Disclaimer
• LEGALLY REQUIRED DISCLAIMER: THE INFORMATION PRESENTED IN THIS VIDEO AND THROUGH WEALTHY EDUCATION
IS FOR EDUCATIONAL PURPOSES ONLY AND IS NOT INTENDED TO BE A RECOMMENDATION FOR ANY SPECIFIC
INVESTMENT. THE RISK OF LOSS TRADING SECURITIES, STOCKS, CRYPTOCURRENCIES, FUTURES, FOREX, AND OPTIONS
CAN BE SUBSTANTIAL. INDIVIDUALS MUST CONSIDER ALL RELEVANT RISK FACTORS INCLUDING THEIR OWN PERSONAL
FINANCIAL SITUATION BEFORE TRADING. TRADING INVOLVES RISK AND IS NOT SUITABLE FOR ALL INVESTORS.
WEALTHY EDUCATION ENCOURAGES ALL STUDENTS TO LEARN TO TRADE IN A VIRTUAL, SIMULATED TRADING
ENVIRONMENT FIRST, WHERE NO RISK MAY BE INCURRED. STUDENTS AND INDIVIDUALS ARE SOLELY RESPONSIBLE FOR
ANY LIVE TRADES PLACED IN THEIR OWN PERSONAL ACCOUNTS. WEALTHY EDUCATION, IT'S TEACHERS AND
AFFILIATES, ARE IN NO WAY RESPONSIBLE FOR INDIVIDUAL LOSS DUE TO POOR TRADING DECISIONS, POORLY
EXECUTED TRADES, OR ANY OTHER ACTIONS WHICH MAY LEAD TO LOSS OF FUNDS.
Copyright © WealthyEducation.com - Visit our website for more practical information
TECHNICAL ANALYSIS
MODULE 3: CANDLESTICKS & CHART PATTERNS
LEARNING MATERIAL – TAKEAWAY NOTE
Copyright © WealthyEducation.com - Visit our website for more practical information
Why Chart Patterns and Technical Analysis Work
• Fundamental analysis does not account for
“people” who are emotional and trade the
markets
• Chart patterns and technical analysis allow a
trader to impose discipline on their trading,
e.g., identify clear entry and exit points
Copyright © WealthyEducation.com - Visit our website for more practical information
Why Chart Patterns and Technical Analysis Work
• Technical indicators do impact the market
because traders use them
• Random walk theory says the previous day’s
price does not matter, but traders look at
previous prices and make decisions on those
prices (again, “people” make markets)
Copyright © WealthyEducation.com - Visit our website for more practical information
Candlestick Pattern – Wedges
Rising Wedge
• A wedge is a reversal pattern
• A rising wedge (higher highs, higher lows)
is bearish
Falling Wedge
• A falling wedge (lower highs, lower lows)
is bullish
Copyright © WealthyEducation.com - Visit our website for more practical information
Candlestick Pattern – Triangles
Symmetrical Triangle
• A symmetrical triangle is neutral,
trade in the direction of the break
• An ascending triangle (higher lows,
Ascending Triangle Descending Triangle
flat highs) is bullish
• A descending triangle (lower highs,
flat lows) is bearish
Copyright © WealthyEducation.com - Visit our website for more practical information
Candlestick Pattern – Pennants
• A price compression continuation pattern
Pennant
after a sharp rise in price
• Also known as a Flag pattern
• The sharp rise (or decline) in price forms
the flagpole
Copyright © WealthyEducation.com - Visit our website for more practical information
Candlestick Pattern – Double Tops & Bottoms
Double Top • In a double top, the stock touches a high, reverses to a
lower level, touches the high a second time, and then falls
below the pullback low
• In a double bottom, the stock touches a low, reverses to a
higher level, touches the low a second time, and then rises
Double Bottom above the pullback high
• Price target is the distance between the high / low and the
pullback price with a stop at the high / low
Copyright © WealthyEducation.com - Visit our website for more practical information
Candlestick Pattern – Head and Shoulders
• A head and shoulders pattern is a bearish reversal
Head
pattern for a stock in a bullish trend
Left Shoulder Right Shoulder
• The head and shoulders has an initial upside push,
followed by a pullback, followed by another
Head & Shoulder
stronger upside push (the head) and subsequent
pullback to the neckline, and then one final push
that does not reach the high of the head
Copyright © WealthyEducation.com - Visit our website for more practical information
Candlestick Pattern – Cup and Handle
• A cup and handle pattern is a consolidation
Cup & Handle pattern with a distinct pullback
• Looks exactly like a cup with a handle
• This is a bullish signal, stock price tends to go up
• The handle of the cup is similar to a pennant
pattern and represents the buying opportunity
Copyright © WealthyEducation.com - Visit our website for more practical information
Trading Single Candlestick Patterns
• The Spinning Top has two long equal length shadows and a
Spinning Top Doji
small body
• The Doji candlestick has a small body, meaning the opening
and closing prices are very close to each other, and either
two long shadows or one long shadow
• The Hammer, which is a bullish reversal candlestick, has a
Hammer small body with a short to no shadow on top and a long
shadow on the bottom
Copyright © WealthyEducation.com - Visit our website for more practical information
Double Candlestick Patterns – Engulfing
• The Bullish Engulfing pattern and Bearish
Engulfing pattern, are trend reversal patterns
Bullish Engulfing
• Feature one candlestick in the direction of the
trend and a second candlestick which is larger
Bearish Engulfing
than the first and in the opposite direction of
the trend
Copyright © WealthyEducation.com - Visit our website for more practical information
Double Candlestick Patterns – Tweezer
• The Tweezer Tops and Tweezer Bottoms are
Tweezer Bottom
reversal patterns
• Feature two candlesticks with shadows that are
equal to the same price, either a high or low
Tweezer Top
Copyright © WealthyEducation.com - Visit our website for more practical information
Triple Candlestick Patterns – Morning & Evening Star
• In the Morning Star, the first candlestick in the
Morning Star pattern is a bearish long body candlestick,
followed by a Doji, and then a bullish long body
candlestick that closes at least halfway into the
price of the bearish candlestick (the Evening
Evening Star
Star is exactly opposite)
Copyright © WealthyEducation.com - Visit our website for more practical information
Triple Candlestick Patterns – Black Crows & White Sodiers
• Three black crows, or three white soldiers, is a
reversal pattern represented by lengthening
Three White Sodiers
bodies as three candlesticks move in the
opposite direction of the trend
Three Black Crows
Copyright © WealthyEducation.com - Visit our website for more practical information
THANK YOU FOR WATCHING!
Let’s keep in touch! – Visit our website: www.WealthyEducation.com