Candlestick charts explained
Bullish reversal candlestick patterns typically appear at the end of an downtrend. They suggest that selling momentum has decreased and soon the trend will turn bullish. The reliability of bullish reversal formations – as always – depends very much on the timeframe and the instrument, however in an established uptrend, bullish reversal candles can safely predict the end of a bearish correction phase. These ‘end of correction signals’ tend to be pretty powerful.
Often the reversal signal precedes the reversal by several candles, therefore apply stoplosses carefully.
Posted in Bearish reversals, and Bullish reversals
It has very long shadows. Both of the upper and lower shadows are long and close in length and the body is lacking. This pattern forms when prices trade well above and below the day’s opening price but then close either exactly at or almost at the same level as…
Posted in Bullish reversals
The dragonfly doji is a bullish reversal candlestick pattern. A candle forms with a very small to almost nonexistent body with a long lower wick. The lower wick or shadow is significant, several pips long. There is little or no upper wick. How to trade the dragonfly doji? The pattern…
Posted in Bullish reversals, and Continuation patterns
The white opening marubozu is a single candlestick pattern with a long white body, an upper shadow and the lack of lower shadow. The day opens and prices rise above the opening price. Prices continue to move up all day thus forming the long white body. The closing price is…
Posted in Bullish reversals, and Continuation patterns
The white marubozu is a simple single candle pattern. As the name suggests it is white, showing that the stock price closed on a higher level than it started the day. It has a long body without any lower or upper shadows. The day opens and prices continue to move…
Posted in Bullish reversals
The morning doji star is a bullish reversal pattern that is very similar to the morning star. The difference lies in the middle candle that must be a doji. The pattern forms in a down trend; the first candle is a long black one. The next candle opens lower with…
Posted in Bullish reversals
The piercing line is a bullish trend reversal pattern with two candlesticks. It forms in a downtrend. A long black candlestick appears on the first day that is followed by a long white candle. The second candle opens lower with a gap but closes more than halfway into the body…
Posted in Bullish reversals
The bullish morning star pattern is a three candle bullish trend reversal sign. It consists of three different candles. Recognition criteria of bullish morning star A long black candlestick appears on the first day that continues the prevailing downtrend. On the second day a short candle forms (the colour is…
Posted in Bullish reversals
The ladder bottom is a five-candle bullish reversal candlestick chart pattern that forms in a downtrend. On the first three days long black candles appear following each other in a descending line, like the three black crows pattern. The fourth day is an inverted hammer with short black body and long upper…
Posted in Bullish reversals
The inverted hammer is a single candle pattern that appears at the bottom of a downtrend. There is a long upper shadow, which should be at least twice the length of the real body. The longer the upper shadow, the higher the potential of a reversal occurring. The color of the…
Posted in Bullish reversals
The bullish unique three river bottom is a bullish reversal three-line pattern. It forms in a down trend and starts with a long black candlestick on the first day that often closes at a new low. The second day is also black; a smaller candle with a long lower shadow…