2011issue C0379
Constructing candlestick, breakaway-gap, and Elliott-wave signals
Build the candlestick bar first, mark whether a range exit left an untraded breakaway gap, then count the larger Elliott-wave cycle so one OHLC picture becomes a testable setup instead of three disconnected labels.
- Construct each candlestick by drawing one shadow through the session high and low and a candlestick body across the open-to-close range, white when the close is above the open and black when the close is below the open.
- A doji, an engulfing pattern, or an evening star is named only after those body and shadow rules are in place.
- A breakaway gap is marked when price leaves a trading range and leaves an untraded area on the bar chart, typically as a larger formation completes.
- The Elliott-wave cycle is counted as five waves in the advance and three corrective waves, eight waves in total, with a Fibonacci span available to project a later target from those wave distances.
One picture, one construction sequence
Editorial reading: TradersWeek treats candlestick construction, the breakaway gap, and the Elliott-wave cycle as successive steps on the same open-high-low-close picture, not as three disconnected labels.
The archive facts below stay inside how each piece is drawn. The checklist order is editorial.
Build the candlestick bar first
A candlestick is constructed by drawing the session high and low as one shadow and the open-to-close range as a narrow rectangular candlestick body.
The candlestick body is white when the close is above the open and black when the close is below the open. The shadow is the single high-to-low line that frames that rectangular open-to-close block.
Name the bar only after the body and shadow are drawn
A doji is a session whose open and close are the same or nearly the same. Named varieties such as gravestone or long-legged depend on where that print sits inside the full high-low range.
An engulfing pattern is a multiple-line candlestick reversal built from two real bodies of opposite color.
An evening star is constructed as the bearish counterpart of a morning star. It is a three-part top-reversal construction and is treated as a top reversal when it appears after an uptrend.
Mark whether the range exit left a breakaway gap
A breakaway gap is constructed when price leaves a trading range at levels that leave an untraded area on the bar chart, typically as an important chart formation completes.
Editorial reading: mark that untraded area on the same picture as the finished candlesticks, rather than treating the gap as a separate chart.
Count the larger Elliott-wave cycle
Elliott-wave construction treats a complete cycle as five waves in the advance followed by three corrective waves, for eight waves in total.
Fibonacci ratios may be applied to those wave price spans so later price targets can be projected. That step is a Fibonacci span: a ratio applied to wave price distances so a later target can be projected.
What the finished picture is for
Editorial reading: once the candlestick constructions, the optional breakaway gap, and the eight-wave count sit on one chart, the picture can be stated as a single testable setup. The archive describes only how the pieces are drawn.
All readings on this track · 7 readings
- 1991The midpoint retest after a missed breakaway gap
- 2011Constructing volume-confirmed breakaway gaps
- 2011The first close after a breakaway gap as a classroom breakout test
- 2011Constructing candlestick, breakaway-gap, and Elliott-wave signals
- 2013A PHM breakaway gap stacked with Elliott labels and mapped support
- 2019Breakaway gap after a completed double bottom
- 2019Evaluating upward breakaway gaps by changing one rule at a time