Basic candlestick pattern(III)

14 Oct

After its name, this is a bearish pattern and it signals a top reversal. The first candlestick is a long white candlestick followed by a real body that gaps higher. Then another black real body appears, which opens above the second day’s open and closes under the second day’s close, completing the pattern.

This pattern is consisted of three relatively long consecutive black candlesticks which closes near or below the previous day low. This type of pattern announces the beginning of a reversal or the continuation of the existing downtrend.

This pattern is consisted of  three relatively long consecutive white candlesticks wich closes above the previous day high.This type of pattern announces the beginning of an uptrend or a continuation of the existing uptrend (if it’s the case).

This pattern consists of 5 candlesticks, this bulish pattern has good chance of developing due to its rarity and complexity. Bulish Mat Hold pattern is formed as followed:

– the first candlestick is a long white bar (coulor doesn’t matter).

-the second day gaps up with a close higher then the previous.

-the third and fourth days continue to retrace gains from the first candlestick with light volume.

-the fifth candlestick is a large white candlestick which makes a new high.

Bearish counterattack line

The Bearish Counterattack Line is composed of two Japanese candlesticks of opposite colour that have the same closing price. The body of the 1st candlestick is white and preferably powerful. The 2nd candlestick must be black it should preferably open gap up and close at almost the same level as it did the day before.

During the uprend, a black body occurs. This causes some concern to the Bulls. But the next day the prices gap back up to the previous day’s open. This gives the bulls confidence that the trend still has life in it. They jump back in and move prices higher. Confidence is renewed and the trend continues. The bearish Separating Line works the exact same way in the opposite direction.

Gravestone Doji is a pattern in which the opening and closing prices are at the low of the day. The Bearish Gravestone Doji Pattern is a top reversal pattern. It appears during an uptrend representing a possible reversal of trend just like the well known Bearish Shooting Star Pattern. This type of pattern could as well be meet at the beginning of an uptrend.

Long Legged Doji is characterized by very long shadows. It is an important reversal signal.Long Legged Doji is especially important at top. Hence, a confirmation is definitely required in the form of an opposite move to the prior trade on the next trading day in order to judge that a reversal may be starting.

                                               Doji candlesticks

This kind of candles whethere are meet at the top/bottom or middle of a trend they need a continuation or a confirmation candle.

Bearish: a downside Tasuki Gap forms on a downtrend. A black candlestick forms after gapping down from the previous black candle. The color of the first two candles is the same as the trend. The next day opens higher and closes higher. If the gap filled, then bearish sentiment has ended. If not, many traders go short.

 Bullish: an upside Tasuki Gap is just the opposite. The pattern forms on an uptrend.  The first two days are white candlesticks with an up gap from the first to the second. The third day is a black candlestick opening within the body of the second candlestick and closing within the gap between day one and two.  The third day does not close the gap.

 In an upward trend, the first candlestick is followed by another upward that opens above the close of the first (gap up), that is followed by a third upward candlestick that opens below the close of the second (gap down).

During a downtrend, the first candlestick is downward, followed by an upward candlestick that opens below the close of the first one (gap down), followed by an upward candlestick that opens below the close of the second one. This pattern indicates the continuation of a downtrend.

The bullish continuation upside gap three methods is a three candlestick pattern. It has a long white candle, followed by another that opens above the first (gaps up), followed by a downward black candlestick that opens below the close of the second day (gaps down) and has a low below the close of the first day. The upward trend is expected to continue.

The bearish continuation downside gap three methods is a three candlestick pattern.It has a long downside black candlestick, followed the second day by another downward black candlestick that opens below the close of the first day (gaps down) and is followed by an upward white candlestick that opens above the close of the second day (gaps up) and has a high above the close of the first day. The downward trend is expected to continue.

  The Three River Bottom pattern is a rare pattern. This candlestick signal is formed with three candles and at the end of a downtrend a long black body is produced. The second day opens higher as it drops down to new lows and then closes near the top of the trading range. This is a Hammer-type formation and on the third day it opens lower but not below the low of the previous day. It closes higher and produces a white candle however it does not close higher than the previous day’s close.

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