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The three important candlestick pantone. Is it Stone Age trading or is it a real way or is working for you? I think it will help you a little bit more clearer in your mind to understand what kind of structures in candlestick formations are truly working. And trust in me, I will give you a lot of nice explanations and the stories behind why they are working. Very, very good.

And.

And you will love it. Trust in me. I translated this video with AI because I'm not the perfect English speaker, but I think you will love it.

So have a wonderful day everyone. Today I feel like telling you a lot about the topic of candlesticks. And do these candlesticks, which I believe have existed since 1850, even make sense? Or is it a completely outdated method that is totally devoid of any sense? And today we're going to get to the bottom of these questions. And there's one thing I'd like to say in advance. I love candlesticks, but only when I truly understand them in depth and can clearly gain an advantage from them that tells me whether supply and demand are currently in balance or out of balance. And I have three of them that I will introduce to you where you might realize for yourself. Okay, wow, less is more. And maybe I shouldn't focus on so many different formations as is often the case. There are people out there using bullish, harami, pattern cross, you name it, and so on. And I have to say there really are some where I think that looks pretty cool. But what do I always add to the whole thing? And that's what I want to talk to you about today. I want to take a closer look with you at whether what I discovered back then, in all those years when I first started exploring candlesticks for myself, when I had no idea about market profiling, footprint charts and so on, what did I discover back then? And these discoveries are of course now supported by much more depth. Because over the years 2008, 2009 to 2013 in particular, I was able to study all the other models in detail. I was able to research them very thoroughly. In the years before that, I spent countless nights sitting in front of the screen, searching through candlestick formations, studying them and looking for recurring patterns. And I found them. But I can say very clearly, unfortunately, they don't always work. Why is that? It's quite simple, because even there, you always have to know where you're looking for which formation. Am I in a trending phase or in a value phase? Are the markets more suitable for counter trades or are they better for breakouts? And trend following setups. And you absolutely have to combine these things into a single concept so that, you know, with these candlestick formations, with the information these candles provide, I really do have an advantage. And that's what I'd like to explain to you now on the chart. All right, so let's start with a plain candlestick chart with nothing on it. And maybe just very briefly, for those who don't know what that is at all, I'll keep it very short and to the point. Each of these candlesticks here. So each of these little figures is based on a specific time frame. For example, each one of these was formed within 30 minutes, which means M30.

Each can also represent a day, meaning each of these figures is one day. You can set all of that. And let's just say, for example, we're using a candlestick chart here, especially for people who are a bit more active on M3. And say each of these candlesticks is a three minute candle, or we say M5. That means each of these candlesticks represents a time frame of five minutes. So what kind of information do we get from that? For example, this candle here is a strongly positive candle. It started here when this time frame began, and it ended here. This was the maximum extension downward, and this was the maximum extension upward. And that's basically all there is to it. In the same way you can say what is a negative candle in this case? Those are always the dark ones. Let's take this one here, because it's a bit more extreme. It started here and then ended here, but its maximum extension was down here. And you can already see, okay, something happened there. There was definitely, without any question, some impulsiveness involved here. Now, some of you have probably already taken the time to analyze all these doji patterns, harami patterns, bearish engulfing formations, and all the rest for yourselves, perhaps even more than once. And I can say some of them do really have their justification. But today I want to introduce you to three patterns that in my opinion, truly are working because they give me more information than others. And that's where I want to start. And one of my absolute favorite formations is three in a line. Three candlesticks of the same color in one direction. On top of that, I really like it when they show spikes, because then I can see there's always some resistance present.

The third move after the three in a line is often an extreme move.

Now, of course, it's interesting to know, when should I look for this? Well, I should only look for it when A market is at a so called breakout level. And why is that the case? Here, take a look. This is the previous underlying range area where the market participants were accumulating.

So they were accumulating here. Then we got this three in a line and then we shot right through.

But there are also situations where this doesn't work. And that's normal because if we were to look here, for example, we would find another three in a line.

But what's missing beforehand? What's missing is the real range and the actual support area. That's where this formation becomes interesting for me. Let's move on. Take a look right over here. 1, 2, 3. So can you tell me why exactly it crashes down here at this particular spot and the fourth strong impulse really comes into play. When this fourth strong impulse comes, it's always the excess. And for me that's basically always the end of a three and a line. That means one, two, three, bang. But only if I have an area beforehand that is interesting to me. Don't just do this anywhere on the chart because you can see it here, for example, 1, 2, 3. Oh yeah, there was an impulse. But why didn't it really continue?

Because the market here didn't break out of an extreme range or an extreme phase beforehand. I want to repeat that again. It's very important, please, with this model, always make sure to check beforehand whether a compression has built up in whatever form. And if something does happen, then the probability is high that it will be intense. And if the market then, like here for example, comes back down again, 1, 2, 3. What happens then? Then the following happens. Everyone who thought the market was going to go really far long gets completely flushed out of the market here.

You might already see that these candlestick patterns always need some additional information. You shouldn't look at them individually and in isolation.

Let's take another example and see what information it gives us. So let's move on and look at it with the same perspective and you'll find this happening over and over again. So when might the bottom be in? Or when might the top be in? And there's the possibility, for example, to identify these inside bars for yourself. What is that?

The market goes up, forms its candlesticks, and at some point there's a candlestick that's simply within the previous range.

What does that mean? For me, this inside bar is great information. And why is that? Because it shows me a stopping point where market participants ultimately begin to form a balance. So they have represented a calming phase for me after a certain impulsive structure. And when that happens, it's always interesting for me. And I then look to see if there's an opportunity for a reversal here. But as you can see, they don't always appear. Of course, that would be nice. And even there you always have to look closely and know what exactly you're looking for. And it's also absolutely essential to check whether there was a resistance or support area beforehand where this candlestick formation could give me an advantage.

Maybe just a little tip on the side. If something like this appears in the middle of a range, think about whether that's actually helpful to you. And if it does appear, what needs to happen next for it to actually help me? What information do I get from that? Let's take a closer look.

Let's see what needs to happen inside such a candle for me to say that it actually has substance. I'm deliberately going a bit deeper here. And what am I doing here? I'm simply analyzing the trading volumes using a footprint chart within the same time frame that I'm currently using as a basis here. And then I look at how much volume actually traded within it. And now things start to get a bit more complex again.

So what exactly do I look at to gain these informational advantages? Especially if I don't have a support area, but still have the idea, for example, to handle a context or a stretch from point A to point B? Well, then I can, for example, look at where supply and demand are out of balance.

What does the trading volume look like?

Because I know that if I analyze markets purely based on supply and demand, markets always tend to move toward areas of high trading volume. That's all there is to it. And if, as I see here, the volumes are falling, they're continuing to go down, then I have a piece of information. And if, for example, I have this information here, and I have a three in a line, just as I showed earlier, and the trading volume is really at the low and below that, as in this case, there might be some room, then it makes sense not to always connect such a formation with support and resistance, but instead to analyze a trend continuation of a move based on the trading volume. I know this is getting a bit more complex, but it's totally plausible and it helps us tremendously to investigate such things.

Here, for example, we've just received the result from the previously observed period, and you can see there was a stronger movement. And with that we come to our last candlestick, which I personally find interesting. And these are so called outside bars. So what are outside bars? Outside Bars are candles that have completely traded above and below the previous period.

This means, for example, this candle here was entirely above and entirely below the previous one. And such outside bars often give me an indication that the market has now made a decision.

So after an outside bar like this, as you can see here, it's often quite likely that another impulse will follow. Or if such an outside bar has appeared and the market crashed down here and then goes back above, an impulse often follows. Why is that? And I definitely want to share this logic with you because it's really fascinating. The reason is actually quite simple. When the market has been both above.

And below the previous price ranges, it has cleared out the equilibrium level. It has checked both above and below. And if traders were involved there, and maybe especially in a less liquid market, there were stop losses placed, or if the market was asking, are there even any fair prices left here? Then all of that has been cleared out.

And then it's interesting for us to know, okay, there's nothing left to gain there for now. So my conclusion is if something happens after that, then then there's definitely a possibility that the market, having taken care of everything, can now establish a new trend. And now the question again is how far can it go? And that's when, of course, it's interesting to know again, where is my next interesting support or resistance area where I might once again look out for these three patterns. I hope you guys enjoyed it. I hope this gave you a bit more depth about the candlestick formations that I find interesting. And at some point I will definitely go into these spikes and so on, when they might get filled and when they don't. But I think that was, for now, the essence of the three most important candlestick formations, from my perspective. Yes. And of course you can also backtest these three formations really well. And if you do that, don't forget to include the relevant previous support and resistance levels. Then your backtesting model will also give you great insights. If you do all of this in isolation somewhere in the market, then please always include volume as well, just as I showed earlier. And then you'll gain a great benefit for yourself, seeing how easy it is to identify and trade markets, less is more. That's my message. Thank you for listening.