Steve Bigalow’s Power Patterns
This product is not a recommendation to buy or sell, but rather a guideline to interpreting the specific analysis methods. This
information should only be used by investors who are aware of the risk inherent in securities trading. MetaStock, Traders Forum,
LLC, and their employees accept no liability for any loss arising from any use of this product or its contents.
MetaStock, Traders Forum LLC and their employees disclaim all liability for any investment decisions by investors based on the use
of their software, any trading strategies or any information provided in connection with these companies.
MetaStock, Traders Forum LLC and their employees do not endorse the purchase of any security nor are they paid for the
promotion of any security. No information contained in this presentation should be construed as investment advice or a solicitation
to buy any security.
NO INVESTMENT ADVICE:
You agree that (a) any Service is provided is for informational purposes only, (b) any investment decisions you make are solely at
your own risk, (c) neither MetaStock nor any of its licensors nor third-party information providers shall not be responsible or liable
for any trading or investment decisions made based on information provided by the Service, (d) the Service does not recommend
any securities, financial products or instruments, nor does the Service provide any investment advice or opinion regarding the
nature, potential, value, suitability or profitability of any particular security, portfolio of securities, transaction, investment strategy,
or financial product, and (e) the Service does not provide tax, legal or investment advice.
CFTC Rule 4.41
Hypothetical performance results have many inherent limitations, some of which we describe below. MetaStock makes no
representation that any account will, or is likely to, achieve profits or losses similar to those shown. There are frequently sharp
differences between hypothetical performance results and the actual results subsequently achieved by any particular trading
program. One of the limitations of hypothetical performance results generally benefits from hindsight in their preparation.
Additionally, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the
impact of financial risk in actual trading. For example, an individual's tolerance for loses and discipline in following a trading
program in spite of losses are material points which can also adversely affect actual trading results. Hypothetical performance
results cannot fully account for numerous other factors related to the markets in general or the implementation of any specific
trading program. All of these factors can adversely affect actual trading results.
Characteristics & Risks of Standardized Options
Prior to buying or selling an option, investors must read a copy of the Characteristics & Risks of Standardized Options, also known
as the options disclosure document (ODD). It explains the characteristics and risks of exchange traded options. Copies of this
document may be obtained from your broker or from any exchange on which options are traded.
Introduction
I had the great pleasure of working with Steve Bigalow in a number of endeavors. We spent a
lot of time coding his patterns. He was a great mentor and friend. He had a great impact on
my trading. I loved how his patterns capture the psychology of the markets. He loved
teaching and he loved helping traders.
We worked for years on his patterns and coded all of his favorites. This visual guide is
designed to help you understand the patterns that Steve defined as his most profitable. I
created this as a visual guide. As much as possible, I tried to use Steve’s terminology.
I hope you find them useful.
Jeff Gibby
www.thetradersforum.net
Power Patterns
A collection of 12 less common Candlestick patterns that produce
good signals.
Matt Hold
•The first candle is a long white candle in an
established uptrend.
• The second candle is a smaller candle that closes
inside the High-Low range of the first candle.
• The third candle closes lower than the Close of the
second candle but above the Low of the first candle.
• The fourth candle closes lower than the Close of the
third candle but above the Low of the first candle.
• The fifth candle is a large white candle that closes
above the Close of the first candle
Matt Hold
Mat Hold is a bullish continuation pattern that occurs
during an uptrend and indicates the continuation of
the trend. Traders can use the pattern in conjunction
with other technical indicators to confirm trade
signals and increase the probability of success. Always
use risk management techniques, such as stop-loss
orders, to manage risk.
Meeting Lines
• Prices are in a clear downtrend
• The first candle is a black candle with a
long body
• The second candle is a white candle
with a similar size to the first candle.
• The top and bottom of both candles
have similar values. They do not have to
have the same value, just similar.
Meeting Lines
Meeting Lines is a bullish reversal pattern.
Collectively, the two candles represent indecision in
the market.
A trader should look for other technical indicators or
chart patterns that support the reversal to confirm the
pattern.
A stop loss below the low of the pattern will limit the
risk exposure of the trade.
Advanced Block
PATTERN REQUIREMENTS:
• The prices should be in an uptrend.
• Three relatively small consecutive
white candles appear.
• Each candle should have a higher
High and higher Low than the
preceding candle.
Advanced Block
The Advance Block candlestick pattern is a bearish
reversal signal with a high degree of reliability. It can
be used in combination with other technical
indicators to increase the probability of success.
A confirmed pattern will have lower volume on the
last candle than on the second candle.
Traders can enter a short position when the price
moves below the low of the third candlestick. Place a
stop loss above the high of the third candlestick.
TriStar
PATTERN REQUIREMENTS:
• Three consecutive doji or very
small body candles appear in a
defined trend.
• The second candle gaps above
(bearish) or below (bullish) the
first and third candles.
TriStar
The TriStar candlestick pattern is a relatively rare but powerful
pattern that can indicate a period of market indecision and a
potential trend reversal.
The pattern can be bullish or bearish, depending on the market
trend. It can be used in combination with other technical
indicators to increase the accuracy of the trade setup.
Traders can enter a long position if the pattern appears at the
end of a downtrend or a short position if the pattern appears at
the end of an uptrend. The stop-loss for long positions is below
the Low of the last candle. For short positions, it is above the
High of the last candle.
Breakaway Pattern
PATTERN REQUIREMENTS:
• Three consecutive candles in a tight
trading range
• The fourth candle is a large body candle
• The fourth candle opens inside the
trading range of the first three candles
and closes outside the range.
• The volume of the breakaway candle
should be higher than the average
volume of the first three candles
Breakaway Pattern
The Breakaway candlestick pattern is a multi-candlestick
pattern that is considered a bullish or bearish reversal
signal.
It has a high degree of reliability, especially when it
occurs at important support or resistance levels.
The stop-loss can be placed below the Low (for a bullish
Breakaway) or above the High (for a bearish Breakaway)
of the long-bodied candlestick, which helps to manage
risk and limit potential losses.
Take profit at the next resistance level or the previous
swing high (for a bullish Breakaway) or at the next
support level or the previous swing low (for a bearish
Breakaway).
Bullish Separating Lines
PATTERN REQUIREMENTS:
• Prices are in a clear uptrend.
• The first candle is black.
• The second candle is white.
• Both candles have the same open price.
Bullish Separating Lines
The Bullish Separating Lines candlestick pattern is a
bullish continuation pattern. The combined candles
suggest that the market rejected the first candle's
trading.
Traders should confirm the pattern with other
technical indicators like a bullish divergence on the
RSI or a breakthrough of a resistance level.
A stop-loss at the low of the first candle can manage
risk.
Bearish Separating Lines
PATTERN REQUIREMENTS:
• Prices are in a clear downtrend.
• The first candle is white.
• The second candle is black.
• Both candles have the same Open price.
Bearish Separating Lines
The Bearish Separating Lines candlestick
pattern is a bearish continuation pattern. The
combined candles suggest that the market
rejected the first candle's trading.
Traders should confirm the pattern with other
technical indicators like a bearish divergence on
the RSI or a break of a support level.
A stop-loss at the High of the first candle can
manage risk.
Downside Tasuki Gap
PATTERN REQUIREMENTS:
• The first bar is a black candle.
• The second candle is also black and gaps below
the Close of the previous candle.
• The last bar is a white candle that opens within
the body of the second candle and closes above
the Open of the second candle.
• It is not necessary to close the gap.
Downside Tasuki Gap
This pattern typically occurs in a downtrend and
suggests that the trend is likely to continue. It
provides a clear entry signal to enter the market in
the direction of the trend. Traders can place a
stop-loss above the high of the second candlestick
to manage risk.
Also, Traders can use the Downside Tasuki Gap
pattern in combination with other technical
indicators to confirm the trade's validity
Upside Tasuki Gap
PATTERN REQUIREMENTS:
• The first bar is a white candle.
• The second candle is also white and gaps above the
Close of the previous candle.
• The last bar is a black candle that opens within the
body of the second candle and closes below the Open
of the second candle.
• It is not necessary to close the gap.
Upside Tasuki Gap
This pattern typically occurs in an uptrend and
suggests that the trend is likely to continue. It
provides a clear entry signal to enter the market in
the direction of the trend. Traders can place a stop
loss below the low of the second candlestick to
manage risk.
Also, Traders can use the Upside Tasuki Gap pattern in
combination with other technical indicators to
confirm the trade's validity.
Three Line Strike
• The first three candles are relatively large black
candles.
• Each of the first three candles should close lower
than the candle before it.
• The last candle opens below the Close of the third
candle and closes above the open of the first candle,
typically engulfing the last three candles.
Three Line Strike
It is a bullish reversal pattern that can signal the end of a
downtrend and the start of a new uptrend.
Traders can enter on positive trading after the last candle.
More conservative traders can use the RSI or MACD to
confirm the new trend or delay entry until prices move
above the High of the last bar. A stop-loss below the Open
of the last candle will reduce the risk of the trade.
Three Stars in the South
The pattern is named "Three Stars in the South" because it looks
like three stars in a row, with the Doji candles representing the
stars and the long shadows representing the tails.
To trade this pattern, traders typically wait for confirmation of a
trend reversal by looking for a bullish candle to appear after the
Three Stars in the South pattern. This bullish candle should close
above the high of the third Doji candle, indicating that the buyers
have taken control of the market and that the downtrend is likely
over.
Traders can place a stop-loss below the Low of the last doji
Three White Soldiers
PATTERN REQUIREMENTS:
• The first candle is a relatively large white candle.
• The second candle is another large white candle and closes
above the close of the first.
• The third candle is another large white candle and closes
above the close of the second candle. The third candle should
have an above-average High-Low range.
• The pattern is stronger if the upper and lower shadows on the
candles are small or nonexistent.
Three White Soldiers
This pattern should appear after a downtrend
and is a reliable bullish reversal pattern. Traders
should use the RSI or MACD to confirm that the
trend is reversing before entering a trade.
A stop-loss below the lowest Low of the pattern
can manage risk and limit potential losses.
Join our Community
Join us:
www.thetradersforum.net
Chat with other traders
Learn about the markets
A community of Traders Helping Traders
About Steve Bigalow
Stephen W. Bigalow possessed decades of investment experience, including eight
years as a stockbroker with major Wall Street firms: Kidder Peabody & Company,
Cowen & Company, and Oppenheimer & Company. This was followed by fifteen years
of commodity trading, which overlapped with twelve years of real estate investing. He
holds a business and economics degree from Cornell University and has lectured at
Cornell and many private educational investment functions over the past twenty years.
Mr. Bigalow advised professional traders, money managers, mutual funds and hedge
funds, and is recognized by many in the trading community as the “professional’s
professional.”
Steve was a great trader and developed many powerful candlestick patterns. He was
an esteemed technician. He had a great sense of humor. His contributions to the field
of technical analysis where immense.
Candle Profit System
Includes
• 11 Explorations
• 2 Expert Advisor
• 4 Layouts
• 58 unique patterns
• 70 page manual
Watch the demo at
www.metastock.com/candlestickforuma
