Page 112 - THE MARKET WHISPERER

110 PART 4 - The Char t: Money ’s Footprint

prices across an axis of time. Note that I used the word “understand”
rather than merely “observe” or “see.” Over the years, I experienced an
amazing phenomenon. If you, like me, spend several years observing the
Japanese candlestick method, perhaps you too will undergo a similar
transformation. At some point, though I cannot define exactly when it
happened, I managed to comprehend the candle “matrix” (you saw the
movie, right?). Now when I look at a complex Japanese candlestick chart, I
start talking fluent Japanese. I “understand” the stock without needing to
analyze the chart. I can look at it just as a surgeon looks at a brain scan, or
as a musician hears music when he or she sees notes. I am in the world of
support, resistance, breakouts and breakdowns, and bears and bulls. This
virtual world of rising and falling prices is where some of them “respond,”
too: “Buy me, sell me… I’m willing to keep rising up to the price of…”

You’re probably thinking that after so many years of Japanese
candlesticks, I’ve lost my mind. There could be a bit of truth in that. But
for those of you who know how to play a musical instrument and who
succeeded (unlike me, who was forced to learn piano and is left with
nothing to show for it but “Do Re Mi”) in moving from just reading the
notes to hearing them, you know exactly what I mean. For a musician, this
is the stage in which he or she lives within the “body” of the notes. For the
stock trader, it is the stage in which he or she feels the stock, senses the
fear and greed of sellers and buyers, and knows how to take advantage
of this for his or her own benefit. As a novice trader, I needed some ten
minutes to analyze a chart comprised of Japanese candlesticks. Now that
takes me no more than several seconds.

Below is a typical Japanese candlestick chart showing daily price
changes over a period of sixteen trading days. Each candlestick represents
one day of trade. Does the chart look familiar? That’s because it provides
the same information as the bar chart from a couple of pages back. At first
glance, it appears a little more complicated, but as I explained above, I
promise it’ll get easier.