Candlestick Patterns - Part2
Hammer (Bullish Reversal Pattern)
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The Hammer is a popular candlestick pattern that provides important information about the potential reversal of a downtrend. It is a single candlestick pattern characterized by a small body located at the top of the trading range with a long lower shadow (also known as the tail or wick). The long shadow represents a rejection of lower prices, indicating potential reversal. The upper shadow, if present, is usually very small or nonexistent. Traders may interpret the Hammer as a signal to go long or buy, considering confirmation and other technical analysis tools.
Candlestick Patterns - Bullish Reversal Patterns - Hammer
Key components and characteristics
The Hammer pattern consists of a single candlestick with the following characteristics:
1. Body: The Hammer candlestick has a small body, which represents a narrow range between the opening and closing prices. The body is typically bullish (white or green) but can also be bearish (black or red). The small body indicates that there is indecision in the market.
2. Lower shadow/wick: The most prominent feature of the Hammer is its long lower shadow, which extends below the body. The length of the lower shadow is generally at least twice the size of the body. This shadow represents the low price reached during the trading period.
3. Upper shadow/wick: The upper shadow, if present, is usually very short or nonexistent. This indicates that the bulls were able to push the price up from the lows, suggesting a potential reversal.
Inverted Hammer (Bullish Reversal Pattern)
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The Inverted Hammer is a candlestick pattern that typically forms at the bottom of a downtrend and suggests a potential reversal in the price of an asset. It consists of a small body located near the bottom of the candle, with a long upper shadow and little to no lower shadow.
The pattern indicates that sellers initially dominated the market, pushing the price lower. However, buyers stepped in, driving the price back up, resulting in the long upper shadow. The small body indicates indecision between buyers and sellers, with a slight bias towards buyers. The lack of a lower shadow suggests that buyers were able to maintain control without much resistance.
Traders interpret the Inverted Hammer as a signal that the bearish pressure may be weakening, and a bullish reversal might occur. Confirmation of the reversal typically comes with a subsequent bullish candle or a break above the high of the Inverted Hammer. Traders often look for other technical indicators or patterns to strengthen their analysis before making trading decisions based on the Inverted Hammer pattern.
Candlestick Patterns - Bullish Reversal Patterns - Inverted Hammer
Key components and characteristics
The Inverted Hammer candlestick pattern consists of a single candlestick with the following characteristics:
1. Body: The pattern has a small real body near the bottom of the candlestick. The body represents the price range between the opening and closing prices.
2. Lower shadow/wick: The Inverted Hammer typically has little to no lower shadow. The absence of a lower shadow suggests that the low price for the period is near the bottom of the candlestick body.
3. Upper shadow/wick: The Inverted Hammer has a long upper shadow, which extends above the small body. This upper shadow represents the high price reached during the trading period.
Dragonfly Doji (Bullish Reversal Pattern)
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The Dragonfly Doji is a candlestick pattern that forms when the opening price, closing price, and high price of a trading session are all equal. This pattern typically occurs at the bottom of a downtrend and suggests a potential reversal in the price direction.
Candlestick Patterns - Bullish Reversal Patterns - Dragonfly Doji
Key components and characteristics
The Dragonfly Doji candlestick pattern consists of a single candlestick with the following characteristics:
1. Body: In a Dragonfly 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 top of the candlestick.
2. Lower shadow/wick: The candlestick has a long lower shadow, which indicates that the price fell significantly during the session but was ultimately pushed back up by buyers. The length of the lower shadow is typically at least twice the length of the body.
3. Upper shadow/wick: Unlike other candlestick patterns, the Dragonfly Doji does not have an upper shadow. This means that the high price of the session was the same as the opening and closing prices.
Bullish Engulfing (Bullish Reversal Pattern)
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The Bullish Engulfing candlestick pattern is a bullish reversal pattern that typically occurs at the end of a downtrend. It consists of two candles, a smaller bearish candle followed by a larger bullish candle. The body of the bullish candle completely engulfs the body of the bearish candle, indicating a shift in market sentiment from bearish to bullish.
Candlestick Patterns - Bullish Reversal Patterns - Bullish Engulfing
Key components and characteristics
The bullush engulfing candlestick pattern consists of two key components:
1. Bearish candle: The first candle is a bearish (red or black) candlestick, indicating that sellers have been in control. It is typically smaller in size compared to the second candle.
2. Bullish candle: The second candle is a larger bullish (green or white) candlestick. Its body completely engulfs the body of the bearish candle, meaning the high and low of the bullish candle's body completely cover the range of the bearish candle.
Morning Star (Bullish Reversal Pattern)
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The Morning Star is a bullish candlestick pattern typically found on price charts. It consists of three candles and is considered a reliable indicator of a potential trend reversal from a downtrend to an uptrend.
Candlestick Patterns - Bullish Reversal Patterns - Morning Star
Key components and characteristics
The key components and characteristics of a Morning Star candlestick pattern are as follows:
1. First Candle: The first candle in the pattern is a long bearish (red or black) candlestick. It signifies a strong selling pressure and suggests that bears are in control of the market.
2. Second Candle: The second candle is a small-bodied candle that can be either bullish or bearish. It forms a gap down from the previous candle, indicating indecision or a weakening of the selling pressure.
3. Third Candle: The third candle is a long bullish (green or white) candlestick that gaps up from the second candle. It confirms the reversal as buying pressure overtakes the selling pressure. This candle suggests that bulls are gaining control and a trend reversal may be imminent.
Three White Soldiers (Bullish Reversal Pattern)
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The Three White Soldiers is a bullish candlestick pattern that often signals a reversal of a downtrend and the beginning of an uptrend. It consists of three consecutive long-bodied bullish candles with small or nonexistent wicks or shadows. Each candle opens within the previous candle's body and closes higher than the previous candle's close. The pattern indicates increasing buying pressure and suggests a strong shift in market sentiment toward the bulls. Traders often interpret this pattern as a sign of potential upward momentum and look for opportunities to enter long positions.
Candlestick Patterns - Bullish Reversal Patterns - Three White Soldiers
Key components and characteristics
The key components and characteristics of the Three White Soldiers candlestick pattern are as follows:
1. Three consecutive candles: The pattern consists of three consecutive bullish (upward) candles.
2. Long-bodied candles: Each candle in the pattern should have a relatively long body, indicating strong buying pressure. The longer the bodies, the more significant the pattern.
3. Absence of or small wicks/shadows: The candles should have minimal or no upper or lower wicks, suggesting that the buying pressure was sustained throughout the entire trading session without significant pullbacks.
4. Opening within the previous candle's body: Each candle should open within the body of the previous candle, showing a continuation of the buying pressure from one candle to the next.
5. Closing higher than the previous close: The closing price of each candle should be higher than the previous candle's close, signifying a steady rise in prices and a bullish sentiment.
6. Reversal signal: The Three White Soldiers pattern typically appears after a period of downtrend, indicating a potential reversal and the start of an uptrend.
7. Volume confirmation: Higher trading volume during the formation of the pattern adds strength to the interpretation and suggests increased buying activity.
These components collectively suggest a strong shift in market sentiment from bearish to bullish, often prompting traders to anticipate further upward movement and potential buying opportunities.
To be continued.
Cheers & have fun!
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The Hammer is a popular candlestick pattern that provides important information about the potential reversal of a downtrend. It is a single candlestick pattern characterized by a small body located at the top of the trading range with a long lower shadow (also known as the tail or wick). The long shadow represents a rejection of lower prices, indicating potential reversal. The upper shadow, if present, is usually very small or nonexistent. Traders may interpret the Hammer as a signal to go long or buy, considering confirmation and other technical analysis tools.
Candlestick Patterns - Bullish Reversal Patterns - Hammer
Key components and characteristics
The Hammer pattern consists of a single candlestick with the following characteristics:
1. Body: The Hammer candlestick has a small body, which represents a narrow range between the opening and closing prices. The body is typically bullish (white or green) but can also be bearish (black or red). The small body indicates that there is indecision in the market.
2. Lower shadow/wick: The most prominent feature of the Hammer is its long lower shadow, which extends below the body. The length of the lower shadow is generally at least twice the size of the body. This shadow represents the low price reached during the trading period.
3. Upper shadow/wick: The upper shadow, if present, is usually very short or nonexistent. This indicates that the bulls were able to push the price up from the lows, suggesting a potential reversal.
Inverted Hammer (Bullish Reversal Pattern)
---------------------------------------------
The Inverted Hammer is a candlestick pattern that typically forms at the bottom of a downtrend and suggests a potential reversal in the price of an asset. It consists of a small body located near the bottom of the candle, with a long upper shadow and little to no lower shadow.
The pattern indicates that sellers initially dominated the market, pushing the price lower. However, buyers stepped in, driving the price back up, resulting in the long upper shadow. The small body indicates indecision between buyers and sellers, with a slight bias towards buyers. The lack of a lower shadow suggests that buyers were able to maintain control without much resistance.
Traders interpret the Inverted Hammer as a signal that the bearish pressure may be weakening, and a bullish reversal might occur. Confirmation of the reversal typically comes with a subsequent bullish candle or a break above the high of the Inverted Hammer. Traders often look for other technical indicators or patterns to strengthen their analysis before making trading decisions based on the Inverted Hammer pattern.
Candlestick Patterns - Bullish Reversal Patterns - Inverted Hammer
Key components and characteristics
The Inverted Hammer candlestick pattern consists of a single candlestick with the following characteristics:
1. Body: The pattern has a small real body near the bottom of the candlestick. The body represents the price range between the opening and closing prices.
2. Lower shadow/wick: The Inverted Hammer typically has little to no lower shadow. The absence of a lower shadow suggests that the low price for the period is near the bottom of the candlestick body.
3. Upper shadow/wick: The Inverted Hammer has a long upper shadow, which extends above the small body. This upper shadow represents the high price reached during the trading period.
Dragonfly Doji (Bullish Reversal Pattern)
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The Dragonfly Doji is a candlestick pattern that forms when the opening price, closing price, and high price of a trading session are all equal. This pattern typically occurs at the bottom of a downtrend and suggests a potential reversal in the price direction.
Candlestick Patterns - Bullish Reversal Patterns - Dragonfly Doji
Key components and characteristics
The Dragonfly Doji candlestick pattern consists of a single candlestick with the following characteristics:
1. Body: In a Dragonfly 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 top of the candlestick.
2. Lower shadow/wick: The candlestick has a long lower shadow, which indicates that the price fell significantly during the session but was ultimately pushed back up by buyers. The length of the lower shadow is typically at least twice the length of the body.
3. Upper shadow/wick: Unlike other candlestick patterns, the Dragonfly Doji does not have an upper shadow. This means that the high price of the session was the same as the opening and closing prices.
Bullish Engulfing (Bullish Reversal Pattern)
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The Bullish Engulfing candlestick pattern is a bullish reversal pattern that typically occurs at the end of a downtrend. It consists of two candles, a smaller bearish candle followed by a larger bullish candle. The body of the bullish candle completely engulfs the body of the bearish candle, indicating a shift in market sentiment from bearish to bullish.
Candlestick Patterns - Bullish Reversal Patterns - Bullish Engulfing
Key components and characteristics
The bullush engulfing candlestick pattern consists of two key components:
1. Bearish candle: The first candle is a bearish (red or black) candlestick, indicating that sellers have been in control. It is typically smaller in size compared to the second candle.
2. Bullish candle: The second candle is a larger bullish (green or white) candlestick. Its body completely engulfs the body of the bearish candle, meaning the high and low of the bullish candle's body completely cover the range of the bearish candle.
Morning Star (Bullish Reversal Pattern)
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The Morning Star is a bullish candlestick pattern typically found on price charts. It consists of three candles and is considered a reliable indicator of a potential trend reversal from a downtrend to an uptrend.
Candlestick Patterns - Bullish Reversal Patterns - Morning Star
Key components and characteristics
The key components and characteristics of a Morning Star candlestick pattern are as follows:
1. First Candle: The first candle in the pattern is a long bearish (red or black) candlestick. It signifies a strong selling pressure and suggests that bears are in control of the market.
2. Second Candle: The second candle is a small-bodied candle that can be either bullish or bearish. It forms a gap down from the previous candle, indicating indecision or a weakening of the selling pressure.
3. Third Candle: The third candle is a long bullish (green or white) candlestick that gaps up from the second candle. It confirms the reversal as buying pressure overtakes the selling pressure. This candle suggests that bulls are gaining control and a trend reversal may be imminent.
Three White Soldiers (Bullish Reversal Pattern)
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The Three White Soldiers is a bullish candlestick pattern that often signals a reversal of a downtrend and the beginning of an uptrend. It consists of three consecutive long-bodied bullish candles with small or nonexistent wicks or shadows. Each candle opens within the previous candle's body and closes higher than the previous candle's close. The pattern indicates increasing buying pressure and suggests a strong shift in market sentiment toward the bulls. Traders often interpret this pattern as a sign of potential upward momentum and look for opportunities to enter long positions.
Candlestick Patterns - Bullish Reversal Patterns - Three White Soldiers
Key components and characteristics
The key components and characteristics of the Three White Soldiers candlestick pattern are as follows:
1. Three consecutive candles: The pattern consists of three consecutive bullish (upward) candles.
2. Long-bodied candles: Each candle in the pattern should have a relatively long body, indicating strong buying pressure. The longer the bodies, the more significant the pattern.
3. Absence of or small wicks/shadows: The candles should have minimal or no upper or lower wicks, suggesting that the buying pressure was sustained throughout the entire trading session without significant pullbacks.
4. Opening within the previous candle's body: Each candle should open within the body of the previous candle, showing a continuation of the buying pressure from one candle to the next.
5. Closing higher than the previous close: The closing price of each candle should be higher than the previous candle's close, signifying a steady rise in prices and a bullish sentiment.
6. Reversal signal: The Three White Soldiers pattern typically appears after a period of downtrend, indicating a potential reversal and the start of an uptrend.
7. Volume confirmation: Higher trading volume during the formation of the pattern adds strength to the interpretation and suggests increased buying activity.
These components collectively suggest a strong shift in market sentiment from bearish to bullish, often prompting traders to anticipate further upward movement and potential buying opportunities.
To be continued.
Cheers & have fun!
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