Basic candlestick patterns (II)

13 Oct

About the Hammer candlestick what is important is that this candle is a bullish reversal pattern that forms after a decline. In addition to a potential trend reversal, hammers can mark bottoms or support levels. After a decline, hammers signal a bullish revival.While this may seem enough to act on, hammers require further bullish confirmation (take ex. from the pic.)

The Hammer and Hanging Man look exactly alike, but have different implications based on the preceding price action. While Hammer is a bullsih pattern, Hanging Man is a bearish reversal pattern that can also mark a top or a resistance level. As with the Hammer, a Hanging Man requires bearish confirmation before action.

Bearish Engulfing pattern is consisted of one white candle followed by a longer black candle (colours doesn’t matter) it is a bearish reversal pattern.In an ideal bearish engulfing pattern, the body of the black candle will also engulf the white candle’s shadows but it is not a requirement. Analists consider that if the black candle is longer and the greater its coverage of the white candle, the stronger is the reversal indicated by the bearish engulfing pattern.

Bullish Engulfing thispattern is consisted of one black candle followed by a longer one white candle that ”engulfs” the previous candle  (colours doesn’t matter) it is a bullish pattern. Basically this two patterns look alike only they form at tops or bottoms.

A Morning Star is a bullish top reversal candlestick pattern that occurs in a bearish  market. It’s composed of 3 candlesticks. A long bearish candlestick followed by a small bullish or bearish candlestick. The third session is a candlestick that closes well into the first red candle’s body.

Evening Star is consisted just as the Morning Star from 3 candles: -the first bar is a large candlestick located within an uptrend.

-the middle bar is a small-bodied candle that closes above the first bar.

                                                                                                                                 -the last bar is a large candle that opens below the middle candle and closes near the center of the first bar’s body. This pattern is an indication that the uptrend is about to reverse.

Dark Cloud Cover pattern is a berish signal after an uptrend and could be the signal of a future down/bearish trend. It is consisted of one bullish candlestick followed by the next candle wich opens at a new high then closes below the midpoint of the previous candle.
Piercing Line is a bullish pattern and it’s consisted of one bearish candlestick followed by the next candle wich opens at a new low (lower than the previous) then closes above the midpoint of the previous candle.
Inverted Hammer is a bullish pattern suggesting the possibility of a reversal. This candle has to have follow through meaning that the comming candle/s should sustain the bullish pattern.
Shooting Star is a berish pattern suggesting that a reversal could come and  just like Inverted Hammer this candle has to have follow through as seen above in picture.
Тhe Bullish Harami is a candlestick reversal pattern that has a small white (colour doesn’t matter, we take white because white is in our picture)  bodied candle completely contained within the preveos black candle. This formation suggests that the downtrend is coming to an end and will reverse upwards. To confirm the reversal, is important the body of the candle, that is formed after the small, to pass the close of the black body.  The smaller the second candlestick, the stronger the trend reversal signal.
The Bearish Harami is a candlestick reversal pattern that consists of a small black bodied candle completely contained within the previous white candle. This formation suggests that the uptrend is coming to an end and will reverse downwards. To confirm the reversal, is important the body of the candle, that is formed after the small, to pass the close of the white body. The smaller the second candlestick, the stronger the trend reversal signal.
Tweezer Formation has the following characteristics: two or more candles (dojis or spinning tops) of roughly equal height with long upper/lower wicks (the wicks must make up at least 60% of the entire candle).  The two (or more) candles can be bullish, bearish, or a combination of both.
The Belt Hold Line candlestick pattern (a.k.a. yorikiri in Japanese) is considered  a minor trend reversal pattern that can indicate a bullish or bearish trend reversal depending on the direction of the trend in wich it apears.
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