Technical Analysis

The four prices behind every candle. What the real body encodes that a bar chart doesn't — and why the relationship between open and close is the most important thing a candle communicates.

A doji is not a reversal signal — it is indecision. Four doji types, what each shape reveals about the session's internal fight, and why location determines whether a doji means anything at all.

One shape, four names, completely opposite meanings depending on what came before. Why the hammer and hanging man are identical candles — and how location turns shape into signal.

The vocabulary that makes candlestick patterns meaningful. A pattern without a trend has nothing to reverse. A signal without confirmation is a guess. The terms every candlestick reader must internalize before studying patterns.

Two candles working together to mark a turning point. What engulfing actually requires. Why the midpoint rule separates piercing from dark cloud cover. How the harami reframes the prior candle's significance.

The three-act structure: trend continuation, momentum failure, and the opposite side proving control. Morning and evening stars, doji star variants, and three white soldiers — the patterns that include their own confirmation.

Bullish candle, bearish candle, and marubozu placed inside a realistic price sequence. Trains contrast recognition — the core interpretive habit that applies to every pattern that follows.

Long-legged, dragonfly, and gravestone doji shown with confirmation, non-confirmation, and the failure case. Location is the first filter — a doji without a prior trend is noise.

Hammer, hanging man, shooting star, inverted hammer, spinning top, and high-wave candle in realistic price sequences. Same shape, opposite signals — location and confirmation decide everything.

Every two-candle pattern family in a price sequence — working signals, failed signals, and the harami failure case that most students misread. Confirmation converts a condition into a trade.

Morning star, evening star, three white soldiers, and three black crows in realistic price sequences. Penetration depth and open position determine quality — not just pattern presence.

Not every counter-trend cluster is a reversal. Rising three methods, falling three methods, upside and downside tasuki gaps, mat hold, and separating lines — vocabulary, confirmation rules, reliability data, and cited statistics.

The rarity-reliability principle in action. Tweezers (55–56%, common), abandoned baby (70%, rank #13/103 — rare), bullish kicker (75–80%), and belt holds: why strict structure filters out noise.

The pattern family tree: harami confirmed = three inside up; engulfing confirmed = three outside up. How a third candle converts a tentative two-candle signal into a confirmed reversal — and the bearish mirrors.

Pattern recognition is not enough. Four quality dimensions — location, magnitude, confluence, confirmation — determine whether an identified pattern is worth acting on. The same hammer in three different contexts scores completely differently.

Windows (gaps) in Japanese analysis act as support when rising and resistance when falling. Island reversals, isolated by gaps on both sides, trap participants whose forced exits fuel the reversal. Nison's window rules applied.

On-neck, in-neck, thrusting, and piercing are not four patterns — they are four points on one continuum. The midpoint of the prior body is the single threshold that changes bearish continuation into bullish reversal.

Three charts applying the four quality dimensions — location, magnitude, confluence, confirmation — to familiar patterns in realistic price sequences. A textbook-quality signal is strong on all four; most real signals are weaker on at least one.

Chart 11 puts the continuation pattern family into a realistic price sequence — showing how each pattern appears, confirms, and why the three middle candles that look like reversals are actually the pattern's structural requirement.

Chart 13 pairs two patterns at opposite ends of a quality spectrum: tweezers (common, 50–56% reliability) and the abandoned baby (rare, 70% reliability). Shows a failed tweezer top mid-rally and explains why rarity correlates with reliability.

Chart 10 puts three inside up and three outside up into a realistic price sequence — showing the harami and engulfing parent patterns, the built-in confirming third candle, and why the meta-principle reduces the memorization burden.

Chart 14 shows a bullish kicker, bullish belt hold, and rising window in sequence — demonstrating the open-equal-open kicker structure, the missing-shadow belt hold, and how the gap zone acts as structural support on retest.

Chart 12 walks through a single downtrend containing all four spectrum points — on-neck, in-neck, thrusting, and piercing — showing why the same counter-trend shape produces continuation three times and reversal once.

Most candlestick patterns have 50–60% success rates in isolation. Six evaluation questions, four source types, and the context multiplier: the meta-skill that makes every pattern statistic in this curriculum meaningful rather than misleading.

How individual candle signals graduate into multi-bar chart patterns. The six dimensions that separate chart patterns from candle patterns: time horizon, tools, trendlines, volume, targets, and failure modes.

Every chart pattern from Lesson 16 onward is built from three foundational elements: horizontal support, horizontal resistance, and trendlines. Four visual charts — horizontal S&R, trendline drawing, channels, and role reversal — with the psychological explanation of why broken support becomes resistance.

The most iconic chart pattern in technical analysis. Full anatomy with candle integration at every structural moment — shooting star at the head peak, doji at the right shoulder, bearish engulfing at the neckline break. Statistics from six sources spanning 52–93%, with a full explanation of why the spread exists.

Double top and double bottom anatomy with candle-level reading at each structural moment: the failed breakout at peak 2, the doji at neckline, the marubozu neckline break, and the two-bar reversal at the second trough.

Two reversal categories at opposite ends of the speed spectrum. Rounding patterns reverse through gradual curved transitions — the morning star at the floor and shooting star at the peak. V-shaped reversals reverse through violent sudden directional changes — the key reversal bar and island reversal.

The most common continuation patterns in technical analysis. Three variants with full candle integration: symmetrical (bodies shrink toward apex, doji at equilibrium), ascending (flat upper resistance + rising lower trendline, 73% bullish), descending (flat lower support + falling upper trendline, 73% bearish). Statistics from four sources spanning 47–83%.

Flags and pennants as the fastest continuation patterns in the Western toolkit. Pole requirements, consolidation slope, the failed bear flag as a lesson in pattern failure, and the counter-slope resolution rule for wedges.

Rectangles as pure consolidation bounded by horizontal trendlines. Wedges as angled consolidations where both trendlines slope in the same direction. The counter-slope resolution rule: rising wedges break down, falling wedges break up.

A hybrid pattern: the cup is a rounding bottom (L18), the handle is a small flag (L20). Full anatomy with candle integration and the distinctive U-shape-then-spike volume signature. Statistics from four sources spanning 49–95%, with the key teaching point on why identification strictness drives the spread.

Four less-frequent pattern families: broadening patterns (escalating emotional volatility), diamonds (two-phase expansion then contraction), three drives (momentum exhaustion through measurable extensions), and bump-and-run (speculative blow-off tops).

Three peaks or troughs at approximately equal extremes. Candle character progression across the three touches — shooting star at P1, gravestone doji at P2, bearish engulfing at P3. Statistical performance across sources and the distinction from H&S.

Bulkowski's J-shaped continuation patterns. Four variants: ascending, inverted ascending, descending, inverted descending. Body-shrinkage on left side, doji floor, body-growth on right side — symmetry is the key identification habit.

Bulkowski's two-candle reversal at matched extremes. Weekly chart preference, tight stop-loss advantage, confirmation candle required. The pipe bottom as a bullish signal when the second candle closes higher than the first candle's open.

The six dimensions that turn pattern recognition into trade decisions: location quality, structural magnitude, volume confirmation, measured-move feasibility, failure mode awareness, and confluence with candle-level signals. High/Moderate/Low/Skip conviction levels drive position sizing.

The five-step synthesis methodology: trend context → dominant chart pattern → candle patterns within → confluence evaluation → trade decisions. Walks through the complete 28-lesson curriculum structure and closes out the candlestick and chart pattern curriculum.