WELCOME TO BITKOVA ACADEMY
INTRODUCTION TO TECHNICAL ANALYSIS (TA)
Presented by Mahmoud Sardauna
Introduction to
Technical Analysis
What is candlesticks and how can I read them?
Charts & types
Chart is a graphical representation of data. We have many types of charts some of
which are:
2. Bar chart 3. Candlestick chart
1. Line Chart
4. Heikin Ashi
What is Candlestick?
Long time ago, a Japanese, Munehisa Homma
discovered a secret way to read charts. This method
of reading charts is called Candlesticks.
This is one of the most important tools for
analyzing financial data. Candlestick dates back to
17th century Japan but have been refined in the
early 20th century by the West.
Candlestick chart analysis is one of the most
common ways to look at the Crypto-market using
technical analysis. This technology came to the West
through Mr. Steve Nison.
Candlestick Anatomy
Real body: The hollow or the filled candlestick.
Wick:- The thin line poking above or below the body.
Upper Shadow:- The top of the upper wick
Lower Shadow: The low of the upper wick
• GREEN/WHITE Candlestick: A candlestick is GREEN
when the opening price is lower than the closing
price, in a given timeframe
• RED/BLACK Candlestick: A candlestick is RED when
the opening price is higher than the closing price in
a given timeframe.
Candlestick chart analysis is one of the most common ways to
look at the Bitcoin market using technical analysis.
Market Direction?
Market direction is called Trend. We have three market trends.
1. Uptrend: When the market is generally going up. We call this market, bullish or bull market.
The market is called bull or bullish because the bulls (buyers) are in control of the market.
2. Downtrend: When the market is generally going down. We call this market, bearish or
bear market. The market is called bear or bearish because the sellers (bears) are in control
of the market.
3. Side-trend or consolidation: This is when the market is resting, either after an uptrend or
a downtrend. We sometimes call this market as resting market. Neither bulls (buyers)
nor sellers are dominant in this market. We most a times trade with caution in consolidation
market.
Market Trend
1. Uptrend & downtrend 2. Sidetrend/Consolidation
Basic Candlestick patterns?
MARUBOZU: This means bald or shaven, the candlesticks have little or no wicks. It is signifying
buyers or sellers momentum pending on the colour.
GREEN OR WHITE MARUBOZU:
This is a very bullish candle as it shows that
buyers were in control of the entire session. It
usually becomes the first part of a bullish
continuation or a bullish reversal pattern.
RED OR BLACK MARUBOZU:
This is a very bearish candle as it shows that
Green/White Red/Black sellers controlled the price action the entire
session. It usually implies bearish continuation
Marubozu Marubozu or bearish reversal.
Basic Candlestick patterns?
SPINING TOP-
A Spinning Top is a Japanese candlestick with a small real body and long upper and lower shadows. The
short body of the candle suggests that there was a lot of indecision in the market regarding the direction
of the price, while the long shadows indicate that both buyers and sellers were active during the session.
A Spinning Top candlestick pattern represents indecision. Neither the buyers nor the sellers had control.
Basic Candlestick patterns?
DOJI-
A Doji is a single candlestick pattern that is formed when the opening price and the closing price are
equal. The lack of a real body conveys a sense of indecision or tug-of-war between buyers and sellers and
the balance of power may be shifting. It also means neither buyers nor sellers are in control of the market.
We four (4) types of doji.
(a) Standard (b) Gravestone (c) Dragon-fly (d) Four square (e) Long-legged
Reversal
Patterns
A reversal pattern is a candlestick pattern that signals a possible change in the
market direction, from uptrend to downtrend or from downtrend to uptrend.
We usually look for confirmation candlesticks before deciding whether the trend
has set in or not.
We have single, double and tripple reversal patterns.
Hammer and Hanging man
The hammer and hanging man look exactly alike, but have different implications based on their location.
They both have small real bodies (red or green), long lower shadow and short or no- upper shadow. The
colour is not important too. what is important is the position of the candlestick (after uptrend or downtrend).
Hanging Man: It comes after an uptrend. A Hammer: It comes after a downtrend. A
confirmation candlestick is need to confirm the confirmation candlestick is need to confirm
bearish trend Reversal. the bullish trend Reversal.
Hammer
Hanging Man
Inverted Hammer and Shooting star
The inverted hammer and shooting star look exactly alike, but have different implications based on
whether they appear after an uptrend or downtrend. Both candlesticks have small real bodies (red or
green), long upper shadow and short or no- lower shadow. The colour is not important. what is important
is the position of the candlestick (Did it appear after an uptrend or downtrend).
Shooting Star: It comes after an uptrend. A Inverted Hammer: It comes after a
confirmation candlestick is needed to confirm the downtrend. A confirmation candlestick is
bearish trend Reversal. needed to confirm the bullish trend Reversal.
Shooting Star Inverted Hammer
Hammer
Hanging Man
Shooting Star Inverted Hammer
Class Exercise
Identification of candlesticks – Identify some of the candlesticks in the chart below.
Double
Candlesticks
Engulfing (bullish & Bearish)
Harami (Bullish & Bearish)
Tweezzer (Tops & Bottoms)
Piercing Line
Dark Cloud Cover
Bullish & Bearish engulfing pattern
Simply put, the engulfing pattern occurs at the end of a market trend, with the first
candlestick showing signs of exhaustion and the confirmation candle indicating a
complete takeover or reversal.
Bullish Engulfing Patter Bearish Engulfing Patter
Bullish & bearish Harami
Harami means pregnant in Japan, which is an easy way of remembering how the pattern looks like.
It can be considered a reverse of the engulfing pattern.
Bullish Harami Bearish Harami
Tweezer tops & Bottoms
This double pattern occurs on top of an uptrend or at the bottom of a downtrend, signaling a
possible price reversal. The name of the formation is given because of the double highs of tweezer
tops or double lows of tweezer bottoms which should be of equal length.
Tweezer Top Tweezer Bottom
Piercing Line
1. Occurs at the bottom of a downtrend and it includes a bearish and bullish candle.
2. The bullish candle opens lower than the close of the bearish candle.
3. Bullish candle then closes above the 50% level of the bearish candle body.
4. Piercing line signals a potential trend reversal to the upside (bullish reversal). It also shows, Bears (sellers) are
losing power at that key price level.
Bearish Candle
Bullish Candle
50% Closes above the 50% level of
the preceding bearish candle
Piecing Line
Dark Cloud Cover
1. This double pattern occurs on top of an uptrend. It is the opposite of piecing line.
2. Ensure that the red candle closes lower than the midway point of the previous green candle.
3. Look for confirmation of the new downward trend
Bearish Candle
Bullish Candle
50%
Closes below the 50% level of
the preceding bearish candle
Dark Cloud Cover
Tripple Candlesticks
Morning Star and Evening Star
Morning Doji Star and Evening Doji Star
3 White Soldiers and 3 Black Crows
Morning Star
This tripple pattern occurs at the bottom of a downtrend, signaling a possible price reversal. The bullish
version of the Evening Star is the Morning Star and it signifies a potential turning point in a falling market
(bullish reversal pattern).
Evening Star
The Evening Star is a three-candle pattern, that appears at the top of an uptrend. It signals the
slowing down of upward momentum before a bearish move lays the foundation for a new bearish
downward movement.
Evening Star
Morning Doji Star
This tripple pattern occurs at the bottom of a downtrend, signaling a possible price reversal. The bullish
version of the Evening doji Star is the Morning doji Star and it signifies a potential turning point in a falling
market (bullish reversal pattern).
Evening Doji Star
The Evening Doji Star is a three-candle pattern, that appears at the top of an uptrend. It signals the
slowing down of upward momentum before a bearish move lays the foundation for a new bearish
downward movement.
Evening Star
Three (3) White Soldiers
The Three White soldiers pattern is a bullish reversal pattern that consists of three consecutive
bullish long candlesticks that go upward like a staircase, with each candlestick opening higher than
the previous candle’s open. The Three white soldiers usually indicate a weakness in an established
downtrend and the potential emergence of an uprend.
Three White Soldiers
Three (3) Black Crows
The Three Black Crows pattern is a bearish reversal pattern that consists of three consecutive
bearish long candlesticks that go downward like a staircase, with each candlestick opening lower
than the previous candle’s open. The Three Black Crows usually indicate a weakness in an
established uptrend and the potential emergence of a downtrend.
Three Black Crows
How to trade Candlesticks – Bullish patterns
Identify the pattern & wait for confirmation.
If you enter at a support, your take profit should be the next resistance.
You can use confirmation such as RSI (You will learn about it later)
How to trade Candlesticks – Bullish patterns
Conservative entry is at the
opening of the fourth
candlestick.
Or at the bottom of the first
candlestick of the formation.
Target is the previous support.
Thank
You
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