Darren Winters highlights rudimentary candlestick vocabulary so that you can apply candlestick knowledge to paper trading or live trading when you reach a level of competency. All you need to know to begin your journey of discovery are the keywords to type into the search engine, curiosity, and eagerness to learn.
What Darren Winters has done to save you screen time is highlight some rudimentary candlestick vocabulary, which you can do keyword searches to expand your knowledge further
One of the best YouTube videos on candlestick patterns is the Ultimate Candlestick Pattern Trading Course, which is designed for beginners with no trading experience to an advanced level.
So, candlesticks show price action, open price, high, low, and the close of a given time frame. Candlesticks don’t show volume. A green candlestick means the price has closed higher for the session, and a red candlestick is a reverse.
So, highlighting rudimentary candlestick vocabulary, an upper wick is the high of the session, and a lower wick is the lowest price of the session.
The body, a colored part of the candlestick tells you who is in control
An upper wick shows rejection of higher prices. Additionally, the larger the wick length, the greater is the rejection.
In your knowledge of rudimentary candlestick vocabulary, check your understanding of the candlestick body, the wick, and the implication of body to wick size
For example, a green candlestick with a small body and a larger upper wick is evidence of the market rejecting high prices as sellers push the price down, and it is interrupted as weak buyers in control.
On the list of rudimentary candlestick vocabulary is an indecision pattern, which occurs when you see a slim body that equal upper and lower wick
TAE Framework is also on the list of rudimentary candlestick vocabulary
In short, traders should avoid trading candlestick patterns in isolation. In other words, a green candlestick doesn’t mean traders should buy. Equally, a red candlestick doesn’t mean sell.
TAE is an acronym where T stands for trend, A for Area of Value, and E stands for entry trigger
In your rudimentary candlestick vocabulary, several patterns trigger trades within the TAE Framework
The first is the Engulfing Pattern. A bullish engulfing pattern is a green body engulfing red and vice-versa.
A Hammer is a bullish reversal rejection of lower prices, which is a sign of strength.
A Shooting Star, another candlestick pattern, is the opposite. It is showing rejection of higher prices.
A Hammer and a Shooting Star are used to show price reversals
Dragonfly and Gravestone Doji, also on the candlestick vocabulary, are a sign of price rejection
The only difference between a Shooting Star, a Hammer, and Doji is that the latter doesn’t have a body, so it is that simple.
A Morning Star is a bullish reversal pattern. An Evening Star is the opposite, a bearish reversal pattern. Tweezer Bottom is a sign of rejection of lower prices with two candles, and Top is the opposite, which is a bearish reversal pattern
So, understanding and candlestick vocabulary can help investors identifying the bottom with technical analysis.