TA Education 8｜MA & Candlesticks: How to Combine?
Hi, tigers! Here is Part 3 of MA: MA & Candlesticks. Let’s start this week’s lessons!
1. Dragon Rising from the Sea: Single Bullish Candle Piercing Multiple MAs
The Pattern: This rare and powerful formation occurs when a single, robust bullish candle (typically a large green Marubozu) rises from a low position and decisively cuts through multiple aligned Moving Averages (e.g., short, medium, and long-term lines) simultaneously.
Market Implication: This serves as an explosive reversal signal. It indicates that a dormant or consolidating market has suddenly awakened with overwhelming demand, clearing multiple layers of technical resistance in a single session.
Mechanism: By conquering the "average costs" of short-term, medium-term, and long-term traders all at once, this move unifies market sentiment. It forces short-sellers across all timeframes to cover immediately and signals to sideline capital that a new trend has launched with maximum conviction.
2. Guillotine Blade: Bearish Candle Breaking Multiple MAs
The Pattern: This ominous formation occurs when a single, heavy bearish candle (typically a large red Marubozu) opens high and slices downward through multiple closely aligned Moving Averages simultaneously.
Market Implication: This is a catastrophic reversal signal. Visually resembling a blade dropping to sever the trend, it suggests that structural support has collapsed across multiple timeframes, locking traders into immediate losses.
Mechanism: When one candle violates the cost basis of short, medium, and long-term holders simultaneously, it triggers universal panic. With no immediate support levels remaining, the psychological shock leads to a rush of "panic selling" as traders from all timeframes attempt to exit at once.
3. Golden Phoenix Returns to Nest: Trend Continuation After Healthy Pullback
The Pattern: This poetic metaphor describes a high-quality pullback within a strong uptrend. After a significant rise, the price (the Phoenix) gently retraces to touch or near a rising Moving Average (the Nest). Crucially, the volume decreases during the pullback and expands again as the price bounces off the MA.
Market Implication: This signals that the trend is healthy and sustainable. It suggests the pullback was merely profit-taking by short-term traders, while long-term institutional support remains firm at the "average cost" level, offering a safe entry point.
Mechanism: The "Nest" represents the safety of the average value zone. When the price returns here, the selling pressure dries up (low volume). As value investors recognize the discount, they step in to defend the trend, providing the energy for the Phoenix to soar again.
4. Carp Leaping Over Dragon Gate: Price Breaks Through MA with Heavy Volume
The Pattern: This formation represents a decisive, high-energy breakout. The price, which may have been consolidating below a key Moving Average (often a long-term one like the 60-day or 120-day), suddenly surges above it. This move must be accompanied by explosive volume.
Market Implication: This signals a fundamental transformation in the asset's status. Just as the carp transforms into a dragon after leaping the gate, the stock transforms from a weak/consolidating asset into a strong trending one. The heavy volume confirms that "smart money" is fully committed to the move.
Mechanism: The "Dragon Gate" is the resistance level or the Moving Average. Breaking it requires immense energy (capital). If the price crosses on low volume, it may slide back down; but the surge in volume indicates that the buying force is overwhelming the sellers, clearing the path for a sustained rally.
5. Dragonfly Skimming Water: Brief Pullback in Uptrend
The Pattern: This delicate formation occurs when the price in a strong uptrend dips briefly to lightly touch or barely pierce a rising Moving Average (often a short-term one like the 10-day or 20-day MA) before immediately bouncing back up. The interaction is quick and shallow, often leaving a long lower shadow (wick) on the candle.
Market Implication: This signals strong momentum with minimal selling pressure. It indicates that buyers are so eager they are unwilling to wait for a deeper correction, stepping in the moment the price nears the "average cost."
Mechanism: Just as a dragonfly touches the water's surface without sinking, the price tests the support level without breaking the trend's structure. The swift rejection of lower prices confirms that the path of least resistance remains decisively upward.
Which stocks currently fit the five patterns we learned today?
Leave your comments to win at least 10 tiger coins!
Click here to view our TA education series: learn & earn!
For the past lessons, you can click to read:
TA Education 1｜Understand Market Signals! How to Spot $MSFT & $TSLA's Uptrend?
TA Education 2｜How to Spot 2 Common Bearish Patterns?
TA Education 3｜2 Common Bearish Patterns - How to Spot Misleading Signals?
TA Education 4｜How to apply MA indicators in live-trading?
TA Education 5｜6 Common MA Patterns — Which One Do You Find Most Useful?
TA Education 6｜Breakout or Failed Rally: What Is MA Really Telling You?
TA Education 7｜NVDA Breaks Below 5-Day MA: Will Selloff Accelerate?
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Currently, $NVIDIA(NVDA)$ and $Broadcom(AVGO)$ fit the “Golden Phoenix Returns to Nest” idea, with orderly pullbacks into rising MAs on lighter volume, signaling healthy trend continuation. $Palantir Technologies Inc.(PLTR)$ has shown “Dragonfly Skimming Water” behavior, where shallow dips are quickly bought, highlighting strong momentum.
For breakout setups, $SoFi Technologies Inc.(SOFI)$ and select AI names may form a “Carp Leaping Over Dragon Gate” if they reclaim long-term MAs with clear volume expansion. I wait for that confirmation, as volume ultimately decides whether a breakout can sustain.
@TigerStars @Tiger_comments
A good example is $NVIDIA(NVDA)$ on December 23 2025.
The Setup: After a mid month slump to USD 170.94, NVIDIA was trapped underwater, trading below its 8, 20 and 50 day MAs.
The Eruption: On December 23 25, NVDA surged +3% closing at USD 189.21.
The Breakthrough: This single massive candle slices upward through the 8 day, 20 day and 50 day SMAs simultaneously.
The Result: The Dragon broke its chains, the stock sustained its momentum, hitting USD 190.53 by December 26, confirming a total trend reversal.
In conclusion, 1 candle, 3 broken resistances and a new bullish era for NVIDIA.
@Tiger_comments @TigerStars @Tiger_SG @TigerClub @CaptainTiger
模式：當一根沉重的看跌蠟燭線（通常是一根大紅色丸波祖）高開並同時向下穿過多條緊密排列的移動平均線時，就會出現這種不祥的形態。
市場含義：這是一個災難性的反轉信號。從視覺上看，它類似於一把刀片落下來切斷趨勢，這表明結構性支撐在多個時間範圍內已經崩潰，使交易者立即遭受損失。
機制：當一根蠟燭同時違反短期、中期和長期持有者的成本基礎時，就會引發普遍的恐慌。由於沒有直接的支撐位，心理衝擊導致了一波“恐慌性拋售”，因爲所有時間段的交易者都試圖立即退出。
模式：當一根強勁的看漲蠟燭線（通常是一根大的綠色Marubozu）從低位上升並同時決定性地突破多條對齊的移動平均線（例如，短期、中期和長期線）時，就會出現這種罕見而強大的形態。
市場含義：這是一個爆炸性的反轉信號。它表明一個休眠或盤整的市場突然甦醒，需求旺盛，在一個交易日內清除了多層技術阻力。
機制：通過一次性徵服短期、中期和長期交易者的“平均成本”，此舉統一了市場情緒。它迫使所有時間範圍內的賣空者立即回補，並向場外資本發出信號，表明一種新趨勢已經以最大的信心啓動。