Candlestick Patterns - Part3
Hanging Man (Bullish Reversal Pattern)
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The Hanging Man is a bearish candlestick pattern that appears during an uptrend. It has a small body near the top of the trading range, a short upper shadow, and a long lower shadow. It suggests a potential trend reversal, indicating that buyers may be losing control and sellers could take over. Confirmation from subsequent price action is usually needed before taking any trading decisions based on this pattern.
Candlestick Patterns - Bearish Reversal Patterns - Hanging Man
Key components and characteristics
The Hanging Man pattern consists of a single candlestick with the following characteristics:
1. Body: The Hanging Man candlestick has a small body, typically bearish (black or red), representing a narrow range between the opening and closing prices. The body may also be bullish (white or green) but is less common. The small body indicates indecision or a slight preference towards bearishness.
2. Lower shadow/wick: The Hanging Man has a long lower shadow, also known as the tail or wick, extending below the body. The length of the lower shadow should be at least twice the size of the body. This shadow represents the low price reached during the trading period.
3. Upper shadow/wick: The Hanging Man has little to no upper shadow. If present, it is usually very short compared to the lower shadow. This indicates that bulls attempted to push the price higher but failed, signaling potential weakness.
Shooting Star (Bullish Reversal Pattern)
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The Shooting Star is a candlestick pattern commonly found in technical analysis of financial markets. It is formed when the open, high, and close prices are relatively close to each other, but the high is significantly above the open and close. This creates a candlestick with a small body and a long upper shadow or wick.
The Shooting Star pattern suggests a potential reversal of an uptrend, indicating that buyers may be losing control and sellers are becoming more active. It is often seen as a bearish signal, especially when it appears after a price rally. Traders interpret this pattern as a sign that the market may be overextended and could experience a downward correction or trend reversal.
The significance of the Shooting Star pattern is strengthened when it occurs near key resistance levels or when it is accompanied by other technical indicators or patterns that confirm the bearish sentiment. Traders typically look for confirmation in subsequent price action before making trading decisions based on this pattern.
Candlestick Patterns - Bearish Reversal Patterns - Shooting Star
Key components and characteristics
The Shooting Start candlestick pattern consists of a single candlestick with the following characteristics:
1. Body: The Shooting Star has a small body, indicating that the opening and closing prices are close to each other.
2. Lower shadow/wick: The Shooting Star typically has little to no lower shadow, or if present, it is very short compared to the upper shadow.
3. Upper shadow/wick: The defining characteristic of a Shooting Star is its long upper shadow or wick, which extends above the body. This shadow represents the high price reached during the trading period.
Gravestone Doji (Bullish Reversal Pattern)
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The Gravestone Doji is a candlestick pattern in technical analysis used to analyze financial markets, particularly in trading stocks or other securities. It is formed when the open, high, and close prices of a trading period are all at or near the low of the period, creating a long upper shadow or wick. The pattern resembles a gravestone, hence its name.
Candlestick Patterns - Bearish Reversal Patterns - Gravestone Doji
Key components and characteristics
The Gravestone Doji candlestick pattern consists of a single candlestick with the following characteristics:
1. Body: In a Gravestone Doji Doji, the opening price, closing price, and high price of the trading session are all at the same level. This creates a small body at the bottom of the candlestick.
2. Lower shadow/wick: The lower shadow, which represents the price range between the opening price and the low of the period, is either non-existent or very short in the Gravestone Doji pattern.
3. Upper shadow/wick: The upper shadow represents the price range between the high of the period and the closing price. In the Gravestone Doji, this upper shadow is usually long and extends above the opening price.
Bearish Engulfing (Bullish Reversal Pattern)
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The Bearish Engulfing candlestick pattern is a two-candle pattern that usually signals a potential reversal of an uptrend. It occurs when a small bullish candle is followed by a larger bearish candle that completely engulfs the previous candle's body. The bearish candle's body represents a strong shift in sentiment from buyers to sellers, as it opens above the previous candle's close and closes below the previous candle's open. This pattern suggests that bears have gained control and may lead to further downward movement in the price. Traders often use it as a signal to consider selling or taking a bearish position in the market.
Candlestick Patterns - Bearish Reversal Patterns - Bearish Engulfing
Key components and characteristics
The Bearish Engulfing candlestick pattern consists of two key components:
1. Bullish candle: The first candle is a bullish (green or white) candlestick, indicating that buyers have been in control. It is typically smaller in size compared to the second candle.
2. Bearish candle: The second candle is a larger bearish (red or black) candlestick. Its body completely engulfs the body of the bullish candle, meaning the high and low of the bearish candle's body completely cover the range of the bullish candle.
Evening Star (Bullish Reversal Pattern)
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The Evening Star is a bearish candlestick pattern that typically signals a potential reversal of an uptrend. It consists of three candles and is formed at the top of a price rally.
Candlestick Patterns - Bearish Reversal Patterns - Evening Star
Key components and characteristics
The key components and characteristics of an Evening Star candlestick pattern are as follows:
1. First Candle: The pattern starts with a bullish candle that occurs during an uptrend. It represents the continuation of the existing upward momentum. This candle often has a long body and indicates the dominance of buyers.
2. Second Candle: The second candle is a small-bodied candle, often a doji or a spinning top, which reflects indecision in the market. It signifies a potential shift in sentiment as the bulls and bears reach a temporary balance. This candle can be bullish or bearish and serves as a warning sign.
3. Third Candle: The final component is a bearish candle that closes below the midpoint of the first candle. This candle demonstrates that selling pressure has increased, overpowering the previous buying pressure. It confirms the Evening Star pattern and suggests a potential reversal of the uptrend.
Three Black Crows (Bullish Reversal Pattern)
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The Three Black Crows is a bearish candlestick pattern that often indicates a potential reversal in an uptrend. It consists of three consecutive long-bodied black (or red) candles with each opening within the body of the previous candle and closing near its low. The pattern suggests that sellers have taken control, driving prices lower over three consecutive trading sessions. It typically signifies a strong shift in market sentiment from bullish to bearish and can be a signal for traders to consider selling or taking profits.
Candlestick Patterns - Bearish Reversal Patterns - Three Black Crows
Key components and characteristics
The key components and characteristics of the Three Black Crows candlestick pattern are as follows:
1. Number of candles: The pattern consists of three consecutive candles.
2. Color: Each candle is typically black or red, indicating a bearish sentiment.
3. Shape: The candles are long-bodied, meaning they have relatively large real bodies compared to their wicks or shadows.
4. Opening and closing: Each candle opens within the real body of the previous candle and closes near its low. This shows sustained selling pressure throughout the trading sessions.
5. Trend reversal: The pattern often occurs after an uptrend, indicating a potential reversal in the market sentiment from bullish to bearish.
6. Volume: Ideally, the pattern is accompanied by increasing trading volume, suggesting strong selling pressure.
7. Confirmation: Traders usually wait for confirmation after spotting the Three Black Crows pattern, such as a further decline in prices or a break below a support level, before considering a bearish trade.
It's worth noting that while the Three Black Crows pattern can indicate a bearish reversal, it's essential to consider other technical indicators, market conditions, and confirmation signals to make well-informed trading decisions.
Cheers & have fun!
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The Hanging Man is a bearish candlestick pattern that appears during an uptrend. It has a small body near the top of the trading range, a short upper shadow, and a long lower shadow. It suggests a potential trend reversal, indicating that buyers may be losing control and sellers could take over. Confirmation from subsequent price action is usually needed before taking any trading decisions based on this pattern.
Candlestick Patterns - Bearish Reversal Patterns - Hanging Man
Key components and characteristics
The Hanging Man pattern consists of a single candlestick with the following characteristics:
1. Body: The Hanging Man candlestick has a small body, typically bearish (black or red), representing a narrow range between the opening and closing prices. The body may also be bullish (white or green) but is less common. The small body indicates indecision or a slight preference towards bearishness.
2. Lower shadow/wick: The Hanging Man has a long lower shadow, also known as the tail or wick, extending below the body. The length of the lower shadow should be at least twice the size of the body. This shadow represents the low price reached during the trading period.
3. Upper shadow/wick: The Hanging Man has little to no upper shadow. If present, it is usually very short compared to the lower shadow. This indicates that bulls attempted to push the price higher but failed, signaling potential weakness.
Shooting Star (Bullish Reversal Pattern)
----------------------------------------
The Shooting Star is a candlestick pattern commonly found in technical analysis of financial markets. It is formed when the open, high, and close prices are relatively close to each other, but the high is significantly above the open and close. This creates a candlestick with a small body and a long upper shadow or wick.
The Shooting Star pattern suggests a potential reversal of an uptrend, indicating that buyers may be losing control and sellers are becoming more active. It is often seen as a bearish signal, especially when it appears after a price rally. Traders interpret this pattern as a sign that the market may be overextended and could experience a downward correction or trend reversal.
The significance of the Shooting Star pattern is strengthened when it occurs near key resistance levels or when it is accompanied by other technical indicators or patterns that confirm the bearish sentiment. Traders typically look for confirmation in subsequent price action before making trading decisions based on this pattern.
Candlestick Patterns - Bearish Reversal Patterns - Shooting Star
Key components and characteristics
The Shooting Start candlestick pattern consists of a single candlestick with the following characteristics:
1. Body: The Shooting Star has a small body, indicating that the opening and closing prices are close to each other.
2. Lower shadow/wick: The Shooting Star typically has little to no lower shadow, or if present, it is very short compared to the upper shadow.
3. Upper shadow/wick: The defining characteristic of a Shooting Star is its long upper shadow or wick, which extends above the body. This shadow represents the high price reached during the trading period.
Gravestone Doji (Bullish Reversal Pattern)
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The Gravestone Doji is a candlestick pattern in technical analysis used to analyze financial markets, particularly in trading stocks or other securities. It is formed when the open, high, and close prices of a trading period are all at or near the low of the period, creating a long upper shadow or wick. The pattern resembles a gravestone, hence its name.
Candlestick Patterns - Bearish Reversal Patterns - Gravestone Doji
Key components and characteristics
The Gravestone Doji candlestick pattern consists of a single candlestick with the following characteristics:
1. Body: In a Gravestone Doji Doji, the opening price, closing price, and high price of the trading session are all at the same level. This creates a small body at the bottom of the candlestick.
2. Lower shadow/wick: The lower shadow, which represents the price range between the opening price and the low of the period, is either non-existent or very short in the Gravestone Doji pattern.
3. Upper shadow/wick: The upper shadow represents the price range between the high of the period and the closing price. In the Gravestone Doji, this upper shadow is usually long and extends above the opening price.
Bearish Engulfing (Bullish Reversal Pattern)
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The Bearish Engulfing candlestick pattern is a two-candle pattern that usually signals a potential reversal of an uptrend. It occurs when a small bullish candle is followed by a larger bearish candle that completely engulfs the previous candle's body. The bearish candle's body represents a strong shift in sentiment from buyers to sellers, as it opens above the previous candle's close and closes below the previous candle's open. This pattern suggests that bears have gained control and may lead to further downward movement in the price. Traders often use it as a signal to consider selling or taking a bearish position in the market.
Candlestick Patterns - Bearish Reversal Patterns - Bearish Engulfing
Key components and characteristics
The Bearish Engulfing candlestick pattern consists of two key components:
1. Bullish candle: The first candle is a bullish (green or white) candlestick, indicating that buyers have been in control. It is typically smaller in size compared to the second candle.
2. Bearish candle: The second candle is a larger bearish (red or black) candlestick. Its body completely engulfs the body of the bullish candle, meaning the high and low of the bearish candle's body completely cover the range of the bullish candle.
Evening Star (Bullish Reversal Pattern)
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The Evening Star is a bearish candlestick pattern that typically signals a potential reversal of an uptrend. It consists of three candles and is formed at the top of a price rally.
Candlestick Patterns - Bearish Reversal Patterns - Evening Star
Key components and characteristics
The key components and characteristics of an Evening Star candlestick pattern are as follows:
1. First Candle: The pattern starts with a bullish candle that occurs during an uptrend. It represents the continuation of the existing upward momentum. This candle often has a long body and indicates the dominance of buyers.
2. Second Candle: The second candle is a small-bodied candle, often a doji or a spinning top, which reflects indecision in the market. It signifies a potential shift in sentiment as the bulls and bears reach a temporary balance. This candle can be bullish or bearish and serves as a warning sign.
3. Third Candle: The final component is a bearish candle that closes below the midpoint of the first candle. This candle demonstrates that selling pressure has increased, overpowering the previous buying pressure. It confirms the Evening Star pattern and suggests a potential reversal of the uptrend.
Three Black Crows (Bullish Reversal Pattern)
---------------------------------------------
The Three Black Crows is a bearish candlestick pattern that often indicates a potential reversal in an uptrend. It consists of three consecutive long-bodied black (or red) candles with each opening within the body of the previous candle and closing near its low. The pattern suggests that sellers have taken control, driving prices lower over three consecutive trading sessions. It typically signifies a strong shift in market sentiment from bullish to bearish and can be a signal for traders to consider selling or taking profits.
Candlestick Patterns - Bearish Reversal Patterns - Three Black Crows
Key components and characteristics
The key components and characteristics of the Three Black Crows candlestick pattern are as follows:
1. Number of candles: The pattern consists of three consecutive candles.
2. Color: Each candle is typically black or red, indicating a bearish sentiment.
3. Shape: The candles are long-bodied, meaning they have relatively large real bodies compared to their wicks or shadows.
4. Opening and closing: Each candle opens within the real body of the previous candle and closes near its low. This shows sustained selling pressure throughout the trading sessions.
5. Trend reversal: The pattern often occurs after an uptrend, indicating a potential reversal in the market sentiment from bullish to bearish.
6. Volume: Ideally, the pattern is accompanied by increasing trading volume, suggesting strong selling pressure.
7. Confirmation: Traders usually wait for confirmation after spotting the Three Black Crows pattern, such as a further decline in prices or a break below a support level, before considering a bearish trade.
It's worth noting that while the Three Black Crows pattern can indicate a bearish reversal, it's essential to consider other technical indicators, market conditions, and confirmation signals to make well-informed trading decisions.
Cheers & have fun!
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