How to Make Money Trading with Candlestick Charts

trend line is. As a candlestick trader, what
would you expect the market to show
when approaching a trend line? A
candlestick signal! Therefore, whichever

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trend line the signal is formed at is the
correct trend line.
Figure 10.6
shows the well defined
resistance area in Punjab Tractors.
Figure 10.6:
Punjab Tractors unable to
close above the resistance

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Notice the following candlestick signals in
the chart at that trend line:
1. A Bearish Engulfing signal in September:
2. A Piercing pattern in early October:
3. A Hanging Man in late October; and
4. A Piercing signal in early December.
Notice the chart of Satyam Computer in
Figure 10.7

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Figure 10.7:
Satyam Computer riding up in
a trend channel
This chart clearly defines a trend channel for
the stock from around August 2006 till
February 2007. Every time the stock hits the
upper trend channel, the supply of shares
exceeds the demand for them. Similarly, the

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demand for the stock is heavy along the
lower channel. These demand-supply
imbalances make the stock fluctuate between
those imaginary trend lines. Close
observation of the chart at the reversal points
along the trend channel indicates the
following points:
Point 1:
Bullish Harami.
Point 2:
Hanging Man.
Point 3:
Bullish Harami.
Point 4:
Bearish Engulfing.
Point 5:
Bullish Engulfing.