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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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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.

Basic candlestick patterns (I)

11 Oct

Hammer
Hangman
Engulfing
Morning Star
Evening Star
Dark Cloud
Piercing
Shooting Star
Invert Hammer
Harami
Tweezer Tops
Tweezer Bottoms
Belt Hold Line
Upside Gap Two Crows
Three Crows
Mat Hold Pattern
Counterattack Lines
Separating Lines
Gravestone Doji
Longleg Doji
Bear Doji
Bull Doji
Tasuki Gaps
Side Side White
Three Methods
Unique 3 River Bottom
High Price Gap Play
Low Price Gap Play
Three White Soldiers
Advance Block
Stalled Pattern
Doji Engulfing
Invert Hammer Confirmed
Upside Gap Three Methods
Downside Gap Three Method
Three Line Strike
In-On Neck Trusting, this are most of the patterns and as usual my time is running out but my promise to you is that I will update my blog with pictures and images of all the patterns that I metioned above. (We analyze it for you!)

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