Japanese Candlestick Charting Techniques introduced the Western world to the ancient Japanese method of reading price action that had been used by rice traders for centuries. Steve Nison, credited with bringing candlesticks to the West, provides the definitive guide to this powerful visual analysis method.
Candlestick charts reveal market psychology in ways that traditional bar charts cannot. Each candlestick tells a story of the battle between buyers and sellers during that time period. Nison explains how to read individual candles and, more importantly, how to interpret candlestick patterns that signal potential reversals or continuations.
The book covers all major patterns including doji, hammer, engulfing patterns, morning and evening stars, and many more. Nison goes beyond pattern recognition to explain the psychology behind why these patterns work. He also shows how to combine candlestick analysis with Western technical tools like moving averages, oscillators, and support/resistance levels for confirmation.
What makes this book invaluable is the practical trading applications. Nison provides clear entry and exit signals based on candlestick patterns, along with real chart examples from various markets. Today, candlesticks are the standard chart type used by traders worldwide, making this foundational knowledge essential for any serious market participant.
Key takeaways from this book
- 1. Master all major candlestick patterns and their meanings
- 2. Understand the psychology behind why patterns work
- 3. Learn to combine candlesticks with Western technical analysis
- 4. Identify reversal and continuation signals early
- 5. Apply candlestick analysis to any market or timeframe