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By MICHAEL HALLS
Steve Nison has a
thing about candles, hanging men, dojis, morning stars and engulfing patterns.
And why not? Every time Mr. Nison talks about his candles and their
hangers-on, people not only listen, they seem unable to get enough of it. "A huge number
of clients were calling
us
to get more
information
about
candlesticks ..."
At
a recent gathering of Technical Analysts from Germany, Austria and Switzerland
at the Hamburg Stock Exchange, Mr. Nison lit
a candle to
illuminate his explanation of Candlestick Charting Techniques, a "new" -
in relative Western terms - market charting method that has long been known in
the East, and he argues can revolutionize market analysis in the West.
Mr. Nison
was the star of the show at the European Workshop for Technical Analysts, held
here on June 5. The normally staid atmosphere at the exchange, usually deadly
quiet on Saturdays, was lit by Mr. Nison's real and analytical candles. Add the
sound track
of "The Phantom of the Opera" for a bit of mystery and claims of a "hot" new
way of analyzing markets, and the combination seemed, well, enlightening.
"After
the speech by Steve Nison, it appears that candlestick fever
has come to Germany," said Frank Schmielewski, Reuter Sales Executive (Hamburg)
who organized the workshop for Reuters. "A huge number of clients were calling
us to get more information about candlesticks."
Despite the props and
the drama, Mr. Nison is no Phantom. A member of the Board of Directors of the
Market Technicians Association in The United States, he was Vice President and
Senior Technical Analyst at Merrill Lynch in New York prior to joining the Nikkhah
Group.
Mr. Nison is the acknowledged Western authority on candlestick analysis.
His work on the subject, including his highly acclaimed book, "Japanese
Candlestick Charting Techniques" has revolutionized technical analysis.
He has written extensively about the issue, publishing articles in the Wall
Street Journal, the Los Angeles Times financial section, Institutional Investor,
Eureka and the Japan Economic Journal. He also discusses candles regularly in
appearances on financial television programs such as CNBC/FNN, which in 1991
prompted the most calls the network ever received after a program.
In
recognition of the fact that to explain candles, he must cover some 100 years
of development, Mr. Nison explains the technique with Zen-like deliberateness.
He shows how the candles are charted and explains the different formations like
hanging man, doji, morning star, engulfing pattern and others.
"Mr. Nison
is the
acknowledged
Western
authority on candlestick analysis.
His work on the subject ... has revolutionized technical analysis."
"Bar charts show only the trend of the market," Mr.
Nison said in an interview. "Candles show the trend, but they
also show the force behind the move. Candles show who is winning in the on-going
battle between the bulls and the bears."
Candles have been used longer than
bar charts in Japan. Mr. Nison's point is that the combination of the "old" Eastern
technique with more recent Western techniques can give an even "lovelier
light" without burning the candle at both ends."
A key point is that
the combination of old Far East techniques with modern western indicators, like
RSI, Momentum, and Oscillator can help analysts get really hot," Mr. Schmielewski
said. "Mr. Nison convinced the analysts that it is useful to combine
candles with Fibonacci retracement as well as with Elliot Waves and other cycle
analyses."
Mr. Nison's techniques have received glowing endorsements from
a number of key analysts. In a parallel presentation, Stephan V. Hase of Merrill
Lynch Berlin, endorsed Mr. Nison's contention that candlesticks work best in
combination with other technical indicators. (His major working
toolbox is Reuter Technical Analysis application). Anton Salcher, Ludwig Gutmann
and Thomas Kummer-Hardt of Bayerische Landesbank, Munich, one of the leading
research teams
in Germany, showed their methods of working with Technical Analysis as a research
and marketing instrument. And Joerg Schreiweiss of Deutsche Bank, Frankfurt,
explained the use of different trading models, such as, the combination of fundamental
data with technical indicators like stochastics.
The presentations won rave
reviews and demands for more workshops of this sort. Participants called the
atmosphere "amazing. "They said the information was of "high
quality," and
in the words of one analyst, " the RTA (Reuter Technical Analysis) application
is really a very powerful machine for Technical Analysis".
A couple of people
said that it had been wonderful to see how powerfully candle- sticks were working.
Mr. Schmielewski said." This workshop has been the first in Europe organized
by Reuters. Its success will probably lead Reuters to organize many more in
the
next months."
How long have you worked with candlesticks?
I began my research
and use of the candles about six years ago. There was a Japanese broker who worked
down
the hall from me. She was looking at her charts (which were in candles) and,
forgetting I was in her room, said, "we have a window" to herself.
I asked her what a window was and she explained it to me. This is how I first
got involved with candles.
Where did you get information about working with candlesticks?
I faxed between
members of the Nippon Technical Analysts Association and I have
had 13 books about candles translated from Japanese to English.
What are the
major differences between this old analysis from the Far East and modern Western
techniques?
Bar charts show only the trend of the market. Candles show the trend
but they
also show the force behind the move. Candles show who is winning in the on-going
battle between
the bulls and the bears. Candle signals often give a reversal in a few sessions
while more
traditional bar chart signals can take much longer. Candle signals will often
give you a jump
on those who use just bar charts. In addition candle charts have been used longer
than bar
charts in Japan.
What are the main strategies for using candlesticks?
There are
many ways to use candles. These are described in detail in my book. They can
be used alone or combined with any Western technical tool.
How can one learn
to work with candles?
The most detailed book about the use and history of candles
is my book which
was published a few years ago.
What's the time-frame for candlestick analysis?
The same time frames
used by those who look at bar charts can be used in a candle
charts.
Do you think it works for all instruments and what is the typical user-group
of candlesticks?
Candles are flexible enough to be used in any market where there
is open, high,
low and close data. Since my book dealt mainly with the futures market, futures
traders are
the typical users in the United States. But candles are mainly used for stocks
by the Japanese.
Also, my new book will deal with candles, stocks and the
world financial
markets (such as the DAX, Bund, CAC etc.). Thus, we should expect candles to
become more
widely used in these markets.
from Reuters
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