Candlestick Charting Explained (3rd Edition)

by Gregory L. Morris
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The classic Japanese candlestick reference, updated with all-new insights and tools to improve your predictive accuracy. Candlestick Charting Explained takes the subjectivity out of Japanese candlestick analysis by providing you with standardized, straightforward coverage of 89 powerful candlestick charts patterns. You will learn what they indicate about current trader behavior and how you can use each to instantly improve your market knowledge and analytical precision.

In this revised and greatly expanded third edition, candlestick expert Greg Morris updates his influential guidebook with valuable new material and patterns to give you:

•Thorough coverage of candlestick patterns to allow instant analysis of investor attitude and probable market direction.

•Methods for integrating candlesticks with traditional Western charting analysis for enhanced signal verification. •Completely new section by Ryan Litchfield dedicated to “Trading with Candlesticks.”

•Current insights into trader psychology, and how it impacts interactions between buyers and sellers.

Its in-depth exploration of traditional as well as all-new candlestick charts, Candlestick Charting Explained will show you how to make candlestick charting a logical, understandable, and profitable component of your current trading program.

Empower your trading with Japanese candlestick charting!

Japanese candlestick charts dramatically improve your understanding of short-term (less than a week) market sentiment, making you a much more informed and focused trader of stocks, futures, and indices. The bestselling Candlestick Charting Explained focuses on the patterns themselves and highlights the key facts you need to know to apply each pattern to your trading. For each of 89 distinctive candle patterns, its standardized format provides you with:

•Commentary--Description of pattern and significance of its name, insights into unique features, and other concise explanation

•Rules of Recognition--Simple rules for quick, accurate identification along with precise, day-by-day descriptions of pattern development

•Scenarios and Psychology Behind the Pattern--Trading scenarios that could have led to the pattern’s development, with general discussion of the psychology of each day’s action

•Pattern Flexibility--Situations that change the pattern’s effectiveness with explanations of allowable deviations from the classic pattern

•Pattern Breakdown--Instructions for reducing the pattern to a single candle line and whether or not outside confirmation is suggested or unnecessary

•Related Patterns--Patterns that have similar formations, could be considered variations, or are a part of this pattern

•Example--A graphic example of the pattern to both aid in recognition and eliminate costly confusion in pattern identification

Additional information and insights present different interpretations of candlesticks based on intraday instead of end-of-day events and action, improving signal reliability. The author’s unique candle pattern filtering concept, instrumental in answering the “how” question, is updated to utilize today’s larger universe of stock data. An all-new chapter provides practical application and perspective traders need to view candles in the context of today’s computer-driven marketplace.

For millions of traders, candlesticks have become a key tool in creating and verifying trading signals. Candlestick Charting Explained is the only book you need to start integrating their proven versatility and effectiveness into your technical trading program.

Gregory L. Morris is Chief Investment Officer for PMFM, Inc. One of the world’s leading experts on candlestick charting, Morris is a consultant and the former CEO of, which he and a partner founded and later sold to He is the author of The Complete Guide to Market Breadth Indicators, along with numerous articles for professional publications, and has spoken to thousands of traders and investors at industry conferences around the world.

Note from Greg Morris: 

"The success of the first edition (1992) and the second edition (1995) made the decision to do this one easy. I added 20+ new complementary patterns to fill the holes that existed in the Japanese literature. A giant section dedicated to traders has been added. Hundreds of updated charts and tables with statistics from millions of days of data have also been added. This is almost a totally new book."

Also available in our ChartWatcher's Bundle.

Paperback: 550 pages
Publisher: McGraw-Hill; 3rd Edition (March 2006)
ISBN-13: 978-0071461542
Availability: In Stock - Usually ships the next business day.

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