How to Make Money Trading with Candlestick Charts

Figure 12.1:
Morning Star in Bank of India
with stochastics oversold

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After weeks of selling and domination by the
bears, the stock formed a Morning Star
reversal signal. Also notice that the
stochastics were in oversold conditions. The
perfect time to buy would have been in the
week after the week of the Morning Star
signal.
As I mentioned before, none of the procedure
for buying or selling changes when using
weekly charts. The only change is the time
frame of trading. The trader or investor using
this chart would have stayed in the position
for at least 2 months before exiting.
Figure 12.2
shows the weekly chart of
Syndicate Bank.

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Figure 12.2:
Evening Star signal starts the
downtrend in Syndicate Bank
In the early part of May 2006, you will
notice an Evening Star formation. Long term
traders could have put on short positions as
soon as the signal got confirmed. The
downtrend was stopped by a Doji-type

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week, followed by a Bullish Engulfing
signal.
Figure 12.3
shows the Nifty index plotted
with a weekly time frame.
Figure 12.3:
Trading candle signals on the
Nifty weekly chart

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This chart is proof that candlesticks work
very well for indexes on a weekly time
frame, just like they do on daily time frames.
Notice the following points about the chart:
Point 1:
An Evening Star signal stopped
Nifty’s advance at the beginning of
October 2005.
Pont 2:
A bullish Harami signal ended the
short downtrend in November 2005.