Candlestick Analysis & Japanese Techniques Flashcards
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Read the first 6 Candlestick Analysis & Japanese Techniques flashcards as text
What is the 'Ichimoku Kinko Hyo' system and its primary advantage?
Answer: A multi-component system providing support/resistance, trend direction, and momentum signals in one view
Ichimoku Kinko Hyo ('equilibrium at a glance') uses five lines including the Cloud (Kumo) to simultaneously display trend, momentum, and support/resistance on a single chart.
In Ichimoku analysis, the 'Kumo' (Cloud) represents:
Answer: A dynamic support/resistance zone formed by the leading spans, with thickness indicating strength
The Kumo is plotted 26 periods into the future and its thickness represents the strength of support or resistance — a thick cloud is harder to break than a thin one.
The 'Evening Star' candlestick pattern signals:
Answer: A bearish reversal consisting of a large up candle, a small-body candle (star), and a large down candle
The Evening Star is a three-candle bearish reversal pattern where buying momentum is lost in the star candle and then confirmed by the following large bearish candle.
A 'Piercing Line' pattern is the bullish equivalent of which bearish pattern?
Answer: Dark Cloud Cover
The Piercing Line is the bullish counterpart to Dark Cloud Cover — a bullish candle opens below the prior bearish candle's low and closes above its midpoint, signaling a reversal.
What does the 'upper shadow' (upper wick) of a candlestick represent?
Answer: The distance between the high and the body's top, showing the extent to which buyers attempted to push price higher but failed
The upper shadow shows how far above the body the high reached, representing the buyers' failed attempt to hold those higher prices — longer upper shadows indicate more significant rejection.
The 'Three Inside Up' pattern is a bullish reversal pattern that combines which two patterns?
Answer: A Bullish Harami followed by a confirming up candle
Three Inside Up consists of a Bullish Harami (first two candles) followed by a third candle that closes above the first candle's high, providing confirmation of the reversal.