Candlestick Analysis & Japanese Techniques Flashcards
6 cards from real CTA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Candlestick Analysis & Japanese Techniques flashcards as text
A 'Doji' candlestick is significant because it indicates:
Answer: A period where opening and closing prices are nearly equal, reflecting market indecision
A Doji forms when open and close are virtually the same, signaling a battle between buyers and sellers with no decisive winner, often appearing at potential turning points.
What is a 'Hammer' candlestick pattern and what does it signal?
Answer: A candle with a long lower shadow and small body near the top of its range, appearing at a low and signaling bullish reversal
A Hammer has a long lower shadow (at least twice the body) with little to no upper shadow and appears after a downtrend, signaling that buyers pushed price significantly off the lows.
The 'Engulfing' candlestick pattern requires that:
Answer: The second candle's body completely engulfs the first candle's body in the opposite direction
A bullish engulfing pattern has a large white/green candle that completely engulfs the prior red/black candle's body, signaling a shift in momentum from sellers to buyers.
What does the 'Morning Star' three-candle pattern signal?
Answer: A potential bullish reversal, consisting of a long down candle, a small-body candle, then a strong up candle
The Morning Star signals a bullish reversal: a long bearish candle shows selling dominance, the middle star shows indecision, and the final bullish candle confirms the shift to buying.
A 'Shooting Star' candlestick is characterized by:
Answer: A long upper shadow and small body at the lower end of the range, appearing after an uptrend
The Shooting Star has a long upper shadow (at least twice the body) at the top of an uptrend, indicating that buyers initially drove price higher but sellers regained control by the close.
In Japanese candlestick analysis, what is an 'Abandoned Baby' pattern?
Answer: A three-candle reversal pattern with a gap on both sides of a doji star
The Abandoned Baby is a rare and powerful reversal pattern with a long candle, followed by a gapped doji that stands alone (gaps on both sides), then a long candle in the opposite direction.