Candlesticks Pattern Masterclass

Disclaimer

The information in this webinar is for general information purposes only and
is provided on an “as is” basis without any representations or warranties of
any kind. The information does not constitute legal, financial, trading or
investment advice and it does not make any recommendation or
endorsement regarding any and all products mentioned. All participants of
the presentation and persons reading the information in these presentation
slides are advised to seek independent advice and/or consult relevant laws,
regulations and rules prior to relying on or taking any action based on the
information presented. All examples and views expressed are entirely the
presenter’s own.

Bursa Malaysia Berhad, the Bursa Malaysia group of companies (the Company)
and the presenter do not accept any liability for: the information provided
during the presentation and in the presentation slides (including but not
limited to any liability pertaining to the accuracy, completeness or currency
of the information); and for any investment or trading decisions made on the
basis of this information.

2
Speaker Profile

3
What’s Covered Today

✓ Introduction to Price Action

✓ The use of candlesticks in history
✓ How to measure the power of Price Action with a candlestick?
✓ Bullish reversal pattern
✓ Bearish reversal pattern
✓ Volume to confirm candle movement

4
Trading Skill
1. Trading Psychology
2. Analytical and Decision Making
- Fundamental or Technical
3. Money Management

5
Trading Price Forecasting
• Technical Or Fundamental
• Timing – Purely Technical
• Money Management
• Betting Size, cut loss or take profit

6
Trading decision
• Price – Buy (Entry)
Sell (cut Loss or Take Profit)

• Time – Holding Period

7
Trading decision
• E – Entry
• T – Target
• E – Exit
• T - Time Frame

E. T. E. T

8
Trader’s Style
• Position Trader – Months to years
• Swing Trader - Days to weeks
• Day Trader - One day only
• Scalp Trader - Seconds to minutes

9
Japanese Candlestick
Japanese Candlestick

• Used in 1600 by Japanese traders

• Notable trader is Munehisa Homma
• He made a killing in trading rice markets in Osaka Rice
Exchange (used to make 100 consecutive winning trades)
• Used by Americans since 1980’s
• “Japanese Candlestick Charting Technique” by Steve Nison
• “Japanese Charts Of Charts” – Seiki Shimizu translated by
Greg Nicholson
• “Always consult the Market about the market” – Seiki
Shimizu

11
12
Advantages Of Japanese Candlestick

• Leading Indicator
• Pick top and bottom
• Pictorial
• Adaptability To Any Trading Medium
• Time Tested (over 300 years)
• Describe traders psychology at one point of time
• Give explicit buy and sell signal

13
History
1.Said to be founded by Munehisa Homma (1724-
1803) came from Sakata.
2.Actively traded the rice coupon (futures) market
3.Given control of his family business in 1750.
4.Began trading at his local rice exchange in the port
city of Sakata.
5.When to Dojima Rice Exchange (Osaka) and began
trading rice futures.
6.Died in 1803.

14
daily bar chart

candlestick

15
BAR CHART VS JAPANESE CANDLESTICK

16
LINE VS CHANDLESTICK CHARTS
18
Yoh Inn

Rōsoku ashi 19
20
How to measure Price Action with a candlestick?

21
Candlestick

1. Colour
• White – bullish
• Black bearish
2. Size and Range
• Bigger means more volatile

22
3. Range of the body
• Body size indicates the strength of either bull or bear

23
4. Range of upper shadow and lower shadow

24
 Bull VS Bear

1. Long white candlesticks indicate that the

Bulls controlled the ball (trading) for most
of the game.
2. Long black candlesticks indicate that the
Bears controlled the ball (trading) for most
of the game.
3. Small candlesticks indicate that neither
team could move the ball and prices
finished about where they started.
4. A long lower shadow indicates that the
Bears controlled the ball for part of the
game, but lost control by the end and the
Bulls made an impressive comeback.
5. A long upper shadow indicates that the
Bulls controlled the ball for part of the
game, but lost control by the end and the
Bears made an impressive comeback.
6. A long upper and lower shadow indicates
that the both the Bears and the Bulls had
their moments during the game, but neither
could put the other away, resulting in a
standoff.
SINGLE CANDLE

LONG CANDLE

28
There are many different types of candlesticks

31
 Reversal and Continuation

LONG CANDLESTICKS
WHITE – BULLLISH
BLACK - BEARISH
1. Bullish Morubozu
2. Long Candle 3
3. Bearish Morubozu

1 2
Reversal and Continuation

DOJI (Blunder Or Mistakes)

DOJI
GRAVESTONE DOJI
Long Candle
Short Candle
Volume
How to measure the power of Price Action with a candlestick?
• Candlesticks are sensitive and it requires only 1,2 or 3 candles.
1. Short term Analysis
2. Reversal

38
Reversal pattern
• Hammer
• Hanging man
• Shooting star
• Inverted hammer
• Shooting Star
• Engulfing pattern
• Dark cloud cover
• Piercing pattern
• Harami
• Morning star
• Evening star
• Tweezer tops and bottoms

39
Hammer

1. Can be recognized by three criteria:

a.The real body is at the upper end
of the trading range. The color of
the real body is not important.
b.It has a long shadow that should
be at least twice the heights of
the real body.
c.It should have no, or very short,
upper shadow.
2. Bullish ramification.
3. Need a falling trend to reverse.
4. Confirmation: a close above the
hammer.
40
Hammer

41
 Chin Hin Group Bhd (0.44500, 0.46000, 0.41500, 0.46000, +0.00000)

0.65 0.65

0.60 0.60

0.55 0.55

0.50 0.50

0.45 0.45

0.40 0.40

50000
20000
45000
40000
35000
15000
30000
25000
20000
10000
15000
10000
5000
20 28 3 10 17 24 2 9 16 23 30
February March April
 Chin Hin Group Bhd (1.16000, 1.20000, 1.16000, 1.20000, +0.05000)

0.65 0.65

0.60 0.60

0.55 0.55

0.50 0.50

0.45 0.45

0.40 0.40

20000 50000
45000
40000
15000 35000
30000
25000
10000
20000
15000
5000 10000
5000

13 20 28 3 10 17 24 2 9 16 23 30 6 13 20 27 4 12 18
February March April May
Reversal pattern

Hanging Man
1. Can be recognized by three criteria:
a.The real body is at the upper end of
the trading range. The color of the
real body is not important.
b.It has a long shadow that should be at
least twice the height of the real
body.
c.It should have no, or very short, upper
shadow.
2. Bearish ramification
3. Need a rising trend to reverse.
4. Confirmation: a close below the hanging
man.
45
 Eversendai Corporation Bhd (0.54000, 0.54500, 0.52500, 0.54500, +0.01000)
0.630
0.625
0.620
0.615
0.610
0.605
0.600
0.595
0.590
0.585
0.580
0.575
0.570
0.565
0.560
0.555
0.550
0.545
0.540
0.535
0.530
0.525
0.520
0.515
0.510
0.505
0.500
0.495
0.490
0.485
0.480
0.475
0.470
0.465
0.460
0.455
0.450

35000
30000
25000
20000
15000
10000
x10
4 5 6 7 8 11 12 13 14 15 18 19 20 21 22 25 26 27 28 29 1 2 3 4 5 8 9 10 11 12 15 16 17 18 19 22 23 24
March April
 Eversendai Corporation Bhd (0.25500, 0.26000, 0.25000, 0.26000, +0.00000)
0.630
0.625
0.620
0.615
0.610
0.605
0.600
0.595
0.590
0.585
0.580
0.575
0.570
0.565
0.560
0.555
0.550
0.545
0.540
0.535
0.530
0.525
0.520
0.515
0.510
0.505
0.500
0.495
0.490
0.485
0.480
0.475
0.470
0.465
0.460
0.455
0.450

30000

20000

10000
x10
4 5 6 7 8 11 12 13 14 15 18 19 20 21 22 25 26 27 28 29 1 2 3 4 5 8 9 10 11 12 15 16 17 18 19 22 23 24 25 26 29 30 2 3 6
March April May
Reversal pattern
Inverted Hammer
1. Can be recognized by three criteria:
a.The real body is at the lower end
of the trading range. The color of
the real body is not important.
b.It has a long shadow that should
be at least twice the height of
the real body.
c.It should have no, or very short,
lower shadow.
2. Bullish ramification.
3. Needs a falling trend to reverse.
4. Confirmation: a close above the
hammer.
49
Reversal pattern
SHOOTING STAR

1. Can be recognized by three criteria:

a.The real body is at the upper end
of the trading range. The color of
the real body is not important.
b.It has a long shadow that should
be at least twice the height of
the real body.
c.It should have no, or very short,
lower shadow.
2. Bearish ramification.
3. Need a rising trend to reverse.
4. Confirmation: a close below the
hammer.
51
 Techbond Group Bhd (0.88436, 0.89840, 0.87500, 0.87500, -0.00468)
0.90 0.90

0.89 0.89

0.88 0.88

0.87 0.87

0.86 0.86

0.85 0.85

0.84 0.84

0.83 0.83

0.82 0.82

0.81 0.81

0.80 0.80

0.79 0.79

0.78 0.78

0.77 0.77

0.76 0.76

20000 40000
10000 20000
4 11 18 25 2 9 16 23
November December
 Techbond Group Bhd (1.19000, 1.24000, 1.19000, 1.23000, +0.03000)
0.90 0.90

0.89 0.89

0.88 0.88

0.87 0.87

0.86 0.86

0.85 0.85

0.84 0.84

0.83 0.83

0.82 0.82

0.81 0.81

0.80 0.80

0.79 0.79

0.78 0.78

0.77 0.77

0.76 0.76

40000
10000 10000
29 4 11 18 25 2 9 16 23 30 6 13 20 28
November December 2020
 Reversal pattern

1. Three criteria for an engulfing pattern:

a. The market is in a clearly definable trend.
b. The second real must engulf the prior real
body (it not need to engulf the shadows)
c. The second real body should be opposite
color of the first real body.
2. In the bar chart known as Outside day.
3. Factors increasing likelihood of engulfing
pattern could be an important turning signal
a. First fay candle has a very small real body
and second day has a very long real body.
b. Appear after a very fast move/overextended
market.
c. Heavy volume of the second real body.
55
 Reversal pattern

1. Three criteria for an engulfing pattern:

a.The market is in a clearly definable trend.
b.The second real body must engulf the prior
real body (it need not engulf the shadows)
c.The second real body should be the opposite
color to the first real body.
2. In the bar chart known as Outside day.
3. Factors increasing the likelihood of an
engulfing pattern could be an important
turning signal
a.First day candle has a very small real body
and second day has a very long real body.
b.Appears after a very fast move/
overextended market.
c.Heavy volume of the second real body.
Reversal pattern

1. Three criteria for an engulfing pattern:

a.The market is in a clearly definable trend.
b.The second real body must engulf the prior
real body (it need not engulf the shadows)
c.The second real body should be the
opposite color of the first real body.
2. In the bar chart known as Outside day.
3. Factors increasing likelihood of engulfing
pattern could be an important turning signal
a.First day candle has a very small real body
and second day has a very long real body.
b.Appear after a very fast move/
overextended market.
c.Heavy volume of the second real body.
 Eversendai Corporation Bhd (0.39500, 0.40000, 0.38000, 0.38000, -0.01000)

0.405

0.400

0.395

0.390

0.385

0.380

0.375

0.370

0.365

0.360

0.355

0.350

0.345

0.340

0.335

0.330

0.325

0.320

0.315

60000
50000
40000
30000
20000
10000
29 30 31 3 4 5 6 7 10 11 12 13 14 17 18 19 20 21 24 25 26 27 28 2 3 4 5
February March
 Eversendai Corporation Bhd (0.25500, 0.26000, 0.25000, 0.26000, +0.00000)
0.420
0.415
0.410
0.405
0.400
0.395
0.390
0.385
0.380
0.375
0.370
0.365
0.360
0.355
0.350
0.345
0.340
0.335
0.330
0.325
0.320
0.315
0.310
0.305
0.300
0.295
0.290
0.285
0.280
0.275
0.270
0.265
0.260
0.255
0.250
0.245
0.240
0.235
0.230
0.225
0.220
0.215
0.210
0.205
0.200
0.195
0.190
0.185
0.180
0.175
0.170
0.165
0.160
0.155
0.150
0.145
0.140

60000
50000
40000
30000
20000
10000
29 30 31 3 4 5 6 7 10 11 12 13 14 17 18 19 20 21 24 25 26 27 28 2 3 4 5 6 9 10 11 12 13 16 17 18
February March
60
Reversal pattern

1. The first candle is a strong white real body.

2. The second day’s price opens above the prior
session’s high. However closes within the prior day’s
white body.
3. If the close is more than 50% into the prior white
candle, it’s more powerful.
4. Bearish ramification.
5. Factors intensifying the importance:
a. The greater penetration of the black real body’s
close into the prior white body.
b. The first day is a white morubozu and the
second day is a black morubozu.
c. If the second body opens above a major
resistance and then fails.
d. If on the opening of the second day, there is very
heavy volume, then a buying blow off could have
occurred.
 0.61 Tiong Nam Logistics Holdings Bhd (0.59000, 0.60000, 0.57000, 0.57000, -0.01500) 0.61
0.60 0.60
0.59 0.59
0.58 0.58
0.57 0.57
0.56 0.56
0.55 0.55
0.54 0.54
0.53 0.53
0.52 0.52
0.51 0.51
0.50 0.50
0.49 0.49
0.48 0.48
0.47 0.47
0.46 0.46
0.45 0.45
0.44 0.44
0.43 0.43
0.42 0.42

20000 50000
10000
24 1 8 15 22 29 5 12
July August
 0.64 Tiong Nam Logistics Holdings Bhd (0.48500, 0.48500, 0.47500, 0.48000, -0.00500) 0.64
0.63 0.63
0.62 0.62
0.61 0.61
0.60 0.60
0.59 0.59
0.58 0.58
0.57 0.57
0.56 0.56
0.55 0.55
0.54 0.54
0.53 0.53
0.52 0.52
0.51 0.51
0.50 0.50
0.49 0.49
0.48 0.48
0.47 0.47
0.46 0.46
0.45 0.45
0.44 0.44
0.43 0.43
0.42 0.42
0.41 0.41

20000
50000
10000
29 6 13 21 27 3 10 17 24 1 8 15 22 29 5 13 19 26 3 10 17 23 30 7 14 21 29 4 11
May June July August September October November
64
Reversal pattern
Piercing Pattern
1. The first candle is a strong red real
body.
2. The second day’s price opens below
the prior session’s low. However closes
within the prior day’s red body.
3. If it closes more than 50% into the prior
red candle, it’s more powerful.
4. Bullish ramification.
5. Factors intensifying the importance:
a. The greater penetration of the green
real body’s close into the prior red
body.
b.The first day is a red morubozu and
the second day is a green morubozu.
 Telekom Malaysia Bhd (3.29000, 3.54000, 3.10000, 3.52000, +0.16000)

4.0 4.0

3.9 3.9

3.8 3.8

3.7 3.7

3.6 3.6

3.5 3.5

3.4 3.4

3.3 3.3

3.2 3.2

3.1 3.1

45000
35000
40000
30000 35000
30000
25000 25000
20000
20000 15000
10000
x10 x10
30 6 13 20 27 4 11 18 25 1 8 15 22 29 6 13 20 27 3 10 17 24 31 7 14 21 28 6 13 20 27 3 10 17 24 1 8 15 22 29 5
September October November December 2020 February March April May June
 Telekom Malaysia Bhd (3.71000, 4.25000, 3.68000, 4.15000, +0.47000)
4.6 4.6
4.5 4.5
4.4 4.4
4.3 4.3
4.2 4.2
4.1 4.1
4.0 4.0
3.9 3.9
3.8 3.8
3.7 3.7
3.6 3.6
3.5 3.5
3.4 3.4
3.3 3.3
3.2 3.2
3.1 3.1
3.0 3.0

35000 P 45000
40000
35000
30000
30000
25000 25000
20000
20000 15000
x10
10000
x10
23 30 6 13 20 27 4 11 18 25 1 8 15 22 29 6 13 20 27 3 10 17 24 31 7 14 21 28 6 13 20 27 3 10 17 24 1 8 15 22 29 5 12 19 26 3 10 17 24
September October November December 2020 February March April May June July
68
Reversal pattern
Morning Star
1. Bottom reversal pattern (Bullish)
2. Has three candles
a. Candle 1: An extended black real body. (The bears
are in command.)
b. Candle 2: A small body that doesn’t touch the
prior real body. (Sellers are losing capacity to
drive the market lower)
c. Candle 3: A white real body that intrudes deeply
into the first session black candle. (Bulls has
seized control)
3. Factors intensifying the importance:
a. If there is no overlap among the first, second and
third real bodies.
b. If third candle close deeply into the first real
candle’s real body.
c. If there is light volume on the first candle session
and heavy volume on the third candle session.
4. The low of the star becomes a support.
0.645 Tiong Nam Logistics Holdings Bhd (0.54500, 0.57000, 0.54000, 0.57000, +0.02500) 0.645
0.640 0.640
0.635 0.635
0.630 0.630
0.625 0.625
0.620 0.620
0.615 0.615
0.610 0.610
0.605 0.605
0.600 0.600
0.595 0.595
0.590 0.590
0.585 0.585
0.580 0.580
0.575 0.575
0.570 0.570
0.565 0.565
0.560 0.560
0.555 0.555
0.550 0.550
0.545 0.545
0.540 0.540
0.535 0.535

5000
5000

25 4 11 18 25 1 8 15 22 29 6
March April May
0.645 Tiong Nam Logistics Holdings Bhd (0.59000, 0.60000, 0.57000, 0.57000, -0.01500) 0.645
0.640 0.640
0.635 0.635
0.630 0.630
0.625 0.625
0.620 0.620
0.615 0.615
0.610 0.610
0.605 0.605
0.600 0.600
0.595 0.595
0.590 0.590
0.585 0.585
0.580 0.580
0.575 0.575
0.570 0.570
0.565 0.565
0.560 0.560
0.555 0.555
0.550 0.550
0.545 0.545
0.540 0.540
0.535 0.535

5000
5000

25 4 11 18 25 1 8 15 22 29 6 13
March April May
72
Reversal pattern

1. Bottom reversal pattern (Bearish)

2. Has three candles
a. Candle 1: An extended white real body. (The bulls are in
command.)
b. Candle 2: A small body that doesn’t touch the prior real body.
(Buyers are losing capacity to drive the market higher)
c. Candle 3: A white real body that intrudes deeply into the first
session white candle. (Bears have seized control.)
3. Factors intensifying the importance:
a. If there is no overlap among the first, second and third real
bodies.
b. If third candle close deeply into the first real candle’s real
body.
c. If there is light volume on the first candle sessions and heavy
volume on the third candle session.
4. The high of the star becomes a resistance.
Reversal pattern
1. Bottom reversal pattern (Bearish)
2. Has three candles
a. Candle 1: An extended white real body. (The bulls are
in command.)
b. Candle 2: A small body that doesn’t touch the prior
real body. (Buyers are losing capacity to drive the
market higher)
c. Candle 3: A white real body that intrudes deeply into
the first session white candle. (Bear has seized
control.)
3. Factors intensifying the importance:
a. If there is no overlap among the first, second and third
real bodies.
b. If third candle close deeply into the first real candle’s
real body.
c. If there is light volume on the first candle sessions and
heavy volume on the third candle session.
4. The high of the star becomes a resistance.
 0.61 Tiong Nam Logistics Holdings Bhd (0.49500, 0.49500, 0.47500, 0.48000, -0.02000) 0.61
0.60 0.60
0.59 0.59
0.58 0.58
0.57 0.57
0.56 0.56
0.55 0.55
0.54 0.54
0.53 0.53
0.52 0.52
0.51 0.51
0.50 0.50
0.49 0.49
0.48 0.48
0.47 0.47
0.46 0.46
0.45 0.45
0.44 0.44
0.43 0.43
0.42 0.42
0.41 0.41
20000
50000
10000
x10
19 3 17 31 14 21 5 19 2 16 23 6 20 4 18 25 8 22 29 13 27 3 17 31 14 28
May June July August September October November December 2020 February March
 0.55 Tiong Nam Logistics Holdings Bhd (0.40500, 0.40500, 0.39500, 0.39500, -0.01500) 0.55

0.50 0.50

0.45 0.45

0.40 0.40

0.35 0.35

0.30 0.30

0.25 0.25

20000
50000 10000
x10

September October November December 2020 February March April May June July August September
77
Reversal pattern

BULLISH HARAMI
1. A small real body that is contained within
a long candle.
2. Harami is the Japanese word for pregnant.
3. Comparable to Western Inside day.
 Nextgreen Global Bhd (0.51000, 0.52000, 0.49000, 0.50000, -0.01500)

0.51 0.51

0.50 0.50
0.49 0.49

0.48 0.48
0.47 0.47
0.46 0.46

0.45 0.45
0.44 0.44

0.43 0.43
0.42 0.42

25000

P 10000

20000
5000

15000
x10
7 14 22 28 4 11 18 25 4
February March
 Nextgreen Global Bhd (0.40500, 0.45500, 0.40000, 0.44000, +0.05000)
0.520 0.520
0.515 0.515
0.510 0.510
0.505 0.505
0.500 0.500
0.495 0.495
0.490 0.490
0.485 0.485
0.480 0.480
0.475 0.475
0.470 0.470
0.465 0.465
0.460 0.460
0.455 0.455
0.450 0.450
0.445 0.445
0.440 0.440
0.435 0.435
0.430 0.430

25000

P 10000

20000
5000

15000
x10
28 29 30 31 4 7 8 11 12 13 14 15 18 19 20 21 22 25 26 27
February
81
Reversal pattern

BEARISH HARAMI
1. A small real body that is
contained within a long candle.
2. Harami is the Japanese word for
pregnant.
3. Comparable to Western Inside
day.
83
Reversal pattern

Tweezer Tops and Bottoms

1. In an uptrend, a tweezer top is formed
when two or more consecutive highs
match.
2. In a downtrend, a tweezer bottom is
formed when two or more consecutive
lows match.
3. The tweezer could be composed of real
bodies, shadows or dojis.
85
86
Reversal pattern

Tweezer Tops and Bottoms

1. In an uptrend, a tweezer top is formed
when two or more consecutive highs
match.
2. In a downtrend, a tweezer bottom is
formed when two or more consecutive
lows match.
3. The tweezer could be composed of real
bodies, shadows or dojis.
88
89
Reversal pattern

Tweezer Tops and Bottoms

1. In an uptrend, a tweezer top
is formed when two or more
consecutive highs match.
2. In a downtrend, a tweezer
bottom is formed when two
or more consecutive lows
match.
3. The tweezer could be
composed of real bodies,
shadows or dojis.
 Continuation Pattern
Windows / Tasuki
1. Upward gapping tasuki is made of
a rising window formed by a white
candle and then a black candle.
The black candle opens within the
real white body and closes under
the white candle’s real body.
2. Downward gapping tasuki is made
of a rising window formed by a
black candle and then a white
candle. The white candle opens
within the real white body and
closes above the black candle’s
real body.
3. The two candles of the tasuki
should be about the same size.
4. Rare.
92
93
Continuing Pattern

Rising three method

1. Composed of
a. A long white candle.
b.Followed by a group of falling/lateral
small real body candles. Ideally two
or three small candles, also
acceptable if the hold within the long
white candle’s high-low range.
c. The final day should be a strong
white real body with a close above
the first day’s close.
2. Resembles Western bull flag/pennant.
95
Continuing Pattern

Falling three method

1. Composed of
a. A long black candle.
b.Followed by a group of falling/lateral
small real body candles. Ideally two or
three small candles, also acceptable if
the hold within the long black candle’s
high-low range.
c. The final day should be a strong black
real body with a close above the first
day’s close.
2. Resembles Western bear flag/pennant.
97
Facts about Japanese Candlesticks
Candlesticks are a true leading indicator. They regularly identify potential market
price moves before they begin to happen.

Candlesticks are attuned to the short term trend (3 to 15 trading sessions) when
charted on a Daily basis. To apply candlestick to longer term trending markets,
one must use a Weekly or Monthly chart.

Candlesticks can be applied to any other Western technical oscillators to produce

a synergistic trading approach.

Candlesticks are the only technical analysis tool that generates intuitive text
messages (results) about the inner psychology of any market.

Candlesticks have been relatively unknown, except in Japan, for the last three
centuries.

Candlesticks use the same price data as bar charts, yet the candlestick technique
better promotes the ability to recognize complex patterns and to identify what
these patterns mean.

The Japanese candlestick technique consists of hundreds of different patterns that

accurately identify specific market traits or tendencies.
Candlestick Analysis Rules & Suggestions

As one learns to interpret the different candlestick patterns, one should always keep in mind the
following rules to assist in the proper identification and possible actions taken from the patterns. There
are three simple rules to interpreting candlestick patterns:

1. Size

Larger candles play an important role when identifying patterns. They represent accumulation or
distribution within the market or stock. When you begin to see an increase in size of the candles, the
trend is accelerating and accumulation is occurring. When you begin to see a decrease in the size of
the candles, the trend is decelerating and distribution is occurring.

2. Shape

The shape of the candlestick, or pattern, determines the type of pattern generated, the possible
trading signal and the potential direction of trend. Shape and size work hand-in-hand. A very small
Engulfing Bullish pattern would indicate the potential for a market rally, yet the small size indicates
that the trend has not yet begun to accelerate.

3. Location

The location of a candlestick pattern will assist in determining the possible trading signal. For example,
a Shooting Star found after a defined up trend strongly indicates a potential bearish correction or top.
A Piercing Line found after a defined down trend indicates a potential for a bullish reversal. Either of
these two patterns found within a consolidated, sideways trend, do not indicate as strong a potential
for a trend reversal, and one should wait for confirmation of the candlestick pattern before taking
action.
Bullish Candlestick reversal pattern

• Tweezer bottom
• Bullish harami
• Bullish engulfing
• Morning star
• Abandon baby
• Piercing line

100
Bearish reversal pattern

• Tweezer top
• Harami bearish
• Bearish engulfing
• Evenng star
• Abandon baby
• Dark cloud

101
102
 Thank you

DISCLAIMER:
These presentation slides are owned by Bursa Malaysia Berhad and/or the Bursa Malaysia group of companies (“Bursa Malaysia”). Whilst Bursa Malaysia endeavors to
ensure that the contents in this presentation are accurate, complete, current and have been obtained from sources believed by Bursa Malaysia to be accurate and
reliable, neither Bursa Malaysia or the presenter of this presentation make any warranty, express or implied, nor assume any legal liability or responsibility for the
accuracy, completeness or currency of the contents of this presentation. In no event shall Bursa Malaysia be liable for any claim, however arising, out of or in relation
to this presentation.

This document shall be used solely for the purpose it was circulated to you. This document is owned by Bursa Malaysia Berhad and/or the Bursa Malaysia group of
companies (“Bursa Malaysia”). No part of the document is to be produced or transmitted in any form or by any means, electronic or mechanical, including
photocopying, recording or any information storage and retrieval system, without permission in writing from Bursa Malaysia.

Copyright Bursa Malaysia Berhad 2019 (30632-P)