🕯️ Candlestick Secrets from the East: Steve Nison’s Timeless Toolkit

“A clever hawk hides its claws.” — Japanese proverb (and trading wisdom in disguise)

Before candlestick charts lit up Western screens, they guided Japanese rice traders in the 1700s. Munehisa Homma, a samurai-turned-speculator, used them to corner the rice market and reportedly win over 100 trades in a row. But it wasn’t until the 1990s that Steve Nison brought this ancient visual language into modern trading rooms.

And once you learn to read candles—not just see them—you’ll never go back to bar charts again.

🧠 Why Candlesticks Still Matter

Steve Nison’s breakthrough was more than just drawing pretty waxy rectangles on a chart. He taught traders how to see the psychology behind price—fear, greed, hesitation, traps, and reversals.

Candlesticks show the open, high, low, and close, just like bars. But the shape, color, and shadows encode a story of conviction and reversal.

🧱 The Core Candlestick Reversals

  • 🔨 Hammer & Hanging Man: Reversal signals after trends
  • 💢 Engulfing Patterns: Momentum shift warning
  • 🌅 Morning Star & 🌆 Evening Star: Trend-change alerts
  • ☁️ Dark Cloud Cover: Sign of heavy selling after an uptrend
  • 🧘‍♂️ Doji: Candle of indecision and momentum shift

⚔️ Combining Candles with Western Tools

Stack candles with moving averages, RSI, MACD:

  • Hammer + RSI = Strong reversal
  • Engulfing + Resistance = Bear alert
  • Doji + Divergence = Trade setup

🧭 6 Commandments of Candlestick Reading

  1. Check for prior trend
  2. Size matters: Big candles count
  3. Wait for confirmation
  4. Use context: SR, volume, EMAs
  5. Watch the shadows
  6. Nothing is 100% certain

📌 Real Market Example

AAPL in a 6-day uptrend prints a Doji on Day 7. Day 8 brings a Bearish Engulfing. RSI breaks below 70. EMA flattens. Result: Trend reversal likely.

✅ Key Takeaways

  • Candlesticks = Clarity + Emotion
  • Combine with classic tools
  • Understand the story, not just the shape

🕯️ Final Thought

Bar charts show data. Candlesticks show emotion. Steve Nison’s work turned candles into a language every serious trader must understand.

📖 Read full article on my blog:
👉 https://seunforex.blogspot.com/2025/07/the-trader-who-still-wins-seun-fx.html

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