Candlestick X-Ray™ Indicator Package: State-Of-The-Art Pattern Detection Page 3

The Candlestick X-Ray™ Indicator Package: State-of-the-Art Pattern Detection Page 3

An Overview of the Candlestick X-Ray™ Features Page 5

The Complete List of Candlestick Patterns: 92 Fibonacci-Based Patterns Page 6

Candlestick X-Ray™ PaintBar: Color-Coded Candlestick Patterns Page 7

- Configuring and Customizing the PaintBar Page 8

Candlestick X-Ray™ Indicator: Detect Any Candlestick Pattern Page 9

- Configuring and Customizing the Indicator Page 10

Automated Scanning Capabilities: Scanning for Crossovers & Divergences Page 11

- NinjaTrader Market Analyzer Page 11 - TradeStation RadarScreen Page 13 - TradeStation Scanner Tool Page 15

Frequently Occurring Intra-Day Patterns Page 16

Our Favorite Candlestick Patterns Page 17

Expert Tips & Advice: Scanning for Crossovers & Divergences Page 18

- Expert Tip #1: Candlestick Patterns Establish Strong S/R Levels Page 18 - Expert Tip #2: Incorporate Volume Analysis with Candlestick Patterns Page 19 - Expert Tip #3: Pay Close Attention to Dojis after Rallies & Selloffs Page 20 - Expert Tip #4: Use Patterns to Define Profit-Target & Stop-Loss Levels Page 21

– Continued on the Next Page –

Superior Coding, Formulas, and Indicators: Filtering Out Weak Patterns Page 22

- Problem #1: Missed Signals on “Big” and “Small” Stocks Page 22 - Problem #2: Incorrect Formulas & Labeling of Candlestick Patterns Page 24

Harnessing the Power of Fibonacci: The Science behind our Formulas Page 25

Superior Customer Support Page 27

Risk Disclosure Statement Page 28

The Candlestick X-Ray™ is the most comprehensive, feature-rich collection of candlestick pattern Indicators on the commercial market. Whether you're interested in the most common or advanced patterns — the Indicator, PaintBar, and Scanner detect over 90 unique candlestick patterns — significantly more than any other indicator or software.

The Candlestick X-Ray™ outperforms all competitors by using strictly coded, Fibonacci-based formulas that filter out low-quality patterns. This ensures that only the strongest candlestick patterns are detected — avoiding weak, unreliable patterns that plague other software and indicators. Other candlestick tools on the market lack a proper understanding of the rules behind each pattern — resulting in incorrect formulas. This can have disastrous consequences if you're making trading decisions based on false patterns.

To solve this problem, we devised each pattern's formula after studying all the candlestick-related literature that we could get our hands on. Since many candlestick patterns and their respective formulas are neither qualitatively defined nor uniformly agreed amongst candlestick "experts", we have combined their various interpretations to determine the specific rules for each pattern. We also went a step further to incorporate Fibonacci numbers and ratios into many of our formulas — creating multi-faceted, extremely powerful candlestick pattern Indicators. (More detailed information on pages 22-26).

The Candlestick X-Ray™ Indicator Package includes:

- Our 92 candlestick patterns is significantly more than ANY other candlestick-related Indicators or software – nothing else even comes close.

- Our strictly coded, Fibonacci-based formulas filter out low-quality patterns. This ensures that only the strongest candlestick patterns are detected – avoiding weak, unreliable and "border-line" patterns that plague other software and indicators.

- The most important and valuable aspect of any candlestick pattern software is the ability to scan for patterns and signals. We include specialized “scanner’ Indicators and templates that are explicitly designed to scan any list of symbols for any and all candlestick patterns.

- Users can enable or disable any of the candlestick patterns to reduce chart clutter and only be notified of the most important patterns. All colors and text labels are also fully customizable to give you complete control.

- Users can configure alerts for any patterns, allowing for audio, visual, and email alerts and notifications to ensure that you won’t miss any signals.

Abandoned Baby Bull Harami Bullish Squeeze Alert Bull Abandoned Baby Bear Harami Bearish Squeeze Alert Bear Advance Block Harami Cross Three Inside Up Bullish Engulfing High Price Gap Bull Three Inside Down Bearish Engulfing High Wave Three Outside Up Bullish Kicking Homing Pigeon Bull Three Outside Down Bearish Kicking In Neck Three White Soldiers Breakaway Bullish On Neck Three Identical Soldiers Breakaway Bearish Ladder Bottom Three Black Crows Concealed Baby Swallow Bull Ladder Top Three Identical Crows Concealed Baby Swallow Bear Low Price Gap Bear Three Line Strike Bull Dark Cloud Cover Marubozu White Three Line Strike Bear Deliberation Bull Marubozu Black Three Stars North Deliberation Bear Matching Low Three Stars South Descending Hawk Matching High Three River Bottom Descent Block Mat Hold Bullish Three Mountain Top Doji Mat Hold Bearish Thrusting Bull Perfect Doji Meeting Lines Bull Thrusting Bear Dragonfly Meeting Lines Bear Tidal Wave Evening Doji Star Morning Doji Star Tri Star Bullish Evening Star Morning Star Tri Star Bearish Falling Three Method Piercing Line Tweezer Top Four Price Doji Rising Three Method Tweezer Bottom Gravestone Separating Lines Bull Two Crows Hammer Separating Lines Bear Two Rabbits Perfect Hammer Shooting Star Upside Gap Two Rabbits Hanging Man Perfect Shooting Star Downside Gap Two Crows Perfect Hang Man Side by Side Bull Upside Gap Three Method Inverted Hammer Side by Side Bear Downside Gap Three Method Perfect Inverted Hammer Stick Sandwich Bull Upside Tasuki Gap Stick Sandwich Bear Downside Tasuki Gap

The Candlestick X-Ray™ PaintBar color-codes the price bars and provides a text label of the pattern name whenever a valid candlestick pattern is detected. It is fully customizable, allowing you to choose whether to show all patterns or only the specific patterns that you want to see. It comes with a default setting of Cyan for bullish patterns, Magenta for bearish patterns and Yellow for indecisive or neutral patterns (since most traders use green and red colored bars to display price

action).

*** Go to Format Symbol - Scaling and make Sub-Graph Margins 10% or more on both the top and bottom so that all the patterns and text will fit on your chart. (this tip is for TradeStation and MultiCharts users only)

*** To change the color of the bar or the text for any of the patterns, simply go to the tool’s Format / Inputs screen where you will see each pattern listed alphabetically with a corresponding color next to it. Each pattern has two color settings: one setting for the bar color and one setting for the text color. This enables each user to deactivate or remove the text labels for any patterns that they do not want, as well as the ability to change the color of the bar when a valid pattern occurs. Choose each color you would like to use by replacing the text with your new color choice. If you would only like to remove the text labels from some patterns but want the bar to be a different color, you may do so by changing the text color to match your background (most likely “black”). This is particularly useful if you decide to remove excessive engulfing or advancing patterns that can occur within small intraday timeframes.

Candlestick X-Ray™ Indicator plots color-coded histogram bars (vertical bars) in the subpanel when a valid candlestick pattern is detected. It’s a bit less obtrusive than the PaintBar text tool and can easily be changed to display all patterns or only the specific patterns that you want to see.

*** To disable any of the patterns, simply go to the tool’s Format / Inputs screen where you will see each pattern listed alphabetically with On/Off and a corresponding value of “1” next to it. To disable a pattern so that both its bar color and text label are no longer displayed, change the value to “0”. This is particularly useful if you decide to remove excessive engulfing or advancing patterns that can occur within small intraday timeframes. For example, if you only wish to know when various dojis or marubozus occur, you can simply change the On/Off values of all the other patterns to “0”.

*** To change the color for any of the patterns, simply go to the tool’s Format / Inputs screen where you will see each pattern listed alphabetically with a corresponding color next to it. Choose the color you would like to use for each pattern by replacing the text with your new color choice.

The Candlestick X-Ray™ also includes a special pre-formatted “Market Analyzer” Indicator and template for all NinjaTrader users. All of the columns, colors, and text are completely customizable so that you can personalize it to your own preferences. Using the Candlestick X-Ray™ with the Market Analyzer allows you to quickly scan an entire list of symbols for all candlestick patterns in just seconds!

A special pre-formatted Market Analyzer template is included for all NinjaTrader users. If you would like to create your own templates, you must adhere to the following values when setting up your own cell conditions:

Abandoned Baby Bull = 100 Harami Bullish = 69 Squeeze Alert Bull = 39 Abandoned Baby Bear = 99 Harami Bearish = 68 Squeeze Alert Bear = 38 Advance Block = 98 Harami Cross = 70 Three Inside Up = 37 Bullish Engulfing = 97 High Price Gap Bull = 67 Three Inside Down = 36 Bearish Engulfing = 96 High Wave = 66 Three Outside Up = 35 Bullish Kicking = 95 Homing Pigeon Bull = 65 Three Outside Down = 34 Bearish Kicking = 94 In Neck = 64 Three White Soldiers = 33 Breakaway Bullish = 93 On Neck = 63 Three Identical Soldiers = 32 Breakaway Bearish = 92 Ladder Bottom = 62 Three Black Crows = 31 Conceal Baby Swallow Bull = 91 Ladder Top = 61 Three Identical Crows = 30 Conceal Baby Swallow Bear = 90 Low Price Gap Bear = 60 Three Line Strike Bull = 29 Dark Cloud Cover = 89 Marubozu White = 59 Three Line Strike Bear = 28 Deliberation Bull = 88 Marubozu Black = 58 Three Stars South = 27 Deliberation Bear = 87 Matching Low = 57 Three Stars North = 26 Descending Hawk = 86 Matching High = 56 Three River Bottom = 25 Descent Block = 85 Mat Hold Bullish = 55 Three Mountain Top = 24 Doji = 83 Mat Hold Bearish = 54 Thrusting Bull = 23 Perfect Doji = 84 Meeting Lines Bull = 53 Thrusting Bear = 22 Dragonfly = 82 Meeting Lines Bear = 52 Tidal Wave = 21 Evening Doji Star = 81 Morning Doji Star = 51 Tri Star Bullish = 20 Evening Star = 80 Morning Star = 50 Tri Star Bearish = 19 Falling Three Method = 79 Piercing Line = 49 Tweezer Bottom = 18 Four Price Doji = 78 Rising Three Method = 48 Tweezer Top = 17 Gravestone = 77 Separating Lines Bull = 47 Two Rabbits = 16 Hammer = 75 Separating Lines Bear = 46 Two Crows = 15 Perfect Hammer = 76 Shooting Star = 44 Downside Gap Two Crows = 14 Hanging Man = 73 Perfect Shooting Star = 45 Upside Gap Two Rabbits = 13 Perfect Hang Man = 74 Side by Side Bull = 43 Up Gap Three Method = 12 Inverted Hammer = 71 Side by Side Bear = 42 Down Gap Three Method = 11 Perfect Inverted Hammer = 72 Stick Sandwich Bull = 41 Upside Tasuki Gap = 10 Stick Sandwich Bear = 40 Downside Tasuki Gap = 9

The Candlestick X-Ray™ also includes a special pre-formatted “RadarScreen” Indicator and template for all TradeStation users. All of the columns, colors, and text are completely customizable so that you can personalize it to your own preferences. Using the Candlestick X-Ray™ with the RadarScreen allows you to quickly scan an entire list of symbols for all candlestick patterns in just seconds!

The Candlestick X-Ray™ also includes a special pre-formatted “Market Scanner” Indicator and template for all MultiCharts users. All of the columns, colors, and text are completely customizable so that you can personalize it to your own preferences. Using the Candlestick X-Ray™ with the Market Scanner allows you to quickly scan an entire list of symbols for all candlestick patterns in just seconds!

We have found that scanning intraday for our favorite patterns can be quite useful as an “early warning” detection system, since the Candlestick X-Ray™ Scanner can display valid daily patterns before the trading day has ended. In other words, you can see which stocks exhibit valid pattern setups at 12 PM (EST) rather than having to wait for the close at the end of the trading day.

*** While this screening technique allows for aggressive pre-emptive strategies, always exercise extreme caution when doing so because a pattern that appears valid at 12 PM (EST) may prove to be invalid at 4 PM on close.

We prefer using the Candlestick X-Ray™ Scanner to keep an eye on which patterns are developing within a specific group of key issues at around 10:30 – 10:45 am, 2:15 – 2:30 pm and once again at 3:35 – 3:50 pm (EST).

To avoid excessive chart clutter and unnecessary signals when analyzing small intraday timeframes that are below 5 minute or 15 minute intervals, we recommended eliminating patterns that can occur too frequently, such as:

 Bullish & Bearish Engulfing;  Bullish & Bearish Marubozu;  Three Inside Up, Three Inside Down;  Three Outside Up, Three Outside Down;  Three White Soldiers / Three Black Crows;  Matching High / Matching Low;  Tweezer Top / Tweezer Bottom;

Abandoned Baby, Morning Doji Star & Evening Doji Star

- High probability reversal patterns with expanding volatility and explosive price action

Advance Block, Descent Block, Deliberation

- These patterns often coincide with significantly overbought / oversold conditions, signaling that trend momentum is markedly waning

High Wave

- These patterns often coincide with significant turning points in market character, reflecting drastic changes in price action (e.g. March 6th, 2009)

Homing Pigeon & Descending Hawk

- Provide extraordinary risk / reward ratios

Piercing Line, Dark Cloud Cover, Thrusting

- High probability reversal patterns

- Wait for price to revert to the support/resistance established where the pattern occurred and enter there for a greater risk/reward ratio. If price fails to revert, leaving you with a missed trade, OH WELL!

There is no harm and no foul in missing a trade when it fails to meet your risk control parameters, regardless of how it plays out. By exercising technical discipline and emotional patience with your candlestick pattern trading, you can significantly increase both your success rate and risk/reward ratio.

- It’s a general rule that candlestick patterns which occur on increased volume exhibit greater probabilities for follow-through. If a valid pattern setup looks good but volume is either suspiciously lacking or utterly unconvincing, prudence warrants exercising caution. This simple, straightforward tip can greatly enhance your candlestick analysis.

- Pay more attention to “dojis” which occur after prolonged or extended rallies (possible tops) rather than those occurring after extensive sell-offs (possible bottoms). While it is fundamentally correct that “going up” simply requires greater cumulative buying than selling, we have observed that doji signals exhibit much greater probabilistic predictive power and hence effective value for traders when they follow exhaustive rallies.

- You can project effective price targets and stop loss levels when employing many candlestick patterns. Placing your stop either just underneath the low or high of the respective pattern (depending on bullish or bearish character) is a simple, straightforward way to effectively manage risk and minimize time decay. For your price target, adding or subtracting the pattern’s High-Low range to the top or bottom of the breakout level is another simple and straightforward way to calculate a realistically achievable price target.

All “doji-based” as well as “matching high or low” patterns that require an equal open, high, low and/or close are simply impossible to code for both “high-priced” and “low-priced” issues when utilizing formulas which require precision; this prevents many candlestick patterns from registering valid signals on “high-priced” stocks, “penny” stocks, bonds, futures, or options.

We believe that our coding has solved this problem by requiring the definition of a “doji” and a “matching high or low” to have a real body (Open - Close) that is less than approximately 13% of the current bar’s trading range (High-Low). This allows for “high-priced” stocks (e.g. several hundred dollars) such as GOOG or PCLN to exhibit effective signals for these patterns in situations where “simple” coding falls short. We have also provided many of the original patterns, in addition to our custom modified patterns.

*** Patterns with an “ = ” after them are the “textbook” codes that require exact Opens / Closes / Highs / Lows.

GOOG opens at $400.50 and closes at $400.00, where the Low is 397.00 and the High is 405.00.

“Simple” Coding: fails to classify as a “Doji” day; no pattern is registered.

Fibozachi Coding: recognizes that the 50-cent real body is only 6.25% of the High-Low range, thereby correctly registering as a “Doji” day.

FNM opens at $1.10 and closes at $1.09, where the Low is 1.00 and the High is 1.20.

“Simple” Coding: fails to classify as a “Doji” day; no pattern is registered.

Fibozachi Coding: recognizes that the 1-cent real body is only 5% of the High- Low range, thereby correctly registering as a “Doji” day.

Many other candlestick pattern tools on the market have fundamental misconceptions about candlestick patterns and incorrect formulas of certain patterns; as a result, they plot invalid patterns and often miss the good ones.

As systematic candlestick traders, we find such programming errors utterly unacceptable. We have painstakingly proofed every one of the 156,335 characters within each of the 4,445 specific lines of code that comprise the Candlestick X- Ray™ Package and take great pride in the quality of our work.

Understanding the inherent price action within specific patterns adds a critical component to one’s knowledge of candlesticks. Employing such valuable information to your candlestick analysis can significantly enhance the effectiveness of their predictive value.

“Simple” Coding: incorrectly plots the hammer, inverted hammer, hanging man and shooting star, due to the lack of an added rule requiring that an uptrend or downtrend MUST be present. (Hammers that register after a selloff is much more valuable than a hammer that registers during a rally).

Fibozachi Coding: includes an added rule, where the midpoint of the current bar must also be above or below the 8-day SMA, which confirms the presence of an uptrend / downtrend. This helps to properly validate candlestick pattern signals.

We have devised each formula within our candlestick patterns in a comprehensive fashion. Since many candlestick patterns and their respective formulas are neither qualitatively defined nor uniformly agreed upon by the several seminal authors of candlestick literature, we have both manually and mathematically assessed the various interpretations to determine the formula and rules behind each pattern. Additionally, we have incorporated Fibonacci numbers and their derivative ratios into the vast majority of our uniquely coded candlestick pattern formulas, resulting in the creation of multifaceted and extremely powerful candlestick pattern Indicators.

The following is a prime example of our initial frustration during the early stages of the developmental process:

Author “X” states that a hammer’s lower shadow must be at least 2 times the length of its real body, where author “Y” states that a hammer’s lower shadow must be at least 3 times the length of its real body.

◼ If we follow the guideline of Author “X” we catch all signals, though they may be probabilistically weaker than those of Author “Y”. ◼ If we follow the guideline of Author “Y” we may miss some signals, though they may be probabilistically greater than those of Author “X”.

Rather than relying on amorphous guidelines, our rule states that a hammer’s lower shadow must be at least 2.236 times the length of its real body. We also define that the Upper Shadow * 7.618 < High-Low Range; in other words, the upper shadow must be less than 13.13% of the bar’s entire range for the hammer pattern to verifiably confirm itself, thereby forming a valid signal.

*** Our “Standard” Doji, Hammer, Inverted Hammer, Hanging Man, and Shooting Star Patterns employ the “13% Rule”, where Open - Close <= 13% of the Range.

We have also included “Perfect Pattern” versions (for classic candlestick pattern traders), wherever applicable, which employ a “3% Rule” in order to isolate only the strongest, most “textbook” patterns that the market has to offer.

Have a question about the Candlestick X-Ray™ Indicator Package? Contact us at [email protected]. We take great pride in our customer support and are happy to help our fellow traders!

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