How to Make Money Trading with Candlestick Charts

It is analyzing
each situation independently to find the
point where the bulls or bears cede control
to the other.
We will look at some of the common
candlestick signals and how to set stop
losses if these signals fail.

---

Hammer
As shown in 
Figure 11.1
, the bottom of the
Hammer is a good support point. The bulls
had shown their dominance at that point,
bringing the prices all the way up. It is quite
logical to assume that if the price drops
below the low of the Hammer, the signal is
negated.

---

Figure 11.1:
Stop out level for a Hammer
signal

---

Inverted Hammer
The bottom of the body of the Inverted
Hammer (
Figure 11.2
) is considered a strong
support area.
Figure 11.2:
Stop out level for an Inverted
Hammer signal
If the price declines below this point, it
shows that the bulls were not able to hold the

---

support. Getting out of the trade is then the
prudent thing to do.

---

Bullish Engulfing Signal
As 
Figure 11.3
shows, the bottom of the
bullish candle is logically analyzed to be a
strong support.
Figure 11.3:
Stop out level for a Bullish
Engulfing signal
That is the price at which the bulls started
taking control from the bears. After the signal
is confirmed, prices should not get back

---

through this point.

---

Piercing Signal
Where did the bulls take control from the
bears in the Piercing signal in 
Figure 11.4
?
Figure 11.4: