In this educational video, Jordan Kuzmanov explains two Japanese candlestick patterns – the Equal Shadows pattern and the Hatchet pattern – and how to trade them. He defines each pattern’s visual criteria (large body with nearly equal upper and lower shadows for Equal Shadows; a long single shadow with a small body and no opposite wick for the Hatchet), clarifies their meaning as continuation signals, and shows chart examples in bullish and bearish contexts. He outlines a trading workflow: enter on the bar’s close after confirmation, place stop‑loss at the pattern’s high (for bearish) or low (for bullish), target a 1:1 risk‑reward ratio (with partial profit taking and moving stop to breakeven), and emphasizes using higher time‑frames for reliability. Kuzmanov also stresses combining candlestick patterns with broader chart structures (ABCD, triangles, channels, divergences) to improve signal quality, and invites viewers to additional resources on vladimirebukov.com and a Telegram channel.
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Hello everyone and welcome to another educational video from the Traders Academy Club. My name is Jordan Kuzmanov, guys, and today we're going to talk about Japanese candlesticks again. This time we're going to cover another 2 candlestick patterns that you can also find here inside the blog. The blog is vladimirebukov.com under Forex Education. If you go to free ebooks, you can see that you will be able to find many, many other books, of course. So if you're looking for in-depth explanation of the patterns we're going to cover today, you can check out the actual books. Now let's go to the PowerPoint and see the 2 patterns. The first one that we're going to talk about is the equal shadows pattern. Highly reliable pattern, and there are a few things we need to mention here in order to identify it correctly. Now, first of all, how does the pattern look like? As you can see under the specifications, we have the very first thing which says large body, and the second part would be that we have more or less equal shadows on either side of the candle pattern, as you can see it right here, and you can see it right there as well. One more thing to mention is that we don't want this pattern to have a body, a body which is too small, which means, in other words, something that reminds a a doji pattern. So let's say the body is like this and you have very large shadows on the other— on the 2 sides, on the top and at the bottom, right? So this type of pattern is not reliable, and we can't really call it equal shadows because that would fall into the doji category. What's the meaning of this pattern? It means continuation, and since it means continuation, what we would like to do is to catch it when we have a trend, established trend. We want to see pullbacks, and using that pattern, we want to be looking for continuation of the price. Okay, so that's why we can call it A continuation pattern. So here is a very quick example of exactly that. This is a very recent chart. I believe that was the Euro Aussie, and here we can see the following: we have clear bullish trend followed by this correction, and. Right there we can find an equal shadow pattern. Green meaning continuation to the upside, and you can see what's happening, um, right after it. Now if you take a look at the chart, you also see a few more, uh, patterns like that reminding more or less the same equal shadows. But not really. For example, this one looks like it, but first of all, the body ratio versus even the smaller one is almost 1 to 1. And second of all, this shadow is much bigger than the other one. We can say the same thing right here. Okay, bigger shadow than the, than the top one. So not entirely perfect. Same we can say about this one. And you can see that if you start looking for these very specific things, at the end of the day you will be filtering out bad signals. Well, let's say this one would work, right? This one would fail, this one would fail, and so on. Same applies for this one. Top shadow smaller than Than the bottom one, and when we go ahead and check out the one that is marked, we can clearly see they're more or less equal. So that would be the place for us to go ahead and attack it. Here is another screenshot. This time we have bearish trend. We are inside what is supposed to be a pullback. Of course, we don't have yet our highs breaking above the swings. So we consider it a pullback, and this one is absolutely tradable in my opinion, even though it failed. Okay, the second one would be winning here. And what else we can see and say, of course, is when you're looking for these pullbacks, it would be good for you if you go ahead and understand chart patterns as well, meaning ABCD structures, meaning triangles, channels, flags, wedges, and so on, right? So if you understand the corrective patterns and you combine them with Japanese candlesticks, the reliability will be much, much bigger. Okay, um, so how exactly do we trade it? Well, the way we recommend to trade it, um, is to enter at the end of the bar when we have a closed bar. It's confirmed how it will look, and then protection above the high. This is of course when we are talking about bearish trends. All right, and of course vice versa is happening when we have Bullish trend, you just cover the bottom and then it's ready for attacks. So that's about the first one, again called equal shadows. And going to the second pattern here, which is the hatchet, it really reminds a lot to hammer and inverted hammer, but the small difference which actually makes a huge difference when you compare it to the hammer, is the fact that we don't have a wick on the top or at the bottom. The specifications though are pretty much the same as with the hammer. Here also we're going to have a very long shadow. The body should be smaller than the actual wick. And usually the larger the difference or the ratio here, the better and more reliable the pattern is. Okay, and as we said just now, we are missing here a shadow on the other side. Okay, so we have only one shadow. This is how we can recognize the hatchet and differentiate it from the hammer. What it means is very simple. When you see green candle pattern like this, you're expecting for the price to continue higher. And when you see a pattern like that, you're expecting this thing to continue lower. Of course, you can use it inside pullbacks, or you can also use it at the end of the actual trend. Needless to say, we need further confirmations whether it's going to be this scenario or that scenario. We're talking about divergences, we're talking about understanding how the trend works and when to expect reversals and continuations, of course. But I think that would apply to any Japanese candlestick pattern that we can work with. Simply don't use them on their own, guys. Try to include something else in order to improve the reliability of these patterns. Okay, they work best in combination of something else. So let's go ahead and see the examples. Here we have previously formed bearish move, price is moving lower. Okay, it opens with a gap and we got the bullish hatchet right at the bottom of it. As you can see The body is very, very tiny compared to the wick, and amazing move followed after that. Another example, we have bullish trend and hatchet appears at the very end of it, then a huge drop to the downside. Now one more thing I would like to mention here is the time frames. Make sure to use these Japanese candlesticks, not just those patterns of course, but It, um, any pattern at all, any trading style works better on the higher time frames, right? So if you try to do that on the 15-minute chart, I'm not saying you will not be profitable. I'm just saying that if you compare the 15-minute chart performance versus the 4-hour chart performance, for example, or daily, the difference will be there. Okay, much more reliable on the higher time frames. This is the bottom line. What's our recommendation here in terms of trading it? Just like with the other pattern, we are using the very top or the very bottom as a stop loss, and the entry is executed at the close of the bar. Okay, in terms of targets, we're using 1:1 risk-reward ratio, and even though most of the times it will deliver more than that, um, it's best to take some profits, lock in some profits. And here, of course, we can talk about it a lot depending on your money management and Trade management, but definitely look to book profits at risk-reward ratio of 1 to 1. Just as an idea, you can be cashing out some percentage like 70-80% here, okay, as target 1. Move the stop loss to break even and then let that thing run. Of course, in order to do this slightly more advanced technique here, it would be better if you understand overall how to read the market. So you're in bullish trend, you see reversal patterns confirmation with candle pattern, and you're expecting much deeper move to happen to the downside. Well, of course, book some profits, move the stop loss to breakeven, and let it run. Okay, something like that. So, uh, that would be all, guys. I invite you to our Telegram channel where me and Vladimir are posting content almost on daily basis. Plenty of trade ideas, trade setups, educational materials. Make sure to join. Of course, you can find the link below in the description. So that would be all. Wishing you happy holidays and have a wonderful remaining of the week.
