supply & Demand: Okay, now to move on to a really important subject when it comes to trading and investing in the market, this subject ties in greatly with candlesticks and different candlestick patterns, and that is what is known as supply and demand. Now, like I've already mentioned, supply and demand is actually the sole reason for price fluctuations in the market. And they may come to a surprise to many people because many new traders seem to think that something like a press release or news being released by the company or earnings reports or even social media influence is the real reason that stocks go up or down. But at the end of the day, what actually happens is those things like the news and the press releases actually affect the current supply and demand for the stock. But then the supply and demand is actually going to be the main reason that the price goes either up or the price goes down. So for example, if a company puts out an earnings report, and on that earnings report, you see a lot of positive growth, telling you that the company is getting stronger financially, generally, that's going to be good news for the stock as well. But that news is actually not going to cause the stock to directly go up. What happens then is people see this news, and that's going to cause a larger demand for the stock, which is then going to push the price of the stock higher. And really the same concept is true for many things in the economy as well. If you think, for example, about something that is limited addition, many times limited addition items are priced much higher than they would be if there happened to be a larger supply of them. And the reason that they can be priced so high is because there is a very small amount of them available to people like you and I to actually buy. And there's also usually a very strong demand, many people wanting to buy these items, and that strong demand in low supply is then what causes them to be priced so high. And the same concept is true for the stock market. If at any given price there happens to be stronger demand or stronger buying than there is selling or supply, that's going to cause the price to rise from that area. On the other side of the spectrum, if there happens to be stronger supply or selling, then there is demand or buying, that's going to cause the price of the stock to fall. So really what candlesticks do in the market and while we're doing our technical analysis is help us to visualize the current levels of supply and demand. If you think about it, we, of course, know that green candlesticks represent candlesticks that are closing higher than they open, telling us that the stock price went higher during that period of time. That of course, tells us that there has been a strong demand at that price level, which is what pushed the price of the stock higher. On the other side of the spectrum, red candlesticks can tell us that there has been strong supply, and that's what caused the price of the stock to close lower within this set period of time. But to take things just a step further, you can actually look specifically at the wicks, whether it be the upper wick or the lower wick of the candle, to see where there's kind of been a shift in the supply and demand. And this can be very helpful for actually looking for reversal points in the market. And when you do it properly, it can actually allow you to buy into the bottom of a move and sell into the top of a move. So if we take this example here on the left side, we have a diagram showing initially a strong move up in the price. And many times what we see happen at a reversal point is there's going to be a lot of long upper wicks on the candle telling us that the supply has taken over and that there is now more selling or supply at that price than there is demand or buying. And if you think about it, what these long upper wicks on the candles actually tell us is that within this period of time, the stock price spiked all the way up, but at some point, the sellers or the supply took over and pushed the stock price down before it closed. So many times these long upper wicks on a candlestick can represent a bearish reversal to the downside. And if you're in a long position, that can be a red flag, and can be a great indication that you should sell and lock in your profits before the stock reverses the downside. Otherwise, you can actually look at these as an opportunity to short sell to profit from that downside reversal. And basically, if you don't necessarily know about short selling, what it does is allows you to borrow shares from your broker to sell at a higher price before you think the stock is going to come down. And then later on, what you do is buy back those shares, and they automatically get returned to your broker, ideally, you still want to buy low and sell high. But in this case, with short selling, you're simply going to sell high first and then buy back later and profit the difference between where you bought and sold. So these long upper wicks telling us that sellers are starting to take control of the stock can many times be a great indicator to actually open a short position. On the other side of the spectrum, if we have a stock that is initially down trending and making new lows, and then we start to see a lot of long lower wicks on the candlesticks, that tells us there is now a shift from strong supply to strong demand at this price level, and many times that's going to cause a bullish reversal to the upside, which we can buy into and profit from the stock bouncing and reversing to the upside from. And if we go ahead then and take this example that we have here with Tesla stock, you can see that pretty much everything we talked about in the past slides is really coming to life here with this example in Tesla. Initially, we're seeing strong signs of supply, which is represented by multiple red candlesticks, telling us that the stock is getting pushed lower and lower due to stronger supply than demand at these prices. And then what we see eventually happen at the bottom of this move and at the bottom of this short term downtrend, is that there's going to be multiple long, lower wicks on these candles starting to form, telling us that the demand is starting to overtake the supply in the market. And down here at these prices, there's going to be a lot of demand for the stock, which is eventually going to push the price higher. So because we are looking at a five minute chart, this is what you would see if you were doing some day trading probably and being able to actually spot these long lower wicks in real time while you're doing your analysis in the market could be a great opportunity for you to buy into the bottom of this move before Teslas starts to bounce back up. And that can be a very easy and profitable day trade by looking at that opportunity. If we take the next example that we have here with AMD, we see pretty much the exact same thing happen. This case, we're looking at the 1 minute chart, so it's really an even shorter term time frame. Once again, which is what you would be using probably for day trading or any very short term type of trading. But again, this is showing us that there is strong supply in the market. Getting pushed lower and lower with strong volume as it's making new lows. And then what we see happen down here at the lows is that there's all these long lower wicks starting to form on these candlesticks, telling us that the demand is starting to again overtake the supply. And that would be a really good buy opportunity in this case, because we see the stock bounce from, you know, about $88.50 down here at the low, all the way up to later on in the day getting up to well over $91 per share. So those are two very good examples of how you can actually look at these long lower wicks on candlesticks to kind of help you determine when a down trend is starting to come to an end. On the other side of the spectrum, like I've already mentioned in the previous slides, this can, of course, be represented also by long upper wicks forming on candle six, telling us that an uptrend or a strong move up is starting to come to an end. And you can see here with the example we have in PSV on multiple different occasions, as the stock spikes up into this 145 area, you can see that there are long upper wicks on all these candlesticks, telling us that there is a ton of supply being sold at this price level. And not only is it really just a flat line of resistance, but also the fact that there are all these long upper wicks on the candlesticks at that resistance level is going to be just another reason to sell out of your position if you were currently in one and actually look to take the other side of the trade by short selling into that resistance level to profit from the stock reversing back down to the downside. And I really wanted to share this example with you because it's very important to try to pair as many things as possible together when you're looking for the best type of trade setups. So in this case, not only do we have, again, a flat line of resistance, where the stock spikes up into multiple times and fails to break above, but you can also pair that with the fact that there are these long upper wicks on the candlesticks, telling us that there is a lot of supply being sold up at that price level. And this would really be the same concept if you saw a lot of long lower wicks forming on candlesticks while the stock is at a level of support. By pairing multiple indicators together and only taking the trades that have many different things, telling you a stock is likely to go in one direction. Next, that's going to help you improve your accuracy in the market, and that's going to really allow you to take the quality over quantity approach to your trading, which in the long run is, of course, going to lead to the most consistent trading and consistent profitability as well. 5. Support & Resistance: Alright, now moving on to support and resistance. Now, I know I've already talked briefly about support and resistance in the past section when we talked about supply and demand, but I want to go over these topics in more detail because they tie in really greatly with candlesticks for a few reasons that we're going to go over in the future of this section. But just to kind of give you an idea of what I mean by that, candlesticks can really help you again, take the quality over quantity approach to your trading, and they're going to help you buy into breakouts in the stock market. That are going to have the highest probability of those breakouts continuing to the upside. And hopefully, they're also going to help you avoid buying into breakouts that tend to reverse straight back to the downside and ultimately end up causing a loss. So before we get into exactly how that works, it's important to know the basics about support and resistance. And for those of you that may not know, support A is going to be a price level where a stock historically has a difficult time breaking below. Again, this is going to be because of stronger demand or buying than there is selling or supply at that level. And these support levels can be a really good opportunity for us to buy into the stock at the low before it bounces to the upside and continues upward. This is going to be especially true when you pair a level of support with a bullish candlestick pattern. And we're going to be going over both bullish and bearish candlestick patterns in the future of this course. But for now before we get into those, it's important again to just understand the basic concepts of what exactly support is in the first place. If we go ahead and take this example here, we have a diagram showing us that a stock is initially moving up and then it starts to pull back and it bounces off this same level on multiple different occasions, that's telling us that there is, of course, a lot of demand at that price level. So every time it pulls down to that price, the demand is pushing it straight back up. Essentially, that's what a level of support is going to be, and that's essentially what it's also going to look like on your chart. Now it doesn't always have to be a perfectly flat horizontal line of support. It can also be slanted a little bit and that's going to be what is known as a trend line. But in this case, our support level is perfectly horizontal. We would look to buy into that support line just above the support level, then hopefully like we have in this example, the demand is going to push the price up and we can later on sell at a higher price and profit the difference. Just to show you what this looks like on a real chart, we're looking at the 1 minute chart, so this would be what you would be looking at as a day trader. You can see that there is a very clear line of support down here at about $2.50. Just about every time it pulls down there, it bounces straight back up and it actually consolidates above the support line for multiple hours throughout the morning on this day. Throughout those couple of hours while it's holding that support line, you would have plenty of different opportunities to actually buy into the support level and then profit from the run that actually happens later on throughout the day. Now to flip onto the other side of the spectrum, resistance is going to be essentially the exact opposite of what support is. Because of that, it's going to be a price level where a stock historically has a difficult time breaking above due to stronger selling or supply than demand or buying. Resistance levels can actually be a great opportunity to sell at the highs before the stock reverses to the downside. If you happen to be in a position and you're looking for a level to actually sell and lock in your profits, a nearby level of resistance is always a good area to set your profit target for that trade. Alternatively, if you don't have a position open, you can also use a level of resistance to look to short sell to profit from that bearish reversal. And again, we want to pair as many things together as possible to give us the highest probability of success with our trading. So the same way that we would look for a bullish candlestick pattern when we're looking to buy at a level of support, we also want to look for a bearish candlestick pattern, at a level of resistance, which is then really going to confirm that level of resistance and is going to kind of lock in the fact that we should be selling out of our positions and possibly looking to take the other side of the trade by opening up a short position. And this is, of course, what we see when we look at a level of resistance. It's going to again, basically look like a flat horizontal line of resistance in most cases, but it can also be kind of slanted to the downside if it happened to be trend line resistance as well. And again, because stocks tend to have a difficult time breaking above a level of resistance, we can use them to look to short sell and then profit from that reversal down to the downside. And for a quick example, here we have the stock symbol AMD, and we can see that there is a very clear level of resistance up here at about $92.35. The stock spikes into that price level multiple times throughout the morning on this day. And every time it gets to that price, it seems to pull straight back down. So obviously, there is a ton of supply and a lot of selling going on at that price, so it's having a very difficult time breaking through. If you were watching this in real time and seeing that this stock was really struggling to break above $92.35, you could then look to open a short position up here in the $92.30 cent area after that resistance has already started to form earlier on throughout the morning and then you can actually profit from this bearish move that we see happen later on throughout the day and you can start to cover into these lows down here, again, profiting the difference between where you bought and sold. But just with short selling, you're going to be selling high first and then buying low later on. And for one more quick example, we have JNCE here, and this is actually a very important example because what we're going to talk about next in this section is confirmed breakouts and also false breakouts. And what we see happen here is that the stock has a little bit of resistance up here in the $8.50 area. And you can see that very briefly, the dock actually broke above that resistance level, and it got up to a high of about $8.60 before immediately coming straight back down. And then just about half an hour later, it gets all the way down to a low of about $6.70. That was a huge sell off from that line of resistance, and that's the exact type of setup that you want to avoid buying into, and you want to wait for that breakout above that resistance line to actually be confirmed. And that's actually what I want to talk about right now when it comes to breakouts above resistance and breakdowns below support. So, first and foremost, what a breakout even is is going to be a move above a defined level of resistance. And a breakdown is simply going to be pretty much the opposite being a move below a defined level of support. Now, one very common way that traders like to take advantage of the momentum in the market is by looking to buy the breakout of a stock. And buying the breakout is actually a great way to trade momentum. But unfortunately, many new traders are taught to buy breakouts improperly, and that's going to cause them to buy into the stock at the high of the move. And the way that they're taught is if we go back to the previous example, because we have a defined level of resistance up here at about $8.50, many people are taught to buy at the highs as soon as it starts to break over that $8.50 area. So because of that, they would be taught to buy in right up here at about $8.50 all the way up to $8.60, and that's going to cause them to buy the exact high of the move before this very strong move to the downside. And obviously, that's something that we want to avoid doing as traders. And by following the things that we talk about in the rest of this section, when it comes to looking at the candlesticks and waiting for a conformation, you're going to be able to safely trade the breakout of a stock and avoid buying into these breakouts that come straight back down. So just to kind of visualize what these breakouts and breakdowns are going to look like, you can see that, of course, with a breakout, we're going to have a defined level of resistance, and it's going to eventually break out above that resistance and continue up to the upside. And the same is going to be true for a breakdown. In this case, though, it's going to break below that level of support and then continue to the downside. Now, unfortunately, nothing in the market is going to work 100% of the time. So even though a stock may break out above a level of resistance, that doesn't necessarily mean that it can't end up being what is known as a false breakout. And a false breakout is simply a short term temporary breakout above resistance or a short term temporary breakdown below support before the stock reverses to the opposite side. And that's exactly what we saw in this example back here when we see a brief breakout above that resistance line. And again, because many new traders are taught to trade breakouts the improper way without a confirmation, that's going to cause many traders to buy into these highs, and they're going to end up taking a big loss on this trade if they sell down here as the stock starts to sell off. So if we move on to this next example here with Tesla, this is a really good example because we can see not only that there is eventually a confirmed breakout in the stock, but we also see a few short term temporary false breakouts that happen above this level of resistance. So this resistance line is right at about $410, and you can see that a few times throughout the morning, the stock spikes into that price level and then comes straight back down. So naturally, that's going to be a level of resistance. And later on throughout the day, you can see that there was a few times where it briefly broke above that resistance, but it's not able to actually hold above that resistance line and continue to the upside. And what happens is it kind of consolidates in that area for a while before it ends up actually confirming a breakout to the upside and then running up to new highs later in the day. So even though in this case, buying into these false breakouts right here and right here would eventually work out because of the confirmed breakout that we have right here, that's not always going to be the case, and many times what you're going to see happen is that it's going to look exactly like this example, and the stock is going to briefly break out above that resistance and then have a big sell off to the downside. So the best way to trade breakouts is to look for a candlestick confirmation. Waiting for a confirmation of a candlestick to close above that level of resistance on a breakout is going to help you avoid buying into these false breakouts. Again, that is eventually what happens with this example on Tesla stock. We see a few quick false breakouts and then this candlestick right here where the stock actually closes above that resistance level is when this breakout is actually confirmed, and that's going to really be your buy signal if you're somebody that's looking to trade the momentum of the stock. You can also see that that is exactly when the momentum really starts to pick up and that's when it starts to have the next strong move to the upside. Now, if we compare that to the example that we have here with MRSN, in this case, we're looking at the one day chart. So if you were somebody looking to trade longer term or maybe hold positions for a few weeks, all the way up to a few months, you would most likely be focusing on the daily chart. And just like you would if you were day trading or doing any kind of short term trading, you would still want to wait for that conformation above that line of resistance if you were trying to trade the momentum of the stock and buy into the breakout. So in this case, on this day, we have the stock break out above this line of resistance, but before the close, it sells off pretty strong and actually closes significantly below that line of resistance. So in other words, it ends up being a false breakout, which is, of course, something that we want to avoid buying into, and you would be able to do that by waiting for the confirmation and waiting for a day that the stock actually is able to close above this line of resistance. So hopefully this section talking about support and resistance, as well as false breakouts and confirmed breakouts, kind of helps you to see how candlesticks tie in with these different things. At the end of the day, when it comes to technical analysis, candlesticks are always going to tie in because they really are the foundation of doing technical analysis and looking at different charts and chart patterns. But if nothing else, after watching this section, I hope you're a little bit more picky with trading breakouts in the market and waiting for a candlestick confirmation. 6. Gravestone Doji: All right, so now that you know about the dragonfly doge, in this section, I want to kind of take the complete opposite side of the spectrum and talk about what is known as the gravestone doge. Essentially, the gravestone doge is going to be the polar opposite of what the dragonfly doge is. And this is going to look like a doge with a real body at the bottom of the candle, typically indicating to us that there is a bearish reversal to the downside coming, and this is going to most often happen after a strong move up or even a complete uptrend. So the same way that the dragonfly doge is made up almost entirely of a lower wi, the gravestone dogee is going to be made up almost entirely of an upper wick. And if you think about what we talked about, again, in the supply and demand section, you know that, of course, a long upper wick is a sign of supply starting to take control of the stalk, which can be a red flag for anybody holding the stalk and can be a great sign that the stalk is most likely going to pull back or reverse to the downside in the near future. And that's exactly what the gravestone Doge is going to tell us. Again, this is going to typically start off with a strong move up or an uptrend. Then we're going to see the gravestone Doge form, and following that, we're going to see a reversal to the downside. So when you do see the gravestone Doge form, if you're somebody holding a position in the stock, it can be a great sign for you to lock in your profits and sell out of your position. And from there, you can even consider taking the other side of the trade by actually short selling to then profit from that bearish reversal. And now I just want to give a few different examples here of the gravestone Doge. And first, if we take the example over here on the left, you can see we're looking at the stock PSTV on the 1 minute chart. And you can see that the stock is in a pretty strong uptrend throughout the morning. And right here at about 10:40 A.M. We start to see a couple of really long upper wicks on these candlesticks, which of course would be your first big sign of a potential reversal coming in the market. And after that, we actually see a gravestone doge form right here as the stock briefly breaks out above that previous high, and then comes all the way back down and closes at the same price that it opened, of course, then creating this gravestone doge. And from there, we see a reversal all the way from that high up there of about 3:50 down to later on going below $3 per share. So obviously, if you were in a position, this is not a pullback that you would want to hold through. And by spotting that doge in real time, that would be a great sign for you to sell out of the position and lock in your profits without having to hold through this big pullback all the way 350-3. And pretty much the exact same thing happens over here with our example on BFRA. We see another strong move up in the morning, and right here we get a nice gravestone doge. In this case, the real body of the doge is all the way at the exact bottom of the candle. And you can see that just a few minutes later, the stock tried to retest that high that form during that gravestone doge, and it failed to break above it and then immediately reverse to the downside. This one going all the way from a high of about $10.70 to later on being down at a low of about $8.70. Again, another big pullback that you would not want to hold through if you were somebody that was in a position in this stock. Alternatively, this would, of course, be another great opportunity to actually short sell up into these highs, which would then allow you to buy back those shares later on down at $8.70. So in this case, there was actually about $2 of potential profit per share by looking to take a short trade into this gravestone Doge. And real quickly in this section, I want to just give another click by click and candle by candle screen recording of a gravestone Doge. I think this is a great way to help you practice spot them. So that way, you're able to do so in real time once you start looking for them in your own trading. So what I'm going to do is just play the screen recording, and I want you to keep an eye out for the gravestone Doge, and, of course, just see how the price of the stock reacts to it. Okay, so maybe in this example, you notice that there's actually more than one gravestone doge that formed. You can see that we have the example here at about $77.20. The stock starts to bounce back up and then it forms a gravestone doge and continues right back to the downside. And this is a great example because it shows you that it doesn't always have to be a stock that's in an uptrend and then forms a gravestone doge and then reverses to a downtrend gravestone dogees can also form while the stock is already in a downtrend, and the stock is trying to reverse and spike back up. But then when the gravestone doge forms, it's going to be an indication that the trend to the downside is going to continue. And that's exactly what happens in this case on both occasions. Also when the second gravestone Doge form down here at about $75.80. So again, regardless of your trading style and regardless of if you're somebody that buys and sells shares and profits from an upward move, or if you're somebody that likes to take the other side of the trade, by short selling and profiting from these bearish moves, it's still very important to know about gravestone doges and to keep an eye out for them when you're doing your trading because whether it be locking in profits or looking for a great opportunity to short sell a stock, they can be very helpful and they can lead to some great traits. And with that being said, that's going to kind of finish off this section here with Doge candlesticks. Those are the three main ones that I wanted to go over in this course. And in the next section, we're going to be talking about other reversal candlestick patterns that are also going to be very beneficial for spotting the end of a trend and then looking for a reversal to the other side of the move. 7. Engulfing Candles: The first of the reversal candlestick patterns that I want to talk about in this section of the course are known as englfing candles. If you think about the word englf, it of course means to completely cover or take over something else. It really means the same thing when we talk about engulfing candles as well. With that in mind, an engulfing candle is going to be a candlestick with a real body that completely covers or engulfs the real body of the previous candle. These candlesticks are going to be great for spotting trend reversals, whether it be a short term, a midterm, or even a long term trend. So just like any of the other candlestick patterns and formations that we've talked about throughout the course, these can be on any different time frame, whether it be the 1 minute chart, the five minute chart, the daily chart, the weekly chart, or anything in between. So because of that, these can be used also for day trading, for swing trading, or even long term investing. Again, what it's going to come down to is the time frame of the chart. So if you're doing some short term trading, most likely you're going to be looking at an englfing candle on a shorter term time frame like the 1 minute or even five minute chart. Whereas if you're doing some long term investing, you would probably be looking for an englfing candle on the daily or even the weekly chart. So anyway, with that being said, there are really two types of englfing candles. There's going to be a bullish englfing candle and there's going to be a Barish englfing candle. And hopefully by now at this point in the course, because I've used the term bullish and Barish quite often, you know that bullish means to the upside and Barish means to the downside. So because of that, a bullish engulfing candle is going to be a candlestick that engulfs the entire real body of the previous candle and is going to indicate a bullish reversal to the upside. And most often, this is going to happen at the bottom of a move, and it is going to cause a bullish reversal to the upside. And looking at the diagram at the bottom of the slide, you can see that this is pretty much what a bullish and golfing is going to look like. We'll start off with a move down and a couple of strong red candles, and you can see that the bullish and golfing is actually a candlestick pattern that's made up of not just one but actually two candlesticks. And in this case, the second candlestick of the bullishion golfing is going to again have a real body that completely engulfs the real body of the previous one. Once this real body is formed, and the second candlestick is actually closed and we're moved on to the next candlestick, that's when this is completely confirmed as a BolishenGlfing, and that's when you would want to look to actually take the trade by buying into the stock to then profit from this Bolish reversal. And if we go ahead and take this example here with Spy, we're looking at the five minute chart. So this would be a bullish golfing that happened intraday, and would be a pretty good opportunity to buy into the stock for a short term day trade. But as you can see, the stock has a pretty strong down trend going on throughout the morning in this day. Then we see that there is a candlestick that completely engulfs the real body of the previous candlestick down here at the bottom of this trend. And also, one thing to keep in mind, like I've already mentioned, you do want to try to pair as many things together as possible to give yourself the highest chances of success in the market. So with that being said, not only do we see a bullish engulfing candle happen, but you can also see that there are multiple different candlesticks down here with very long lower wicks telling us that there is quite a bit of demand down here at that price level. So those two things paired together would be a great sign that this is the bottom of this move and it's going to temporarily bounce if not completely reverse trends to the upside. Because of that, this would be a great opportunity to buy into the stock and then profit from this bullish reversal. That happens after the bullish n golfing candlestick. And that was always, I want to go through a quick screen recording to actually go through this step by step and candle by candle, which I believe is going to be real helpful for you once you start trading in real time, because this is much better practice than just looking at screenshots or just looking at diagrams because you can actually practice looking for these candlesticks in real time. And then, of course, afterwards, seeing how the price of the stock reacts. So I'm going to go ahead and play the screen recording, and I want you to just keep an eye out for the Volition golf and candlestick. You can see at the bottom of this move, we get a nice bullish engulfing with the real body of this green candlestick completely engulfing the real body of the previous red candlestick. That's exactly where the price of the stock starts to reverse and that's exactly where the stock starts to bounce from. So now that you know about bullish and golf and candlesticks, I want to, of course, take the other side of the spectrum, as well to hopefully best prepare you for your live trading and talk about what are known as bearish golfing candlesticks, which are essentially going to be the polar opposite of the bullish golfing candlesticks. And with that being said, these are going to form typically at the top of a move or at the top of an uptrend, and they're going to cause a reversal to the downside. Because that they can be used to sell out of a position or even look to short sell the stock to then profit from that bearish reversal. And again, like any of these patterns, they can form on any different time frame and can be used for any different trading style. So over here on the left side, you can see we have an example of a Barish en golfing on the 1 minute chart. We see a strong move up in the stock happen in just a 1 minute time frame. And then after that, pretty much immediately, we start to see that there is a Barish en golfing, and the real body of this red candlestick completely engulfs the real body of the previous green candlestick. And from there, the stock reverses all the way from a high of about $10.35 down to a low shortly later to below $9.85. So by being able to spot this Barish engulfing candlestick in real time, you would be able to sell out of your position way up here and avoid having to pull through this pretty strong pullback. Also, you could take the other side of the trade by short selling and then profiting from this pullback, as well. And alternatively, if we take things a little bit longer term and we look at AMD over here on the daily chart, in this case, you can see that the real body of this red candlestick completely engulfs the real body of the previous green candlestick on the daily chart, which would be an indication that the stock is going to reverse to the downside over the next days and even weeks. And that's exactly what happens in this case. On the day of the BarshenGlfing, it hit a high of $94.28, and you can see that just a few weeks later, it gets all the way down to about $74 per share. Or in other words, it pulled back about $20 per share in a pretty short period of time, which is definitely something that you would want to avoid holding through if you were somebody that was trading AMD stock. Again, for some further practice, I'm going to play this screen recording, and I want you to just keep an eye out for the Barish and golfing. A so in this example, you can see that a pretty strong move up happened early on in the morning for this day. And right here with these two candles, we actually get our Barish engulfing. The real body of this red candlestick completely engulfs the real body of the previous green candlestick, and that's exactly where the stock reverses to the downside and actually comes all the way back down to where it started from in the first place. And that just goes to show you how valuable knowing these candlestick patterns can be, whether you're a long trader or a short trader, these very simple patterns can actually help you predict these moves and predict these reversals in the market. And with that being said, let's go ahead now and move on to the next type of reversal candlestick, which is called the morning star. Oh 8. Morning & Evening Stars: Alright, so continuing on with the reversal patterns in the market. In this section, I want to go over what are known as the morning star and the evening star patterns, which are just like the englfing patterns that we went over previously in the course are also going to be reversal indicators in the market. Now to start off, I want to talk about the morning star pattern. This is going to be a Blish reversal pattern. So for that reason alone, it's going to be very similar to the bullish englfing pattern that we previously went over. And because of that, this is going to be an opportunity to buy into a stock at the bottom of a move to then profit from the stock reversing to the upside. Now, one of the main ways that this is visually going to be different from the bullish en golfing pattern is that this is actually going to be a candlestick that's made up of three candles. And if we go ahead and take a look at this diagram here, this is typically what the morning star pattern is going to look like. We're going to start off with a strong move to the downside with one big red candle. Following that, we're going to see one, much smaller candlestick with a real body that is, again, much smaller than the previous candle, as well as the following candle. And that following candle is then going to be a green candlestick to the upside, which then closes right around the price of where the first candlestick actually opened. And once that candlestick actually closes near that price, that's going to be a confirmation of this pattern forming, and afterwards, that's actually going to be where you would want to look to buy into the stock to then profit from the bullish reversal. Now, the way that I like to explain this pattern is if we were to be looking right now at the 1 minute chart, so each of these candles was representing 1 minute of price action, and we were to switch over then to the three minute chart, all three of these candles would then be combined together into one single candle. And I want you to then try to envision what that one single candle is going to look like. Hopefully, you came up something along the lines of what we have over here on the right side of the screen. And the reason that one single candlestick would look something along the lines of what we have here is because if we would take our first candlestick, we see that the opening price is right here. It's going to spike a little bit up to this high before coming back down. During the second candlestick, it would hit a low down here before bouncing back up in the third candlestick and closing slightly below the opening price of the first candlestick. That's exactly what would make it look the way that it does. If you've watched the entire course up until this point, hopefully by now, you know that this long lower wick that is on this candlestick is going to be a great and very common indicator of a bullish reversal in the market. And the reason for that is, of course, because we know at some point, within this candlestick, the sellers drove the price of the stock down to this low, but eventually the buyers started to take control of the market, and all of that demand pushed the price of the stock right back up to just below where it opened, which is a sign that there has been a shift in the supply and demand in the market and that there is likely a bullish reversal coming. And that's exactly what this morning star pattern represents to us. And that's why it can be such a great pattern to look to buy into the market to profit from that bullish reversal. Okay, now two, just go through this step by step. I candle by candle, I want you to just keep an eye out for this morning star pattern and, of course, see how the price of the stock reacts to it. You can see at the bottom of the chart, we actually have our morning star pattern. We have initially our big red candle, followed by a much smaller candle in the middle and then a green candlestick that actually in this case goes well above the high of the opening candle and from there, the price of the stock rebounds and continues higher. I wanted to include this example in the section because it doesn't always have to be as simple as a downtrend, followed by a morning star pattern, followed by an uptrend. In many cases, this can actually be a pattern that forms while the stock is actually in an uptrend, but is pulling back or having a dip along the way. And by spotting this pattern in real time, while the stock is pulling back, it's going to allow you to safely buy into the pullback of the stock to then profit from it bouncing back up and continuing on with its uptrend later on. And really, that's exactly what we see in this example. You can see that the stock is in an uptrend making both higher highs as well as higher lows. However, of course, along the way, even though it is uptrending, it's going to have pullbacks and it's going to have dips. And those are going to be great opportunities for you to actually buy into the stock without chasing all the way up at the highs. By looking for this morning star pattern, you would be able to do exactly that. So now on the other side of the spectrum, the evening star is essentially going to be the exact opposite of what the morning star is. Of course, this is still going to be a reversal pattern in the market. The only difference is that this is going to be a reversal pattern to the downside, whereas the morning star is a reversal pattern to the upside. So with that being said, we're going to use the evening star more for selling or short selling than we would for buying or covering a short position. And again, this is also going to be a three candle pattern, most commonly, in this case, found at the top of a move, indicating to us a bearish reversal to the downside. And this can offer us a great opportunity to short sell to actually profit from that bearish reversal. So that way, we can later cover our short position at a lower price. So when it comes to the way it looks, it's pretty much going to look just like a morning star, but just flipped around the other way. So in this case, we're going to start off with a strong move up and a big green candle, followed by a much smaller candle with a very small real body, followed lastly by a large red candle to the downside, closing just around the price where the first candlestick actually opened. If we think back again to what this would look like if these three candles were actually put together into one single candle, that is going to give us something along the lines of what we have here on this slide because we have our opening price down here. The stock hits a low down here before bouncing back up and the second candle then hits this high before coming back down and the third candle closing just above the price of where the first candlestick actually opened. That's why this candle would look the way that it would if these were to be combined into one single candle. Now just thinking back to what we talked about, again, earlier on in the course, we know that these long upper wicks on candlesticks tell us that at some point within this candle, the sellers and the supply started to take control of the stock. That's why when the stock price rose up here, it was pretty much immediately pushed back down before that candlestick actually closed. That's going to represent a shift in the supply and the demand. That's why this is going to be a Barish reversal indicator, which is then often going to be followed by a stronger move to the downside. Just going through this again, click by click, just keep an eye out for the evening star pattern and then see how the price of the stock reacts to it. So you can see right in the middle of the chart, we do see a nice evening star pattern. The stack spikes up into that high. We get our one strong green candle right here, followed by a second candlestick with a much smaller real body, followed by lastly, another candlestick, this one also being large, but this time to the downside and being a red candle, which closes slightly above the open of the first candle. And that's going to give us our evening star pattern. This is again going to actually be confirmed once that third candlestick actually closes. So if you were looking to take a short position in this case, to profit from the downward move that happens later on, what you would want to do is wait for that third candlestick in the evening star pattern to form and then look to take your short position around here in these next couple of candles. In this case, it would have worked out beautifully as the stock price did come straight back down after that bearish reversal pattern formed. You can see that these are very simple but very valuable candlestick patterns. If you stay tuned for the next section of the course, we're going to go over a few more reversal patterns in the market, which are called the hammer and the hanging man candles. 9. Hammer & Hanging Man Candles: All right. Moving on to the next reversal candlestick pattern. This one is known as the Hammer candlestick, and this is also going to be a Blish reversal pattern. So this is going to go really into the same category as the bullish en golfing, as well as the morning star pattern that we talked about in the previous section. So what a hammer candlestick is and the way that it forms really is when the price of the stock falls significantly within the candle, but at some point, the buyers are able to push the price back up and the stock rallies back up near the opening price before that candlestick actually closes. And again, since this is a bullish reversal indicator, it's most often going to be found at the bottom of a move down or even at the end of an entire down trend. And you can see with this diagram example, essentially what the hammer candlestick is going to look like. We are, of course, going to start off with our move down. Following that, we get our hammer candlestick. We see our opening price right here. The price of the stock falls all the way down here before the buyers drive the price right back up, and the candlestick actually closes up near the high before then running higher after that candlestick is formed. And again, pretty much just like any other bullish reversal indicator that we've talked about. This one is also going to have a very long lower wick on the candlestick, which is still going to represent to us that there has been that shift in the supply and the demand. And down here at these prices, the demand is starting to take control, and that's what's pushing the price of the stock back up. So as we go through this example with AMD, just keep your eyes peeled for the Hammer candlestick pattern, and we'll see how the price of the stock actually reacts to it forming. Alright, so you can see down here at the bottom of the chart, we see our hammer candlestick actually start to form. And actually, if you look just before that, we also see this big red candle here that has a very long lower wick on it. So going back to what we talked about earlier in the course, you want to try to pair as many things together as possible to give you the best chances of success with your trading. And this is a great example of that because not only do we see this bullish reversal pattern, that, of course, being the hammer candlestick, but we also see a few candles prior to that that have very long lower wicks on the candlesticks, which we do know is a very common bullish reversal sign. But anyway in this example, following that pull back to the downside, we get our hammer candlestick, and you can see that there is a very clear and very strong reversal then to the upside following that pattern. And now moving on to the hanging man candlestick pattern, the same way that we kind of had the polar opposites when we talked about the morning star and the evening star, as well as the bullish and Barish golfing. This is essentially going to be the exact opposite of what the hammer candlestick pattern was. So the hanging man candlestick pattern is going to be a bearish reversal to the downside, allowing us to sell or short sell up near the high of the move. And what this is going to look like is essentially just a hammer candlestick that forms at the top of the move after a strong move up or even a complete uptrend. So if we take a look at this diagram here, you can see that we start off initially with our strong move up. Then we get our Hanging man candlestick, which again is going to look very similar to the hammer candlestick that we previously talked about. And following that, we are going to see a reversal to the downside, allowing us to sell our position and lock in profits up near the high or even short sell to then profit from that Barish reversal, so that way, we can later on cover at a lower price. Now the hanging Man candle stak is a little bit different from all of the ones really that we've talked about so far up until now in this course. And the reason for that is because I've always mentioned that these long lower wicks on the candlesticks are typically going to be a bullish indicator in the market and are going to indicate usually a reversal to the upside. So now, when we see this hanging man candles stake, that's really going to be kind of the opposite of what we talked about all throughout the rest of the course. And the only difference in this case with the hanging Man is that we're seeing these long lower wicks after the stock already had a very strong move to the upside. So if we take the psychology behind this move, really what this is telling us is that there's been a strong and steady move to the upside. And now in this hanging man candlestick, because we saw this quick sell off to the downside, even though it did end up making its way back up, that's a sign that the buying pressure that we previously saw while the stock was being pushed up is not quite as strong as it was before, and that's why this hanging man candlestick pattern is often the start of a bearish move to the downside. It's always just to help you practice looking for these patterns in real time, once you start looking for them in your own trading, I'm going to go ahead and play this screen recording and all I want you to do is look out for this hanging man candlestick pattern, and of course, just see how the price of the stock reacts to it forming. Alright, so you can see here up at the top of the move, we see our Hanging Man candlestick pattern. The stock is kind of chopping around going a bit sideways for a while. And then it starts to look like it's actually going to break out because it's moving above that most recent high. And that's going to make traders believe that this is starting to form higher highs in higher lows, and that's going to lead people to believe that this is going to be the start of an uptrend. However, those that know about these candlestick patterns would hopefully be able to spot this hanging Man candlestick pattern and see that this is a potential reversal point in the market. And once that candlestick does form, what we see is a reversal straight back to the downside, and it actually ends up going significantly lower than it was earlier on in the morning. So again, although it may seem very simple, these hammer and hanging man candlestick patterns can be very simple yet effective ways to help you spot potential reversal points in the market. So make sure to keep an eye out for them while you're doing your own trading and analysis. And with that being said, that's going to be a wrap on the reversal section of this course. So stay tuned for the next section when we start to go over continuation patterns in the market, which are hopefully going to allow you to ride the momentum of a stock, whether it be to the upside or to the downside for a profitable trade. 10. Mat Hold Pattern: The first continuation candlestick pattern that we're going to be talking about in this section of the course is going to be known as the Math hooldPattern. Now again, because this is a continuation candlestick pattern, it's going to be a little bit different from the reversal patterns that we talked about in the previous sections of this course. And what a continuation pattern is going to do is, for example, if a stock was in an uptrend and we see a continuation pattern forming, that's going to indicate to us that that uptrend is likely to continue. And the same is going to be true for a downtrend. If we see a down trend and then a continuation pattern forming, that's going to tell us the trend is likely to continue downwards. So anyway, this matt hold pattern is going to be a continuation candlestick pattern. This time actually made up of five separate candlesticks that is going to indicate to us either a bullish or a bearish continuation, and that's going to be, of course, dependent on which direction the trend is moving in the first place. So with that being said, let's start off with a bullish math hold. This is going to be made up of two tall green candles with three smaller red candles in between. This bullish math hold pattern is going to be confirmed once that fifth and final green candlestick actually closes above the high of all of the other candles that happened before it in this pattern. So really what that's going to look like is something along the lines of what we have down here in this diagramming sample at the bottom. You can see, of course, our tall you can see, of course, the tall green candlestick that starts off the pattern. We have our three much smaller red candlesticks that fill up the middle of the pattern, followed by then the one green candlestick that actually ends up closing above the high of the previous four candles in this pattern. Again, that is when this pattern is going to be confirmed. That is when you would want to look to actually enter into the trade to then profit from that bullish continuation to the upside. Now, as always on this slide, I have some practice to help you spot these patterns in real time. I'm going to play this and just keep an eye out for this bullish matld pattern and then see how the price of the stock reacts to it forming. I All right, so you can see pretty clearly at the bottom left of this chart, we do have our Bolish matld pattern that forms. We start off with our move up. We're already in an uptrend in this stock. So, of course, this pattern is going to be a continuation of that uptrend, and it's going to be an opportunity for us to buy into this trend and to really ride that upward momentum of the stock. But what we see is our first big green candlestick. Following that, we see three smaller red candlesticks. And last but not least we're going to finish off the pattern, of course, with that one green candlestick that is going to actually close above the high of the previous four candles. Again, that's when this pattern is confirmed. So with that being said, you would be looking to buy into the stock over the next couple of candlesticks, and from this example, you would have been able to make a great profit as the stock broke out of that pattern right here at about $7.40. And really just about an hour under 2 hours later, you can see that the stock really started to rocket to the upside and actually ended up hitting $8 per share. So again, because this is the bullish math hold pattern, this is going to allow you to take advantage of that upward momentum and profit from buying and selling shares in a stock. Now, of course, on the other side of the spectrum, you can always look to actually short sell to profit from stocks going down as well. And that's really when the Barshathold pattern is going to come into place. And this is, of course, going to be pretty much the exact opposite of the bullish Mathld pattern. And with that being said, it's going to be made up of two tall red candles this time with three smaller green candles in the middle. And this pattern is going to be confirmed when the final red candle actually closes below the lowest point of the previous four candles. So that conformation is what you would want to use for entering into a short position to then profit from that downward momentum that the stock has. And if we take this example here, we can go ahead and play the screen recording, and as always, just keep your eye out for the Mthold pattern and see how the price of the stock reacts to it forming. So you can see here that we do have a Bismat hold pattern. We see our big red candles stick here, followed by three smaller green candlesticks. And lastly, our fifth candlestick, this one closing below the low of the previous four candlesticks. That's going to confirm this BismotHld pattern. So you would look to short sell anywhere in this area over the next couple of candles. And you can see that this is actually not going to be a picture perfect example. I wanted to include this in here because everything's not always going to be picture perfect. I want to hopefully best prepare you for real life trading and not always give you the best cookie cutter examples. This is a perfect example of that. So you can see that after this pattern actually forms, the stock does start to look like it's reversing to the upside, which is really the exact opposite of what this Bishatold pattern is going to do. However, very shortly after the stock breaks above the high of this MC hold pattern, you can see it pretty much reverses straight back to the downside and actually ends up selling off almost $2 from this high up here down to this low down here. So this would have been a great opportunity to look to short sell really anywhere into this move after this pattern was formed to then profit from this Barish move that happens later on in the day. 11. 3 Methods Pattern: Alright, so to finish up with this continuation pattern section of the course, I want to cover what is known as the three methods pattern, which again is going to also be a bolish and a bearish pattern. And since this is a continuation pattern, that is going to be dependent on whether the trend was going to the upside or to the downside before the pattern was formed. Now, if you look at the diagram at the bottom of the page, you can probably see that this is very similar to the pattern that we previously went over, which was the matt hold pattern, but there is going to be one slight difference between the two. And that difference is with the three methods pattern, you can see that these three middle candles here actually fall within the range of the first candle. And when we talk about the matt hold pattern, that's not always going to be the case. Sometimes these three candles in the middle can be a little bit outside of the range of the first candle, but as long as it's one green candlestick followed by three red candlesticks, followed by a green candlestick that closes above the high of the previous four candles in the pattern, then that matt hold pattern would be confirmed, and that would be a sign of a continuation to the upside. However, with the bullish three methods pattern, these three candles do, of course, have to fall within the range, meaning between the high and the low of this first candle. Now because of that and because of the rules being a little bit more strict than those of the bullish mat hold pattern, this is going to be slightly less common to see. However, it is also known to be a little bit more accurate than the bullish mat hold pattern. So it is definitely one that I wanted to cover in this course, and it's definitely one that you should also keep your eyes out for while you're doing your trading. Now, with all of that being said, this is, of course, also going to be a five candlestick pattern. We're going to start off with a strong green candlestick to the upside, followed by our three red candlesticks, again, fitting into the range of that first candlestick, and last but not least, the one green candlestick at the end, which is going to break above and actually close above the highest point of the previous four candles in the pattern. So as always to help you practice spotting these in real time, I'm going to go ahead and play this screen recording, and I want you to just keep your eyes out for that bullish three methods pattern and see how the price of the stock reacts to it forming. I You can see right as the stock market opens for the day, in this case, we get our bullish three methods. We can of course, see that the trend in the first place was going to the upside and because this is a continuation pattern, this is going to indicate that that trend is then likely to continue to the upside afterwards. What we see is our first screen candlestick form right here, followed by our three smaller red candlesticks that fit once again into the range of that first green candlestick. And last but not least, we get our green candlestick that breaks above the high and closes above the high of those previous four candles. And from there, that's going to be our confirmation. So you would look to buy over the next couple of candlesticks, and that would, of course, allow you to buy into the stock down here really in the low $18. And shortly after that pattern formed, the stock bounces up and continues all the way up later on hitting a high of $20.37. Okay, now, just like we had the bullish and the Barish Matt holds, we also, of course, are going to have a bullish and Barish three methods. So the Barish three methods pattern is going to be very similar to the Barish matt hold pattern. Again, the only difference being that those three middle candles are going to actually fit and stay within the range of that first red candlestick. The Barish three methods is also going to be made up of five candlesticks, and it's also going to be confirmed once that last candlestick closes below the lowest point of the previous four candles in the pattern. So if I go ahead and play this screen recording here, you're going to be able to see a Barish three methods pattern form. And being that this is a Barish continuation pattern, we're going to start off with a move to the downside, followed by our pattern, followed lastly by a continuation to that downside move. So you can see we get our downside move there. And right there in the middle of the chart, you can see our Bars three methods pattern form. We start off with our move to the downside. Following that, we get our red candle with our three green candles that fit within the range of that first red candle. And lastly, we get our red candle stick that closes below the low of the previous four candles in the pattern. And from there you can see that the stock continues downward after that pattern is formed. So anyway, with that being said, both the Bolish and Barish three methods and MAT Hold patterns are great ways to really help you take advantage of the momentum in the market, whether it be to the upside or to the downside and whether it be buying and selling or short selling and covering. So I highly recommend keeping these patterns in your mind while you're doing your trading and investing and keep an eye out for them while you're doing your analysis. With that being said, a great way to practice spotting these in real time is to just go into your brokerage platform or your charting platform, zoom into the chart a little bit and go click by click, like we've done in these examples throughout the course, and just see if you can spot any patterns as you're going candle by candle and click by click and as always, see how the stock reacts to that pattern forming, so that way, you're going to be best prepared to take advantage of that pattern and to profit from that pattern while you're doing your real time trading and investing. 12. Gaps Between Candlesticks: Alright, in this section of the course, I want to go over what are known as candlestick gaps. Gaps can actually start to form between candlesticks when the closed price of one is significantly lower or significantly higher than the open price of the following candlestick. Many times what we see happen is that this happens on the daily chart when there's a large move that happens in the stocks extended hours trading. Extended hours trading is after regular market hours that can be either in pre market or in after hours. This is actually the time when companies put out their news. Because that news is going to greatly affect the price of a stock in most cases, it's very common for these stocks to have large moves in either after hours or pre market the following day. Which is then going to cause these gaps in the candle six because that extended hours trading is not going to show up on the daily chart. So just to give an example of this, we have the stock symbol KCAC. And over here on the left side, you can see we have the five minute chart, and on the right side, we have the daily chart. If we take a look at the five minute chart first, you can see that in the background here, we have a little bit of a gray background. When it goes to the black over here, that's when the market actually opens for the day. So right here, this is 9:30 A.M. Eastern Standard Time when the market opens, and everything that happens in the gray period before that actually happen in the pre market trading. So when the stock made this big move down here from about $10 per share all the way up to about $16 when it opened for the day, all of that happened in extended hours trading. Again, because this extended hours trading is not shown on the daily chart, it's just going to appear as a big gap on the daily chart, and you're simply going to see on the next daily candlestick where the stock opened for the day, and of course, where it hit as the high, the low, and where it then closed. But I wanted to include this section in the course to not only explain to you why candlesticks can actually form gaps between them, because I do know that a lot of new traders are a little bit confused by that, but also on top of that, there are actually quite a few different gap trading strategies that you can use for both midterm and short term trading, and we're actually going to go over a few of those in the next sections of this course. And before we move on to those strategies themselves, just to give you one more quick example here, we have the stock symbol ACST, and again, we have the five minute chart on the left with the daily chart over here on the right. And we can see that ACST had a very strong move down from about $0.76 per share all the way down to about $0.25 per share in extended hours trading. And, of course, this is probably due to some kind of negative catalyst or piece of news that was put out by the company. But again, because this happened in extended hours trading, that's just going to show up as a gap on the daily chart. And that's exactly what we see over here when we look at the daily chart. And this is definitely a very extreme example of a gap. They're not always going to be this big. They can be much, much smaller. For example, if we look a little bit beforehand on the Daily chart, you can actually see a pretty small gap here that happened a few months back. And another one up here in the red candles that happened about a month before that. Not nearly as big, of course, as the one that we're using for this example, but they are pretty common in the market and they can lead to some great trade opportunities. If you stay tuned for the next section, we're going to actually talk about one of these GAP trading strategies, and it is one that is known as the GAP close reversal. 13. Gap Close Reversal Strategy: Alright, so now that you know about gaps and how they can form between candlesticks, mostly on the daily chart, I also wanted to share with you one of the most commonly used GAAP trading strategies, and that's what is known as the GAAP close reversal. Now, this is a strategy that lets you actually take advantage of the gaps that form in the market. And this is also a strategy that can be used for both long traders, many people that buy and sell shares regularly, or even traders that prefer to short sell by profiting from a stock coming down. It's going to be dependent on whether the gap is above or below the current price of the stock. But regardless, this can be used on either side of the spectrum, and is a really great strategy for capitalizing on these gaps. And the way that this works is by looking for these gaps and realizing that gaps tend to be filled over time. Once these gaps are filled, the way that you actually take your trade is by looking for the stock to reverse in the opposite direction from the price that the gap was filled at. So let me show you what I mean by this in the first example. And this would be an example where you would be buying into the stock because the gap happened to be below and the stock was closing it to the downside. So if we look down here at the example with BOC, we're looking at the one day chart. So each of these candles is one entire day of price action. And you can see that on this day, the stock had a significant gap up from about $0.36 per share all the way up to the opening price of about $0.57 the following day. Now, because that was a big move that clearly happened in extended hours trading, that, of course, is what caused this large gap to appear on the daily chart. Now the reason that you can actually take advantage of this and look to buy into the stock is because later on, a few days and even weeks later, you can see the stock is pulling all the way back down to where this closed at the previous day before this initial gap up. Once it gets down to that closing price, that's when the gap is actually going to be considered closed. And again, many times these stocks, after closing their gaps, tend to reverse back to the other side. So because it's coming to the downside and it's closing that gap, you would be looking at this as an opportunity in this area to buy the stock and profit from this gap closed reversal. And if we look a bit ahead in the future, you can see that the stock gets all the way back up to about $0.60 per share on multiple different occasions. So buying into the stock on the pullback by using this GAAP close reversal strategy down here in the 30s and even the 40s, would be a great trade and could lead to some great profits, had you bought and then sold up into these spikes that happened later on. And that's really the whole concept of the strategy by looking at these gaps, waiting for them to close, and then looking for a reversal off of that GAP close. And again, to take the other side of the spectrum, these can also be used for short selling as well. So in this case, when you're looking to short sell a GAAP close reversal, that would mean that the gap is above the current price and the stock is spiking into that gap close. Many times after that gap closes, it happens to turn into a level of resistance, which you can then use to actually short sell and profit from the stock reversing back to the downside. So again, if we take the example that we have here with SCON, we are also looking at the daily chart on this one, as well. And you can see that on this day here, we have a gap down from the closed price right at about $0.58 down here to where it opened at about $0.47. So on the daily chart, there is a small gap there that is eventually most likely going to be filled over time. And you can see about a month later as the stock then spikes up into that gap, it eventually does get filled right here on this day. And then if we fast forward about a month later, it also does it again here on this day. And you can see that from both times that it spiked up into that gap close, that is going to act as a perfect level of resistance. And both times that it spiked into that resistance, it reversed straight back to the downside. And on this day, you can see that it got all the way up to about $0.57. It filled that gap once again, and then it reversed all the way back down to about a month later being below $0.25 per share. So by taking a short sale position in that case, you would actually be able to profit from this Barish reversal, and you would be able to sell up here in the 50s and then later on, be able to buy back below $0.25 per share. So regardless of your trading style, whether it be to the upside or to the downside, you can see how valuable having this trading strategy can be. The key to really making the most of this strategy is to wait for a confirmation of a reversal at the GAP close. You don't want to simply expect that gap to be closed and for the stock to automatically reverse because at the end of the day, there's nothing that's going to work 100% in the market, so you never want to simply expect something to happen. Instead of trying to predict that action, wait for it to happen and then react to it. What I mean by that is to simply wait for the gap to close and then wait for some kind reversal candlestick pattern to form at that GAP close level and then go ahead and look to use the GAAP closed reversal strategy to profit from that reversal.