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Morning Star Candlestick Pattern: Trading strategy!🌟🕯️ ✳️The Morning Star candlestick pattern is a candle formation that can often be seen on price action charts. It has a bullish character and can often determine the main minimum of market fluctuations. ✳️Three candles in a figure are one of the mandatory conditions of the pattern. Nevertheless, it is quite easy to find the morning star on the chart. It's easy to make sure of this – just look at the shape and location of the “Morning Star" figure. ⚠️ The shape of the Morning Star pattern So, the formation consists of three Japanese candlesticks. Each of them must meet certain requirements. 🔵 The first candle is a bearish one with a rather large body and the absence of wicks or their presence with a very small length (no more than 10% of the body); 🔵The second candle is with a small body or completely without it. The candle should be with small wicks. The color of the second candle does not matter; 🔵The third candle is bullish with a large body. The body of the third candle should cover most of the body of the first candle (or engulf the whole body). Also, the candle should be without shadows (ribose) or with very small shadows; 🔵There should be a gap between the central candle and the other two. But, as practice shows, it is not always a prerequisite. ❗ Location of the candle model "Morning Star" ❗ The morning star is a bullish formation. Therefore, it is located at the end of a downtrend. The central candle is the local minimum of the downtrend. After the formation of this Price Action pattern, you should buy an asset. ❗ Signal amplification of the Morning Star model ❗ 🔴If the central candle was formed without a body, then the pattern gives almost 100% about the change of the downtrend to an uptrend. This model is also called the "morning star Doji" or "abandoned baby"; 🔴The presence of a gap between the central candle and the other two candles strengthens the trading signal; 🔴The bullish central candle is stronger than the bearish one. But the strongest is bodiless; The third candle completely covers the first candle; 🔴The presence of a small trading volume at the first candle and a large volume at the third candle strengthens the model. ✅ When to enter into a transaction We enter into the transaction after the closing of the third candle. It is confirmatory in the "Morning Star" pattern. This is a kind of guarantor of the model. ✅ When not to enter into a transaction Everything is simple here. If the pattern does not satisfy the main conditions, then we do not enter into the transaction. It will no longer be a morning star model, but something else. ❤️Friends, If you want more of these articles, like comment and subscribe❤️
Education
by TopTradingSignals
22
Buy eurgbp!We are in a downtrend but this pair loves to retrace back to a level of support or resistance until it has enough momentum to push through support. Since this support line was a key level and had a hard time breaking through the only other choice it has is to retest resistance. It has created a higher low and there are several wicks on the candles showing indecision. It has crossed the 200 and 50 ema on the 15 minute chart as well. This is buy and we will reassess the charts once we reach this zone.
Long
by TheGiovannie
2
What are the candlesticks?Candlesticks are a way to express visually the size of the price movement. There are different colors used for the candlesticks, but in pairs of 2: one color for an uptrend (usually marked in green) and one for a downtrend (usually marked in red). Candlesticks are placed in graphics and by their movements create patterns. Starting from those patterns traders decide on a possible future pattern: where will/can the price go from now, based on the previous movements of the price. On any chart, you can use more ways to see the price of an asset: 1. Candles - full candles (usually red or green) 2. Hollow candles - a full candle for a candle that show a downtrend (usually red) and an empty one for an uptrend (usually green and used only on the edges) 3. Bar 4. Line 5. Mountain The main advantage of the candles is that they are more visual. In other words, you can see faster what is going on in your chart. Why usually red or green? The candles are said to show the emotions, so: Red when something is not good Green when something is loved/liked Why do most people use the candles system? The main advantage is that in any time frame you can see these prices: 1. Open price 2. Close price 3. High price 4. Low price What are time frames? There are many time frames: 1, 5, 10, 30 minutes / 1, 4 hours / 1 day / 1 week. For any time frame chosen by the trader the pattern of the candles changes. Depending on what you want to do (invest short, medium or long term) you look at different patterns/timeframes that the candles made. The body of the candle represents the price range between a determined timeframe. If the candle is red - the price is lower than 5 minutes ago (where 5 minutes is the selected timeframe) If the candle is green - the price is higher than 5 minutes ago (where 5 minutes is the selected timeframe) Sometimes the candle looks like a cross (the body for the candle is missing). That means that the opening and close prices are the same. Any candle has 2 wicks or “shadows”: 1. Up - representing the maximum price 2. Down - representing the minimum price There are bigger and smaller candles. Why? The bigger the candle the bigger the price movement. The smaller the candle the smaller the price movement. If the up wicks are smaller it shows that the price closed near the maximum price of that timeframe. The same is valid for a down wick. If the down wicks are bigger it shows that the price closed far from the minimum price of that time frame. The same is valid for an upper wick.
NASDAQ:NVDAEducation
by AngelAlgo
2
NIO: The most important Key Points for us!Hello traders and investors! Let’s see how NIO is doing today! First, it is worth noting that it is in a short-term bear trend , because we do have lower highs/lows in the 1h chart. It also defeated the purple trendline, indicating some weakness. Now, NIO found a support around the $ 43.78 and it is bouncing back up. There’s some light in the end of this tunnel, because it looks like we have a Flag pattern. The pattern wasn’t triggered yet, but this can stop this short-term bear trend. Also, if it defeats the $ 46 again, it'll be a very good sign. It is not the best movement ever, but it is a start. Now, the daily chart has some interesting stuff to tell us: This short-term bear trend in the 1h chart might be just a harmless pullback in the daily chart, to its 21 ema. It is doing a good reaction today, but it still might retest the 21 ema in the next few days. The $ 43.13 is a nice support level , as it was a previous resistance, and now the 21 ema is also quite near this price level too. This seems to be a great support level for NIO, if it corrects, and it could even give us a buy sign – if the right pattern appears. The volume is just fine, but I would be happy if NIO does a sideways correction between the two black lines. All of this doesn’t change the main bullish bias we have in the mid-term, and the target at the $ 50.40. We already filled the gap, which some people found absolutely crazy, and maybe we’ll nail another target. Let’s just be aware of this support level in the daily chart around $ 43.13. If you liked this idea, remember to follow me to keep in touch with my daily updates, and please, support this idea if it helped you! Thank you very much!
NYSE:NIO
by Nathan_The_Finance_Hydra
2
Trading Basics Part 1:How Candlesticks Work! Hello,Traders! Japanese Candlesticks are thought to have been invented by the Japanese rice traders And then made their way into the West where they were used for stocks, forex and commodity trading. Reading candlesticks is quite easy: the body represents an area that indicates the price distance between the open and close of the candle, while wick’s ends indicate the full magnitude of the movement in-between open and close. Thus, when picking the timeframe for your chart, you are deciding on how much time will be contained between open and close of each candle. If open is below the close, the candle is bullish , and if open is above the close, the candle is bearish , which is usually represented by different colors of the bodies and wicks on the chart, typically, green and red. Some of you might ask me, why am I explaining things that seems to be obvious and self evident, yet my experience of Coaching, paints a different picture, with thecandlesticks being undervalued and misunderstood by many, despite them being the staple of technical analysis . In my trading strategy, which is based on multi timeframe top-down technical analysis , we examine multiple timeframes, from 1 week to 1 hour, going from higher to the lower timeframes. Looking for strong levels on weekly and daily and for patterns and confirmations on 4 hour and 1 hour charts. Which means that we are opening 1 week/1 day candle like a Russian doll, finding multiple candles inside the other. We enter the trade only if we are getting the same bias on all timeframes that were of our interest! If you found my post helpful and interesting, please, like comment and subscribe! Thank you!
Education
by TopTradingSignals
13
All Patterns Finish, Part 7 GuideGuide Candles Patterns Candlestick patterns are usually quite good when trying to finish an analysis as it can help you confirm a trend. Basic Candles - Three Line Patterns 1- Advance Block Description: The Advance Block is classified as a three-line bearish reversal pattern. The first line is a white candle that appears as a long line in an uptrend. It can be any of the following basic candles: White Candle, Long White Candle, Opening White Marubozu, Closing White Marubozu or White Marubozu. The second line can be made up of any white candle, appearing as a long or short line. It opens within the body of the first candle and closes above it. The last, third line, is also any white candle that appears as a long or short line. It opens inside the body of the second line and closes above it. Each subsequent candle body within the Advance Block pattern is shorter than the previous one. The shadows in the second and third lines should be longer than those in the first line. The pattern indicates that the bulls are weakening. However, three white bodies form a support zone and, to consider the pattern, it is necessary to confirm it. Therefore, after the appearance of the pattern, the market should close below the first line. If this is not the case, the occurrence of the pattern should be treated as false. The Advance Block is a very rare pattern. Building: First candle • Or a candle in an uptrend • Or white body Second candle • Or white body • Or the opening price is within the previous body • Or the closing price is above the previous closing price Third candle • Or white body • Or the opening price is within the previous body • Or the closing price is above the previous closing price Example: MRK ,14 Dec, 2010. Chart 1d. 2- Three Outside Up Description: The Three Outside Up pattern is a three-line pattern that is an extension of the two-line Bullish Engulfing pattern. Morris introduced the pattern and was intended to improve the performance of the two-line pattern. The third candle is bound to behave as a confirmation of the bullish engulfing. As with the Bullish Engulfing, the first black candle is engulfed by the second with a white body. The first line can appear as a short or long line. It can be any basic black body sail. Doji candles are allowed, except for the four price Doji. The second line should appear as a long line and the candle should be white. It can be one of the following candles: White Candle, Long White Candle, White Marubozu, Opening White Marubozu and Closing White Marubozu. Spinning tops and doji candles are not allowed. The last line of candles can be any basic candle, which has a white body and closes above the closing price of the second candle. In the case of this pattern, the length of the shadows does not matter. Although the idea behind the Three Outside Up is to confirm the Bullish Engulfing, in our opinion the extended pattern should be confirmed anyway. Confirmation can be in the form of a breakout of the nearest resistance zone or a trend line. Building: First candle • Or a candle in a downtrend • O black body Second candle • Or white body • Or the body of the candle wraps around the body of the previous candle (black) Third candle • Or closing price above the previous closing price • Or white body Example: WMT ,22 Aug, 2012. Chart 1d. 3- Three Stars in the South Description: The Three Stars in the South are classified as a three-line bullish reversal pattern. All of its candles are shortening and having black bodies, indicating that bearish momentum is weakening. The pattern name can be somewhat misleading, as we are not dealing with star-like short candles here. There are also no price differences between the candle lines. The first line of the pattern appears as a long line that has a long lower shadow that must be longer than the body. This means that the first line can be made up of the Hammer or Takuri Line pattern. The second candle opens below the previous opening price and closes below the previous closing price. The low price should be higher than the previous low price. The third line is a marubozu sail that has a black body. The candle fits within the midline. It appears as a short line. This last condition has the greatest impact at very low frequencies, meaning the pattern rarely appears on candlestick charts. Building: First candle • Or a candle in a downtrend • O black body • Or long lower shadow Second candle • O black body • Or the opening below the previous opening • Either the close below or at the previous close • Or the low above the previous low Third candle • Or a marubozu candle with a black body • Or appears as a short line • Or a candle is inside the previous candle Example: WMB,15 Sep, 1986. Chart 1d. 4- Evening Doji Star Description: The Evening Doji Star is a bearish reversal pattern, very similar to the Evening Star. The only difference is that the Evening Doji Star must have a doji candle (except for the four price Doji) on the second line. The doji candle (second line) must not be preceded or followed by a price difference. If a lower shadow of a doji candle were placed above the first and second shadow lines, we would be dealing with the Bearish Abandoned Baby pattern. It happens that the first two candles are forming the Bearish Doji Star pattern. The pattern, like any other candlestick pattern, should be confirmed in the next few candles exiting the support zone or a trend line. If the occurrence is confirmed, then your third line can act as an area of resistance. However, it also happens that the pattern is simply a short pause before further price increases. Patterns rarely occur on charts. Building: First candle • or a candle in an uptrend • or white body Second candle • Or a doji candle • Or a doji body on the body of the previous candle • Or the low price below the high price of the previous candle Third candle • O black body • O body of the candle below the body of the previous candle • Or the closing price below the midpoint of the body of the first candle Example: PG,12 Dec, 2012. Chart 1d. 5- Bearish Abandoned Baby Description: The Bearish Abandoned Baby is a three-line bearish reversal candlestick pattern. Its construction is very similar to that of the Evening Doji Star. The only difference is that in the case of Bearish Abandoned Baby, the doji candle opens on the shadows of the candle lines on either side, which is not the case with the Evening Doji Star. The doji candle can be of any type except the four price Doji. In other words, it can be any of the following types of doji: Doji, Long Legged Doji, Dragonfly Doji, Tombstone Doji. The pattern needs to be confirmed, either by breaking the trend line or the nearest support zone. The Bearish Abandoned Baby pattern appears very rarely in charts, so its practical application is quite low. Building: Building: First candle • Or a candle in an uptrend • Or white body Second candle • Or a doji candle • Or the low price above the previous high price Third candle • O black body • Or the high price below the previous low price Example: I have no example for this pattern, sorry. 6- Bearish Side-by-Side White Lines Description: The side-by-side bearish white line pattern is a three-line pattern that predicts a continuation of the downtrend. The first line appears as a long line in a downtrend. The second and third lines can be any white candle that appears as a long or short line, but the body cannot be greater than the body of the first line. The pattern is characterized by a price gap that appears between the first line and two subsequent lines, whose high prices are below the low price of the first line. The last two candles should be a similar size. Also, your opening and closing prices should be similar. The first two lines of the pattern form the Descending Window pattern. Bulkowski and Morris in their books present examples where price differences are only between bodies. In other words, the upper shadows of the second and third lines can reach above the low price of the first line. However, in our approach we decided to be more strict. The price gap should appear between candles, including shadows, because Shimizu emphasizes that the candles in this pattern must be quite short. The pattern has a very low frequency. Building: First candle • Or a candle in a downtrend • O black body Second candle • Or white body • Or the high price below the previous low price Third candle • Or white body • Or the high price below the low price of the first line • Or the size of the candle is similar to the size of the previous candle Example: We can find this chart in JDSU Stock, As of January 14, 2008, tradingview sadly does not have this stock. 7-Evening Star Description: The Evening Star is a three-line bearish reversal pattern that appears in an uptrend. The first line is any white candle that appears as a long line in an uptrend: Long White Candle, White Candle, White Marubozu, Opening White Marubozu, Closing White Marubozu. The second line can be any black or white candle that appears as a short line, except doji candles. The body of the candle must be placed above the previous body, that is, the opening and closing price must be higher than that of the previous candle. The third line is a black candle that appears as a long line, that is: Long Black Candle, Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu. The opening price should be below the body of the previous candle. The candle should close at least halfway across the body of the first line. The length of the shadows or the lack of it does not matter for any pattern line. The second line of the evening star can form the shooting star pattern of a candle. The first two lines can form the two-candle shooting star. The Evening Star should be confirmed in the following candles, breaking the trend line or the closest support zone, which can be formed by the first line of the pattern. If the pattern is confirmed, your third line may turn into a resistance zone. When the pattern is not confirmed, it may simply be a short pause before further market growth. Building: First candle • Or a candle in an uptrend • Or white body Second candle • Or white or black body • Or the body of the candle is above the previous body Third candle • O black body • Or the body of the candle is below the previous body • Or the candle closes at least half the body of the first line Example: BAC,14 Apr, 2010. Chart 1d. 8- Three White Soldiers Description: The pattern of the Three White Soldiers has had several names historically. The Japanese called it the Three Red Soldiers, because what in the western world is known as a white candle, they actually used the color red. During World War II, some called the pattern the Three Soldiers on the March. Finally, now the pattern is widely known as the Three White Soldiers. The pattern is classified as a bullish reversal and appears within a downtrend. The three lines can be formed by any candle that has a white body, appearing as long lines. This means that the following candles may appear: Long White Candle, White Candle, White Marubozu, Opening White Marubozu and Closing White Marubozu. Doji candles and spinning tops are not allowed. The first line forms in a downtrend. The next lines, which is the second and third, open above the opening price of the previous candle and close above the closing price of the previous candle. In the past, some authors required that the opening price of the second and third lines be at least half the height of the body of the previous candle. Others demanded that the closing prices be near the high of the candle, that is, that the candles have very short shadows. However, candlestick patterns and technical analysis in general are evolving, and the Three White Soldiers can be used as an example of such an evolution. In fact, three long white candles in a row with a higher subsequent close price indicate that the bulls are in control of the market. The pattern must be confirmed, but it does not have to occur on the next nearest candle because it becomes a significant upward movement and some market participant may be willing to take the profit. Such behavior may lead to a temporary price drop, but the candles that form the pattern create an area of ​​support that should rescue the market. Then the bulls can regain control. If the pattern is followed by a candle that closes below the opening price of the first line, it should be seen as a false signal. Building: First candle • Or a candle in a downtrend • Or white body Second candle • Or white body • Or the opening price within the previous body • Or the closing price above the previous closing price Third candle • Or white body • Or the opening price within the previous body • Or the closing price above the previous closing price Example: HPE ,27 Apr, 2005. Chart 1d. 9- Morning Star Description: The Morning Star is a three-line bullish reversal pattern that appears in a downtrend. The first line is any black candle that appears as a long line in a downtrend: Long Black Candle, Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu. The second line can be any black or white candle that appears as a short line, except doji candles. The body of the candle must be placed below the previous body, that is, the opening and closing price must be lower than those of the previous candle. In other words, there must be a space between the first and the second body. The third line is a white candle that appears as a long line, that is: Long White Candle, White Candle, White Marubozu, White Marubozu that opens, White Marubozu that closes. The opening price should be above the body of the previous candle. The candle should close to at least half the body of the first line. Some fonts do not require a space between the second and third body. The length of the shadows or the lack of it does not matter for any pattern line. It happens that the first two lines can form the inverted hammer candlestick pattern. The morning star should be confirmed in the following candles, breaking the trend line or the closest resistance zone, which can be formed by the first line of the pattern. If the pattern is confirmed, your third line can become a support zone. When the pattern is not confirmed, it may simply be a short pause before the market continues to decline. Building: First candle • Or a candle in a downtrend • Or white body Second candle • Or white body • Or the opening price within the previous body • Or the closing price above the previous closing price Third candle • Or white body • Or the opening price within the previous body • Or the closing price above the previous closing price Example: KO ,23 May, 2007. Chart 1d. 10- Three Inside Down Description: Gregory Morris introduces the Three Inside Down three-line pattern as an extension of the Bearish Harami pattern. The first line of it is any candle that has a white body, appearing as a long line, i.e. White Candle, Long White Candle, White Marubozu, Opening White Marubozu, or Closing White Marubozu. The second line is any black candle except doji candles. Also, the body of the second line must be swallowed by the body of the first line. The opening price of the second line can be equal to the closing price of the first candle. The closing price of the second line can be equal to the opening price of the first candle. However, these two situations cannot occur at the same time. The third candle in the pattern can be made up of any candle that has a black body, except doji candles, which close below the closing price of the second candle. Shadows don't matter in the case of this pattern. The first line of the pattern can act as a support area. The Three Inside Down pattern should be confirmed. Confirmation can be in the form of breaking out of the nearest support zone or a trend line. Building: First candle • Or a candle in an uptrend • Or white body Second candle • O black body • Or the body of the candle is enveloped by the body of the previous candle Third candle • Or the closing price is below the previous closing price Example: CVX,01 May, 2012. Chart 1d. 11- Bullish Tri-Star Description: The Bullish Tri-Star pattern is a three-line bullish reversal pattern in which all three lines are doji candles (any doji candle except the four-price Doji). The middle doji (second line) is below the others. Shadows don't matter. The pattern must be confirmed at the next candles, which is the closest resistance zone or a trend line must be broken. The context of the market, in which the pattern appears, is crucial. Nison first introduced the Bullish Tri-Star pattern. It appears very rarely on candlestick charts and is therefore not very useful on a daily basis. Building: First candle • Or a doji candle in a downtrend Second candle • Or a doji candle • Or a body under the previous body Third candle • Or a doji candle • Or a body above the previous body Example: BAX,04 Mar, 2009. Chart 1d. After: 12- Upside Gap Three Methods Description: The Upside Gap Three Methods is a bullish continuation pattern of three lines that belongs to the family of tasuki patterns. It is a variant of the Upside Tasuki Gap pattern, but the price gap between the two white candles is closed. Although the price gap between the two white candles is closed, the pattern is classified as bullish continuation. The pattern must be confirmed, that is, the price must move above the closing price of the second line. In other words, the third line that is a black candle must be negated. Last two lines can form the Bearish Tasuki Line pattern, which is a bearish reversal pattern. If such a situation occurs, then the market context should play the most important factor. Building: First candle • Or a candle in an uptrend • Or white body Second candle • Or white body • Or the minimum above the previous maximum (gap) Third candle • O black body • Or the opening price within the previous body • Or the closing price within the body of the first line (closing the gap) Example: AXP,13 Apr, 2009. Chart 1d. After: 13- Bullish Side-by-Side White Lines Description: The side-by-side bullish white line pattern is a three-line pattern that predicts a continuation of the uptrend. The first line appears as a long line in an uptrend. The second and third lines can be any white candle that appears as a long or short line, but the body cannot be longer than the body of the first line. The pattern is characterized by a price gap that appears between the first line and two subsequent lines, whose low prices are above the high price of the first line. The last two candles should be a similar size. Also, your opening and closing prices should be similar. The first two lines of the pattern form the Ascending Window pattern. Bulkowski and Morris in their books present examples where price differences are only between bodies. In other words, the lower shadows of the second and third lines can fall below the high price of the first line. However, in our approach we decided to be more strict. The price gap should appear between candles, including shadows, because Shimizu emphasizes that the candles in this pattern must be quite short. Building: First candle • Or a candle in an uptrend • Or white body Second candle • Or white body • Or the low price above the previous high price Third candle • Or white body • Or the low price above the high price of the first line • Or the size of the candle is similar to the size of the previous candle Example: I have no example for this pattern. 14- Three Inside Up Description: The Three Inside Up pattern was introduced by Gregory Morris as an extension of the Bullish Harami, confirming that pattern. Your first line is any candle that has a black body, appearing as a long line, that is, a black candle, a long black candle, a black marubozu, a black marubozu that opens, or a black marubozu that closes. The second line is any white candle, except doji candles. Also, the body of the second line must be swallowed by the body of the first line. In other words, the first and second lines of the pattern form the Bullish Harami pattern. The opening price of the second line can be equal to the closing price of the first candle. The closing price of the second line can be equal to the opening price of the first candle. However, these two situations cannot occur at the same time. The third candle in the pattern can be made up of any candle that has a white body, except doji candles, closing above the closing price of the second candle. This candle is intended to act as a confirmation of the Bullish Harami pattern. Shadows don't matter in the case of this pattern. The first line of the pattern can serve as a support area. The Three Inside Up pattern should be confirmed, although it is an extension of the confirmed Bullish Harami pattern. Confirmation can be in the form of breaking out of the nearest support zone or a trend line. Building: First candle • Or a candle in a downtrend • O black body Second candle • Or white body • Or the body of the candle is enveloped by the body of the previous candle Third candle • Or the closing price is above the previous closing price Example: JPM,25 Sep, 2012. Chart 1d. 15- Three Inside Up Description: The Three Inside Up pattern was introduced by Gregory Morris as an extension of the Bullish Harami, confirming that pattern. Your first line is any candle that has a black body, appearing as a long line, that is, a black candle, a long black candle, a black marubozu, a black marubozu that opens, or a black marubozu that closes. The second line is any white candle, except doji candles. Also, the body of the second line must be swallowed by the body of the first line. In other words, the first and second lines of the pattern form the Bullish Harami pattern. The opening price of the second line can be equal to the closing price of the first candle. The closing price of the second line can be equal to the opening price of the first candle. However, these two situations cannot occur at the same time. The third candle in the pattern can be made up of any candle that has a white body, except doji candles, closing above the closing price of the second candle. This candle is intended to act as a confirmation of the Bullish Harami pattern. Shadows don't matter in the case of this pattern. The first line of the pattern can serve as a support area. The Three Inside Up pattern should be confirmed, although it is an extension of the confirmed Bullish Harami pattern. Confirmation can be in the form of breaking out of the nearest support zone or a trend line. Building: First candle • Or a candle in a downtrend • O black body Second candle • Or white body • Or the body of the candle is enveloped by the body of the previous candle Third candle • Or the closing price is above the previous closing price Example: JPM,25 Sep, 2012. Chart 1d. 16- Deliberation Description: Deliberation is a three-line bearish reversal candlestick pattern. It is made up of three white chandeliers. The first and second lines of the pattern have long bodies. The third candle has a shorter body than two previous candles. Each subsequent candle opens above the previous opening price. The same applies to closing prices. The third candle appears as a short line and can be one of the following: Short white candle or White spinning top. The opening price of the last candle is slightly lower or higher than the previous closing price. Shimizu provides a somewhat different characteristic of the deliberation pattern. The first candle is short, the second is long, indicating a significant upward movement (a price gap is visible on the diagram of his book). The third candle is short, indicating that the bulls are tired of trying to raise the price. Because all the candles in the pattern have white bodies, the pattern acts as a support zone. The pattern is confirmed if the bears manage to move the price below the opening price of the first candle. Building: First candle • Or a candle in an uptrend • Or white body Second candle • Or white body • Or the opening price is higher than the previous opening price • Or the closing price is above the previous closing price Third candle • Or white body • Or the opening price is slightly lower or higher than the previous closing price • Or the closing price is above the previous closing price Example: MCD ,16 Feb, 2007. Chart 1d. 17- Upside Tasuki Gap Description: The Upside Tasuki Gap is a three-line bullish continuation pattern that belongs to the family of tasuki patterns. Your first line appears as a long line in an uptrend, with a white body. The second line can appear as any white candle, either as a long or a short line. There is a price gap between the first two lines. The third line can be any black candle (except doji candles) that opens between the previous open and close prices. It closes below the previous opening price, however it does not close the price gap between the first and second lines. The Upside Tasuki Gap should be confirmed, that is, the candles that follow its appearance should close above the closing price of the second line. The second and third lines of the pattern can form the bearish Tasuki Line which acts as a bearish reversal pattern. Therefore, considering the market context is very important. Building: First candle • Or a candle in an uptrend • Or white body Second candle • Or white body • Or the minimum above the previous maximum (gap) Third candle • O black body • Or the opening price within the previous body • Or the closing price above the close of the first line Example: MCD ,20 Oct, 2014. Chart 1d. 18- Collapsing Doji Star Description: The collapsed Doji star pattern is a bearish three-line reversal pattern, which appears very rarely. Therefore, the pattern is not very useful. The first line is a white candle that appears in an uptrend. The next line is a doji candle (except the four price Doji) that opens below the previous candle, including shadows. The last, third line, is a black candle that also opens below previous candles, including shadows. The pattern should be confirmed on the following candles. Building: First candle • Or a candle in an uptrend • Or white body Second candle • Or a doji candle • Or the high price below the previous low price Third candle • O black body • Or the high price below the previous low price Example: IVZ,16 Nov, 2006. Chart 1d. 19- Three Black Crows Description: The Black Three Crows is a three-line bearish reversal candlestick pattern. The first line appears in an uptrend, and two other lines open below the opening price of the previous candle but above the closing price of the previous candle. The opening price of the second or third candle is allowed to be equal to the opening price of the previous candle. Historically, the pattern had more conditions, for example, that the next candle should open at least half of the previous candle. Another requirement in the past was that the sails had to have very short bottom shadows. Today, most traders reject such restrictions. Three black candles that appear as long lines, each closing at a new low, indicate market sentiment well. The Three Black Crows often form a hardiness zone. However, it happens that three black candles are not breaking the nearest support zone and the price is moving sideways. Often the pattern is preceded by reversal patterns, for example, Bullish Engulfing, Evening Star, Northern Doji, and others. The location of the pattern on the table can be essential. If the first line breaks a trend line, price drops can be deep. Especially when there are no significant support areas nearby. The Three Black Crows pattern is canceled when it is followed by candles whose closing price is above the opening price of the first line. Building: First candle • Or a candle in an uptrend • O black body Second candle • O black body • Or the opening price within the previous body • Or the closing price below the previous closing price Third candle • O black body • Or the opening price within the previous body • Or the closing price below the previous closing price Example: VZ,14 Dec, 2009. Chart 1d. After: 20- Three Black Cross Description: Greg Morris proposed the three-line Three Outside Down pattern as an extension of the two-line Bearish Engulfing pattern. The first and second lines of it form the bearish engulfing pattern. The first line can appear as a short or long line. It can be any basic candle that has a white body. Doji candles are allowed, except for the four price Doji. The second line should appear as a long line and the candle should be black. It can be one of the following candles: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu and Closing Black Marubozu. Spinning tops and doji candles are not allowed. The last line of candles can be any basic candle, which has a black body and closes below the closing price of the second candle. The length of the shadows does not matter for any line. The Three Outside Down pattern appears in a downtrend that predicts its reversal. Although the third line is a kind of confirmation of the bearish engulfing, it is worth waiting for the confirmation in the later candles. In other words, it is recommended to see if the price breaks out of the nearest resistance zone or a trend line. Depending on the market, if trading volume information is available, it should normally be significantly higher on the third line of the pattern. Building: First candle • Or a candle in an uptrend • Or white body Second candle • O black body • Or the body of the candle wraps around the body of the previous candle (white) Third candle • Or closing price below the previous closing price • O black body Example: INTC,02 May, 2012. Chart 1d. After: 20- Three Black Cross Description: Greg Morris proposed the three-line Three Outside Down pattern as an extension of the two-line Bearish Engulfing pattern. The first and second lines of it form the bearish engulfing pattern. The first line can appear as a short or long line. It can be any basic candle that has a white body. Doji candles are allowed, except for the four price Doji. The second line should appear as a long line and the candle should be black. It can be one of the following candles: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu and Closing Black Marubozu. Spinning tops and doji candles are not allowed. The last line of candles can be any basic candle, which has a black body and closes below the closing price of the second candle. The length of the shadows does not matter for any line. The Three Outside Down pattern appears in a downtrend that predicts its reversal. Although the third line is a kind of confirmation of the bearish engulfing, it is worth waiting for the confirmation in the later candles. In other words, it is recommended to see if the price breaks out of the nearest resistance zone or a trend line. Depending on the market, if trading volume information is available, it should normally be significantly higher on the third line of the pattern. Building: First candle • Or a candle in an uptrend • Or white body Second candle • O black body • Or the body of the candle wraps around the body of the previous candle (white) Third candle • Or closing price below the previous closing price • O black body Example: INTC,02 May, 2012. Chart 1d. After: Basic Candles - Four Line Patterns/b] 1- Bearish Three-Line Strike Description: The three-line bearish exercise is a bearish continuation candlestick pattern. First three candles have black bodies. They can be made up of any black candle except doji and form lower closes. All of them are located within a downtrend. The fourth candle has a white body and appears as a long line. It can be one of the following candles: White Candle, Long White Candle, White Marubozu, Opening White Marubozu, Closing White Marubozu. The candle opens below the previous close and closes above the open of the first line. In other words, the body of the fourth candle envelops all the previous candles. The length of the shadows does not matter. Similar to the bullish counterpart, the three-line bearish strike is a controversial pattern. Its last two lines form the bullish engulfing pattern, which by definition reverses the downtrend. This is in opposition to what the three-line bearish exercise predicts, which is the continuation of the downtrend. Therefore, as usual, every pattern occurrence must be confirmed. Bulkowski writes that the three-line bearish strike behaves like a bullish reversal, rather than a bearish continuation. Within its classification of candlestick patterns, the pattern is number one. We are against creating such classifications for a few reasons. First, the pattern appears very rarely on the charts, which does not allow for reasonable statistics to be calculated. Second, by testing many patterns, we clearly see that a given pattern can be very profitable on asset A, while it is a business disaster on asset B. Therefore, each pattern must be thoroughly tested under its specific conditions. Building: First candle • Or a candle in a downtrend • O black body Second candle • O black body • Or the opening price is within the previous body • Or the closing price is below the previous closing price Third candle • O black body • Or the opening price is within the previous body • Or the closing price is below the previous closing price Fourth candle • Or white body • The body of the candle wraps all the previous black bodies. Example: BF.B,29 Aug, 2013. Chart 1d. 2- Bearish Three-Line Strike Description: Hiding Baby Swallow is a four line candlestick pattern, appearing so rarely (or not appearing) that traders can ignore it. Two Black Marubozu candles appearing one after the other is a very rare situation on candlestick charts, limiting the appearance of this pattern. The additional requirement, which is the appearance of the High Wave candle, makes the pattern hardly appear on the charts. There is a space between the first and second lines. The second and third lines can form the Inverted Hammer pattern, which has the same forecast as the Hidden Swallow, which is a bullish reversal. Building: First candle Or a Black Marubozu candle in a downtrend Second candle • Or a black Marubozu candle • Or the candle opens inside the body of the previous candle • Or candle closes below the previous closing price Third candle • Or a basic High Wave sail with no bottom shadow • Or the candle opens below the previous close price • Or the upper shadow enters the body of the previous candle Fourth candle • O black body • Or the body of the candle wraps around the body of the previous candle, including the shadows Example: EXPD ,10 Aug, 1990. Chart 1d. Basic Candles - Five Line Patterns/b] 1- Bearish Breakaway Description: The bearish breakout is a five-line bearish reversal pattern introduced by Greg Morris as the counterpart of the bullish breakout. Similar to the bullish variant, a price gap forms between the first and second lines. The last fifth line represents a trend break formed by a long black candle. The opening price is lower than the previous closing price, but the candle closes above the closing price of the first line and the gap is not covered. The pattern requires confirmation and one of the following candles should close the price gap. The bearish breakout appears very rarely on the charts. In 20 years on the S & P500, we found only 23 occurrences. Building: First candle • Or a tall white candle Second candle • Or a white candle • Or the candle opens above the previous closing price (price difference up, shadows may overlap) Third candle • Or a white or black candle • Or candle opens above the previous opening price Fourth candle • Or a white candle • Or candle closes above the previous closing price Fifth candle • Or a tall black candle • Or the candle opens below the previous close price • Or the candle closes below the opening price of the second line and above the closing price of the first line • Or the price gap formed between the first and second lines is not closed Example: DIS,02 Apr, 1992. Chart 1d. 2- Ladder Bottom Building: • The candlestick pattern at the bottom of the ladder is a bullish 5-bar reversal pattern. • It is formed by following these characteristics: • The first three long black chandeliers, which resemble the formation of three black ravens, with successive lower openings and closings • The fourth is also a black candlestick but with a short body and an upper wick. • The fifth white candle that opens on the body of the fourth candle Example: CMA,30 Jul, 2012. Chart 1d. 3- Rising Three Methods & Falling Building: • The Rising Three Methods or Falling is a bullish 5-candle continuation candlestick pattern. • It has a large green candle, 3 small red ones and a large green one that closes over the others. Or Contrary • The three descending methods are the opposite of the three ascending methods and is a bearish continuation candlestick pattern. Falling Three Methods The three descending methods are the opposite of the three ascending methods and can be seen in a downtrend. The first bar in this pattern is dark bearish with a large real body. The next candles are expected to be smaller, bullish, light-colored ascending candles. These bars should not go beyond the maximum or minimum of the first bar. The last candle to complete the pattern must be lower than the close of the previous candle and must close below the close of the first candle. That chart pattern experiences a price decline, recovers during the corrective phase, and then the decline resumes. The chandelier behaves in theory as it does in real life. It is a bearish continuation 71 percent of the time and a reversal the rest of the time. Unfortunately, with only 64 samples from 4.7 million candle lines studied, quality performance statistics are as rare as the candle itself. Example: KSU ,24 Dec, 2001. Chart 1d. Rising Three Methods Using three methods is a bullish continuation pattern that forms in an uptrend and the conclusion of which sees a resumption of that trend. This is the opposite of the three-drop method. The three-method bottom-up pattern is formed when the price of a security meets these characteristics: The first bar in the pattern is a bullish candle with a large real body within an obvious uptrend. The next few candles, usually three consecutive small-bodied bearish candles trading above the low and below the high of the first candle. The final bar is another bullish candle that has a large real body that breaks above the high and closes above the high and close of the first candle, suggesting that the bulls have once again controlled the direction of the value. The bulls are in full control before pausing a bit to see if there is enough conviction in the trend. The series of small candles that fall between the first and the fifth candle in the ascending three-method pattern is considered a period of consolidation before the uptrend resumes. The decisive bullish candle is proof that the sellers did not have enough conviction to reverse the previous uptrend and that the buyers have regained control of the market. Active traders can apply the pattern as an indication to include in their long positions. Example: OMGBTC ,14 Sep, 00:00, 2008. Chart 6h. 4- Bullish Breakaway Building: • The breakaway candlestick pattern is a reversible five-bar candlestick pattern. • It is a counterpart to Bearish breakaway • The first candle must be long. • The next three candles must be spinning tops. • The second candle must also create a space between the first and itself. • The fifth candle must be a long candle that closes within the body space of the first two candles. Example: DISCK ,06 May, 2015. Chart 1d. 5- Ladder Top Building: • The Ladder Top candlestick pattern is a 5-bar bearish reversal pattern that appears at the end of an uptrend. • You can identify it with the following characteristics: • The first three candles are always white with long real bodies that open and close above the open and close levels of the previous candle. • The fourth candle should have a short white body with a long lower wick. • The fifth candle should be a long black candle that opens below the true body of the fourth candle. • Its opposite is Ladder Bottom. How to identify the candlestick pattern at the top of the ladder? The appearance of the candlestick pattern at the top of the ladder is a very rare phenomenon that occurs very rarely. As we already know that it is a bearish reversal pattern, therefore the predominant trend must be an uptrend or an uptrend. There are a few other suggestions that can be used to identify the pattern at the top of the ladder. The first three candles are always white with long real bodies that open and close above the open and close levels of the previous candle. The fourth candle should have a short white body with a long lower wick. The fifth candle should be a long black candle that opens below the true body of the fourth candle. Example: DISCK ,05 Dec, 2016. Chart 1d. 6- Mat Hold Bullish & Bearish Building: The bullish Mat Hold Japanese candle formation is a highly reliable trend continuation pattern, which occurs in uptrend or downtrend markets and indicates that there is a high probability that the market will continue with the general trend of its trend. real. Example: With this we have finished all the relevant patterns in candles, congratulations you have finished everything. You can go easy, there are others but they are not relevant and they are created by other authors. These are the main ones. They work mostly in Forex and in cryptocurrencies from time to time they are useful, this topic is wide, but I like to teach a completely complete guide. This has just started, the next topic will be Heikin Ashi where it will not be as long as this, but I will try to explain ways to use it. Then we will continue with Line, BaseLine, etc. Thank you very much for supporting.
COINBASE:BTCUSDEducation
by UnknownUnicorn18500526
2
One Line Patterns, Guide Part 5Guide Candles Patterns Candlestick patterns are usually quite good when trying to finish an analysis as it can help you confirm a trend. Basic Candles - One Line Pattern 1- Bearish Belt Hold Description: Bearish Belt Hold is a one-line pattern formed by the basic opening candle Black Marubozu. There is no source that provides information on how short the bottom shadow should be. We adopt that it should be no more than 25 percent of the candle. The pattern has to occur in an uptrend. The trend rarely changes on the next candle. The pattern slows it down and the turning point occurs at the next closest candles. However, it is not the rule. As with all one-line patterns, it is worth waiting for a few candles for a signal confirmation. The bearish belt retention pattern can occur in combination with another pattern. For example, it can be the second line of patterns like Bearish Engulfing, Dark Cloud Cover, and Three Inside Down. In this case, the most important thing is the pattern made up of multiple lines. When the Bearish Belt Hold pattern is made up of a very long candle (three times as long as the average duration of the last n candles), it can create a very strong resistance zone. Building: • Black body • No upper shadow • Short lower shadow • Appears as a long line Example: HD,23 Feb, 2016. Chart 12h. 2- Hammer Description: The hammer is a frequent pattern of a line that appears as a long line in a downtrend. It is characterized by a candle that has a long lower shadow, two or three times longer than the body. This requirement implies that a candle can be one of the following: white top or black top. Most fonts allow the presence of a superior shadow. Accepts the top shadow up to the length of the candle body. Also, the entire body of the candle must be positioned below the trend line to consider the pattern as valid. Although the pattern belongs to the group of bullish reversal patterns, very often it happens that it is simply a short pause in the bear market, after which the price moves even lower. The hammer works best in a long downtrend, and its appearance after dips that last only two or three candles generally does not matter. The strong meaning has its occurrence within a support zone. Like any one-line pattern, the hammer requires a confirmation within the next two or three candles, during which the closing prices should be higher than the closing price of the body of the pattern. The hammer may also appear, for example, as a second line of the Bullish Harami pattern and as a first and second line of the Lower Claws pattern. It was already mentioned that the height of the Hammer's lower shadow cannot exceed more than three times the height of the body. If a lower shadow exceeds that height, we deal with the Takuri line pattern. In other words, the Takuri Line is like the Hammer but with a very long lower shadow. Building: • White or black small-bodied candle • No upper shadow or the shadow cannot be longer than the body • Lower shadow two to three times longer than the body • If the space is created at the opening or closing, it makes the signal stronger • Appears as a long line Example: UNH,12 Jan, 2012. Chart 1d. 3- Southern Doji Description: The Southern Doji is a pattern that belongs to the group of one-line patterns. Your basic candle is any type of doji candle except the Four Price Doji because at least one shadow is required. A downtrend is required before this pattern occurs. Southern Doji can reverse a downtrend or slow it down. After the appearance of the pattern, it is recommended to wait for its confirmation. The Southern Doji pattern can occur on the same candle line in combination with another pattern, for example Bullish Doji Star, or on the second candle with the Morning Doji Star pattern. Such a situation reinforces the strength of the signal. The pattern made up of multiple lines is considered stronger. Building: • A doji candle with at least one shadow • If the candle before this pattern is a doji type, the body of the pattern must be below • If the candle before this pattern is not a doji candle, then Or in the case of a black candle, the open on the next candle cannot be higher than the close on the previous candle. Or in the case of a white candle, the open at the next candle cannot be higher than the open at the previous candle. • The high price above the low price of the previous candle • Price high at or below the trend line • The length of the shadows is not important Example: HPE,15 Jan, 2020, Chart 1d. 4- Bullish Belt Hold Description: Bullish Belt Hold is a one-line pattern formed by the Opening White Marubozu basic candle. There is no source that provides information on how short the top shadow should be. We adopt that it should be no more than 25 percent of the candle. The pattern has to occur in a downtrend. The trend rarely changes on the next candle. The pattern slows it down and the turning point occurs at the next closest candles. However, it is not the rule. As with all one-line patterns, it is worth waiting for a few candles for a signal confirmation. The bullish belt retention pattern can occur in combination with another pattern. For example, it may be the second line (White Marubozu Opening appearing as one long line) of patterns such as Bullish Engulfing, Piercing, and Three Inside Up. In this case, the most important thing is the pattern made up of multiple lines. When the Bullish Belt Hold pattern is made up of a very long candle (three times as long as the average duration of the last n candles), it can create a very strong support zone. Building: •White body •No lower shadow •Short top shadow •Appears as a long line Example: HPE,04 Nov, 2019, Chart 1d. 5- Hanging Man Description: Hanging Man is a pattern that is very popular with analysts in a similar way to Hammer's opposite pattern. Perhaps this is a consequence of the impressive name that refers to the shape of the candle that resembles a hanged man. The pattern appears in an uptrend as a long line and is characterized by a long lower shadow, at least twice the length of the body. Almost all fonts allow minimal upper shadow, so we assume that its length cannot be longer than the body. Hanging Man belongs to the group of bearish reversal patterns. However, if a strong support zone developed before the pattern occurred, it is often just a temporary slowdown in price increases. It works best in a longer uptrend, and its occurrence after several days of rallies generally doesn't matter. The correct interpretation of the Hanging Man pattern requires a thorough analysis of the market on the chart. The meaning of the pattern will be stronger if it occurs in a significant resistance zone. Like any pattern of a line, it must be confirmed in two or three consecutive candles, whose closing prices must be lower than the closing price of the pattern. However, as with other spike patterns, many active market players open positions without waiting for any confirmation. The Hanging Man pattern can be formed on the second line of other patterns like Bearish Harami, for example. Building: • White or black small-bodied candle • No upper shadow or the shadow cannot be longer than the body • Lower shadow at least twice as long as the body • If the space is created at the opening or closing, it makes the signal stronger • Appears as a long line • The body completely above the trend line Example: HPE,11-20 Nov, 2020, Chart 1d. 6- Takuri Line Description: The Takuri Line pattern is very similar to the Hammer. The only difference is that the length of Hammer's lower shadow cannot exceed more than twice the length of his body, while the lower shadow of Takuri Line cannot be shorter than at least three times his body. The Takuri line is most reliable when it forms in a clear downtrend or within a support zone. An occurrence of the Takuri Line pattern after short-term dips generally doesn't matter. Very important is your market context. In the algorithm implemented inside we use some constraint in which the candle is recognized as a valid pattern only when the body is completely located below the trend line. The Takuri line pattern that appears after the price gap should look like a stronger signal, but as with every one-line pattern, it is good to wait for confirmation of the signal on subsequent candles. However, aggressive traders often take the position immediately after the opening of the next gap candle, as it provides the opportunity for dynamic price movement to the upside. Takuri in Japanese denotes bottom fishing, which is a fishing technique used to catch fish that are found near the bottom of the sea. Building: • White or black small-bodied candle • No upper shadow or the shadow cannot be longer than the body • Lower shadow at least three times longer than the body • If the space is created at the opening or closing, it makes the signal stronger • Appears as a long line Example: HPE,10 Dec, 2020, Chart 1d. 7- Gapping Down Doji Description: The basic candle of the Gapping Down Doji pattern can be any Doji candle except four-price Doji. The high price of the pattern should be below the low price of the previous candle. The pattern has to appear in a downtrend as only then can you predict its continuation. It is recommended to wait for the confirmation of the signal on the next candle. Especially that the doji candle can be part of a different pattern, such as Bullish Abandoned Baby or Bullish Tri-Star, which are bullish reversal patterns. Building: • A doji candle with at least one shadow • The pattern's high price must be lower than the previous candle's low price (i.e. a price difference is required) • One candle earlier, the pattern cannot be a four price Doji Example: IBM,18 Jan, 2002, Chart 1d. 8- Northern Doji Description: The basic candle of the Gapping Down Doji pattern can be any Doji candle except four-price Doji. The high price of the pattern should be below the low price of the previous candle. The pattern has to appear in a downtrend as only then can you predict its continuation. It is recommended to wait for the confirmation of the signal on the next candle. Especially that the doji candle can be part of a different pattern, such as Bullish Abandoned Baby or Bullish Tri-Star, which are bullish reversal patterns. Building: • A doji candle with at least one shadow • The pattern's high price must be lower than the previous candle's low price (i.e. a price difference is required) • One candle earlier, the pattern cannot be a four price Doji Example: CVX,07 Aug, 2020, Chart 1d. 9-Bearish Strong Line Description: The strong bearish line is a one-line pattern that can be classified as either a bearish reversal or a bearish continuation, depending on the context of the market in which it was formed. If the whole body is placed below the trend line, we are facing a bearish continuation variant. When the opening price is above the trend line, we have a bearish reversal pattern. The pattern can be made up of the following basic candles: Long Black Candle, Black Marubozu, Opening Black Marubozu or Closing Black Marubozu. What is crucial is that the body of the candle should be at least three times as long as the average body of the last 5 or 10 candles. Some other authors, for example, Bulkowski, are describing the pattern called Long Black Day. In our approach, what they treat as a Long Black Day, we call it Long Black Candle, and it is a basic candle. We introduce the Bearish Strong Line pattern, because in addition to the case where the candle contains both shades (Long Black Candle), we also allow marubozu candles. Makes sense, because why exclude a perfectly strong black candle just because one or two shades don't exist? The strong bearish line forms a resistance zone, which is stronger when the candle appears with a higher trading volume. It may happen that at the same time the pattern can be considered as the Bearish Belt Hold pattern (Open of the basic candle Black Marubozu). Such an occurrence of Bearish Belt Hold should be seen as very bearish because we are dealing with a candle body that is at least three times higher than the average body of the last 5 or 10 candles. There are even more patterns in which the strong bearish line can appear. For example, Piercing, Bullish Harami, Bearish Engulfing, Dark Cloud Cover. As a general rule of thumb, the pattern should not be ignored as it forms a significant resistance zone. It can be especially important in the context of bullish patterns where the strong bearish line exists. Strong bearish line occurs often on charts, which makes this pattern useful from a trading perspective. However, its efficiency must be evaluated for a particular market / asset. Building: • Black body • No upper and lower shade required • None of the shadows can be bigger than the body • The body of the candle is three times higher than the average body of the last 5 or 10 candles • Appears as a long line Example: CSCO,21 Jun, 2012, Chart 1d. 10- Gapping Up Doji Description: The basic candle of the Gapping Up Doji pattern can be any Doji candle except four-price Doji. The low price of the pattern should be above the high price of the previous candle. The pattern has to appear in an uptrend as only then can you predict its continuation. It is recommended to wait for a confirmation of the signal on the subsequent candles. Especially that Gapping Up Doji pattern can occur as a second line in other bearish reversal patterns made up of multiple lines, such as Bearish Doji Star, Bearish Abandoned Baby. Gapping Up Doji is a pattern that rarely occurs. Building: • A doji candle with at least one shadow • The low price of the pattern has to be higher than the high price of the previous candle (ie a price difference is required) • A candle before the pattern cannot be a four price Doji. Example: BAC,21 Aug, 2009, Chart 1d. 11- One-Candle Shooting Star Description: The shooting star of a candle is a pattern that many authors describe very differently, which causes confusion. Nison in the first edition of his book describes One-Candle Shooting Star as a one-line pattern. However, in the second edition of 2001, he included the pattern in the two-line pattern group, although he provided examples as if it were a one-line pattern. Morris concludes that although the pattern belongs to the group of one-line patterns, it must be seen as composed of two lines, because when looking for it we must also take into account the previous candle. Shimizu points out that the star occurs when a price gap occurs between the candles, but in the example that the shooting star describes there is no such gap visible. Bulkowski found the compromise solution, distinguishing the shooting star of one candle and the shooting star of two candles. One-Candle Shooting Star is a very distinctive pattern, which occurs in an uptrend. It has a long upper shadow, at least twice the size of the body. What's more, the longer the shadow, the more reliable the pattern. The lower shadow can exist, however it cannot be larger than the body. The long upper shadow is a warning that market participants are no longer accepting of the high prices. As with any one-line pattern, it is necessary to wait for the confirmation of a trend reversal signal on the next candles whose closing prices should be significantly lower than the pattern's low price. Some traders may want to be more aggressive and start entering positions when the pattern occurs. The shooting star of a candle often appears as the first line of two-line patterns as a bearish engulfing. Such a bearish engulfing pattern is then a very strong bearish reversal signal. One-Candle Shooting Star can also occur as a second line of a Bearish Harami pattern and the first line of a Tweezers Top pattern. If the candles that follow a candlestick's shooting star close above its upper shadow, it should be interpreted as a signal canceling the pattern. Building: • White or black small-bodied candle • No lower shadow or the shadow cannot be longer than the body • Upper shadow at least twice as long as the body • If the space is created at the opening or closing, it makes the signal stronger • Appears as a long line Example: EBAY,10 Mar, 2010, Chart 1d. 12- Bullish Strong Line Description: The strong bullish line is a one-line pattern that can be classified as a bullish reversal or a bullish continuation, depending on the context of the market in which it was formed. If the whole body is placed above the trend line, we are facing a bullish continuation variant. When the opening price is below the trend line, we have a bullish reversal pattern. The pattern can be formed by the following basic candles: Long White Candle, White Marubozu, Open White Marubozu or Close White Marubozu. What is crucial is that the body of the candle should be at least three times higher than the average body of the last 5 or 10 candles. Some other authors, for example Bulkowski, are describing the pattern called Long White Day. In our approach, what they treat as a Long White Day, we call it Long White Candle, and it is a basic candle. We introduce the Bullish Strong Line pattern, because in addition to the case where the candle contains both shades (Long White Candle), we also allow marubozu candles. It makes sense, because why exclude a perfectly strong white candle just because one or two shades don't exist? The strong bullish line forms a support zone, which is stronger when the candle appeared with a higher trading volume. It may happen that, at the same time, the pattern can be considered as the Bullish Belt Hold pattern. Such a Bullish Belt Hold occurrence should be seen as very bullish because we are dealing with a candle body that is at least three times higher than the average body of the last 5 or 10 candles. The strong bullish line can also appear within other patterns, for example as the first line of dark cloud cover and bearish harami, or as the second line of bullish penetration and engulfing. There are even more patterns in which the strong bullish line can appear. As a general rule of thumb, the pattern should not be ignored as it forms a support zone, which can be especially important in the context of bearish patterns where the strong bullish line exists. The strong bullish line occurs quite frequently on the charts, which makes this pattern useful from a trading perspective. However, its efficiency must be evaluated for a particular market / asset. Building: •White body •No upper and lower shade required •None of the shadows can be bigger than the body •The body of the candle three times higher than the average body of the last 5 or 10 candles •Appears as a long line Example: EBAY,16 Feb, 2010, Chart 1d.
COINBASE:BTCUSDEducation
by UnknownUnicorn18500526
2
Trading Basics Part 1:How Candlesticks Work! Hello,Traders! Japanese Candlesticks are thought to have been invented by the Japanese rice traders And then made their way into the West where they were used for stocks, forex and commodity trading. Reading candlesticks is quite easy: the body represents an area that indicates the price distance between the open and close of the candle, while wick’s ends indicate the full magnitude of the movement in-between open and close. Thus, when picking the timeframe for your chart, you are deciding on how much time will be contained between open and close of each candle. If open is below the close, the candle is bullish, and if open is above the close, the candle is bearish, which is usually represented by different colors of the bodies and wicks on the chart, typically, green and red. Some of you might ask me, why am I explaining things that seems to be obvious and self evident, yet my experience of Coaching, paints a different picture, with the candlesticks being undervalued and misunderstood by many, despite them being the staple of technical analysis. In my trading strategy, which is based on multi timeframe top-down technical analysis, we examine multiple timeframes, from 1 week to 1 hour, going from higher to the lower timeframes. Looking for strong levels on weekly and daily and for patterns and confirmations on 4 hour and 1 hour charts. Which means that we are opening 1 week/1 day candle like a Russian doll, finding multiple candles inside the other. We enter the trade only if we are getting the same bias on all timeframes that were of our interest! If you found my post helpful and interesting, please, like comment and subscribe! Thank you!
Education
by TopTradingSignals
26
Two Line Patterns, Part 6 GuideGuide Candles Patterns Candlestick patterns are usually quite good when trying to finish an analysis as it can help you confirm a trend. Basic Candles - Two Line Patterns 1- Bearish Doji Star Description: The first Bearish Doji Star line has to be a white candle that appears as a long line (White Candle, Long White Candle, White Marubozu, White Marubozu Opening or White Closed Marubozu). The next candle is any doji candle except the four price Doji. The body of the doji is above the body of the previous candle. The length of the doji shadows does not matter. Bearish star Doji appears in an uptrend and belongs to the group of bearish reversal patterns. Its appearance must be confirmed in the following candles. This pattern is distinguished by a space between the high of the first candle and the low of the next candle or between the bodies of these two candles. The first confirmation is when the gap in the candlestick pattern is covered. It can be a black candle whose body is completely below the body of the doji. Another stronger type of confirmation is when an uptrend line or support zone is broken. Building: First candle • Or a candle in an uptrend • Or white body Second candle • Or a doji candle • Or one body above the body of the first candle Example: BAC,24 Jun, 2002. Chart 1d. 2- Bullish Separating Lines Description: The bullish parting lines are a two-line bullish continuation pattern. Her two candles appear as a long row. The first line is a black candle while the second is white. The name of the pattern comes from the fact that the opening price of the first candle is equal to the opening price of the second line, that is, the candles spread in opposite directions. Building: First candle •Or an uptrend candle •Or black body •Or appears as a long line Second candle •Or white body •Or the opening price is equal to the previous opening price Example: TRV,04 May, 2007. Chart 1d. 3- Matching High Description: Matching High is built with two marubozu sails that have white bodies. In other words, it can be a white Marubozu or a close-up white Marubozu. The first line of the pattern appears as a long line, while the second can be long or short. Both lines of candles should close at the same level. Also, the open of the second candle must be higher than the open of the previous candle. The Matching High belongs to the group of bullish reversal patterns. Its appearance on the chart must be confirmed in the following candles, that is, breaking the closest support zone, which can be formed by the first line of a Matching High pattern. The best confirmation is in the form of a black candle that the closing price is below the opening price of the line of the first pattern. Building: First candle • Or a candle in an uptrend • Or white body • Or without upper shadow • Or appears as a long line Second candle • Or white body • Or the opening price is higher than the previous opening price • Or the closing price is at the level of the previous closing price • Or without upper shadow Example: PG,04 Nov, 2010. Chart 1d. 4- Bearish Engulfing Description: The Japanese name for the bearish enveloping pattern is tsutsumi, which means the Japanese art of packaging and is derived from the verb whose meaning is to wrap (a present). In English, we use the word wrap because the second line wraps (overlaps) the first line of the pattern. Bearish Engulfing is a two-line pattern in which the body of the white candle in the first line is engulfed by the body of the black candle in the second line. The first line can be any basic white candle, appearing as a long or short line. It can even be a doji candle, except for the four price Doji. The second line is any black candle that appears as a long line: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu. Shadows don't matter what is explained in the following article: Two-line patterns. The pattern appears in an uptrend and predicts its reversal. If the volume of operations grows in the second line, the reliability of the pattern is higher. Bearish engulfing pattern needs confirmation on subsequent candles. Morris created the Three Outside Down pattern as confirmation of the bearish engulfing. In general, it is recommended to confirm all patterns. Confirmation can be in the form of breaking out of the nearest support zone or a trend line. It is crucial where on the chart a bearish envelope appears. Depending on the market context, the candlestick pattern may just be a short break before the market rallies. Especially if below a bearish engulfing there is a strong support area. If a bearish engulfing pattern is confirmed, its second line may form a resistance zone. Building: First candle • Or a candle in an uptrend • Or white body Second candle • O black body • Or the body of the candle wraps around the body of the previous candle (white) Example: MCD ,20 Dec, 2012. Chart 1d. 5- Bullish Tasuki Line Description: The Tasuki bullish line belongs to the group of tasuki patterns and predicts a reversal of the downtrend. Both candles appear as a long row. The first line has a black body, while the second line has a white body. The length of the shadows doesn't matter; however, the volume (if available in the given market) of the second line is significant. The relation of the bodies is insignificant. The pattern requires confirmation, that is, to break out of the nearest resistance zone or trend line. It happens that a bullish Tasuki line appears as a second and third line of a falling Tasuki gap or three methods of falling gap. Building: First candle • Or a candle in a downtrend • O black body • Or the high price above the previous low price • Or appears as a long line Second candle • Or white body • Or the opening price greater than or equal to the previous closing price • Or the closing price above the previous opening price • Or appears as a long line Example: DIS,16 Apr, 2012. Chart 1d. 6- Matching Low Description: The Matching Low belongs to the patterns that occur less frequently in the charts. Having two candles with no lower shadows in a row (i.e. closing Black Marubozu or Black Marubozu), closing at the same price, is an unusually rare situation. The first line of the pattern appears as a long line in a downtrend. The second line opens below the line of the previous candle. As already mentioned, both candles close at the same level. The pattern is bullish reversal and appears in a downtrend. It must be confirmed in the following candles. Your front line acts as a resistance zone. The classic interpretation of the Matching Low pattern is composed of two candles with no lower shadows (the upper shadow is allowed). Bulkowski, however, relaxed this requirement, resulting in significantly more recognized patterns. Building: First candle • Or a candle in a downtrend • O black body • Or no lower shadow • Or appears as a long line Second candle • O black body • Or the opening price is below the previous opening price • Or the closing price is at the level of the previous closing price • Or no lower shadow Example: NDAQ,21 Nov, 2003. Chart 1d. 7- Bearish Harami Description: Bearish Harami is a two-line pattern in which the body of the white candle in the first line wraps around the body of the black candle in the second line. The first line can be any basic candle with a white body, appearing as a long line, i.e .: White Candle, Long White Candle, White Marubozu, Opening White Marubozu, Closing White Marubozu. Candles that are spinning tops, even with white bodies, cannot appear on the first line. The second line can be any basic black candle, appearing as a long or short line. It can even be a doji candle, except for the four price Doji. Shadows don't matter what is explained in the following article: Two-line patterns. The pattern appears in an uptrend and predicts its reversal. The Bearish Harami pattern needs confirmation on subsequent candles. Morris created the Three Inside Down pattern as confirmation of the Bearish Harami. The pattern can be confirmed by breaking the nearest support zone or a trend line. If a candle that follows the appearance pattern closes above the opening price of the second line (i.e. black candle), the uptrend is likely to continue. On the contrary, when a candle that follows the pattern closes below its second line, there is a possibility that the uptrend will stop. One should be careful when the front line of a bearish Harami has a long white body, as it can form a strong support zone. The market context in which a bearish Harami is developing is more important than the bodies of the candles or the length of the shadows. Building: First candle • Or a candle in an uptrend • Or white body Second candle • O black body • Or the body of the candle wrapped by the body of the previous candle (white) 8- Dark Cloud Cover Description: Dark cloud cover is among the most popular candle patterns. Your first candle must be a white candle that appears as a long line (White Candle, Long White Candle, White Marubozu, White Marubozu Opening, or White Closed Marubozu). The second candle is a black candle that appears as a long line (Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, or Closing Black Marubozu). The opening price of the second candle should be above the high of the previous candle. However, it is acceptable that these two prices are the same. The close of the second candle should be below the midpoint of the first candle, but not below its open. Dark cloud cover is a classic bearish reversal pattern, appearing at the end of an uptrend. After definite rallies, the second candle in the pattern opens creating a price gap, however, it closes below the midpoint of the previous candle, demonstrating the weakness of the market. The reliability of the pattern is higher if the trading volume increases on the second line. Like any other pattern, it must be confirmed by the following candles. Confirmation can be, for example, in the form of breaking a support level or a trend line. If the pattern managed to reverse an uptrend, its second candle creates a strong resistance zone. Building: First candle • Or a candle in an uptrend • Or white body Second candle • O black body • Or the opening greater than or equal to the previous maximum • Or the close below the midpoint of the previous candle • Or the close above the previous open Example: JPM , 20 Sep, 10, 1d Chart. 9- On Neck Description: The On Neck is a two-line bearish continuation pattern. The first line is a candle that has a black body, which appears as a long line. The second line is a candle with a white body, but the length of the upper and lower shadows cannot exceed more than twice the length of the body. The closing price of the second candle is at the level of the low price of the first candle. The pattern appears in a downtrend and predicts its continuation. It should be confirmed in the following candles with a candle that closes below the opening price of the second line. Building: First candle • Or a candle in a downtrend • O black body • Or appears as a long line Second candle • Or white body • Or the opening price below the previous closing price • Or the closing price is equal to the previous low price Example: NEM , 07 Oct, 2002, 1d Chart. 10- Bearish Harami Cross Description: The bearish Harami Cross is a bearish two-line reversal pattern. The first candle envelops the second, being a doji candle, including the shadows. The first line of the pattern can be any white candle that appears as a long line, that is: White candle, Long white candle, White Marubozu, White Marubozu that opens, White Marubozu that closes. Tops with white bodies are not accepted. The second line is a doji candle that has two shadows that form a cross. The Bearish Harami Cross appears in an uptrend and predicts its reversal. The patterns should be confirmed on the next closest candles. A doji candle appearing as the second line indicates market indecision. Interestingly, to recognize the pattern as valid, your first line must be a long white candle, which can become an important support zone. For this reason, care must be taken when such a pattern forms on the chart. Building: First candle • Or a candle in an uptrend • Or white body • Or appears as a long line Second candle • Or a doji candle with two shadows • Or the candle (including the shadows) is enveloped by the body of the previous candle Example: MRK, 06 Feb, 2009, 1d Chart. 11- Descending Hawk Description: The Descending Falcon is a bearish two-line reversal pattern that belongs to the harami family of patterns. The body of the candle in the first line wraps around the body of the second line. The shadows do not matter with respect to both candles. The first line of the pattern can be any candle with a white body, which appears as a long line. The following candles are allowed: White Candle, Long White Candle, White Marubozu, Opening White Marubozu, Closing White Marubozu. Candles classified as doji or spinning top are not allowed. The Descending Falcon's second candle can be any white candle, appearing as a long or short line, i.e., Short White Candle, White Candle, Long White Candle, White Marubozu, White Marubozu Opening, White Marubozu Closed. Candles classified as doji or spinning top are not allowed. Controversies about how to consider bodies and shadows are described in this article: Two-line patterns. The Descending Falcon appears in an uptrend predicting its reversal. It has to be confirmed in the following candles in the form of a breakout of the support area or a trend line and closing significantly below. Care must be taken in the first line that forms a support zone. Building: First candle • Or a candle in an uptrend • Or white body • Or appears as a long line Second candle • Or white body • Or the body of the candle wrapped by the body of the previous candle • Either appears as a long or short line Example: KO , 08 Mar 9:00, 2011, 12h Chart. 12-Piercing Description: The Piercing is a bullish equivalent pattern of the bearish Dark Cloud Cover. The first day of the pattern is a black candle that appears as a long line in a downtrend, except for the tops and doji candles. In other words, the first line can be one of the following basic candles: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu. The candle in the second line is exactly opposite to the first line, that is, it can be one of the following basic candles: White candle, Long white candle, White Marubozu, Opening white Marubozu, Closing white Marubozu. The candle in the second line should appear as a long line. Its opening must be less than the low of the previous candle. However, it is acceptable that both prices are the same. The closing price of the second candle should be between the midpoint and the open of the previous candle. The Piercing pattern can look like a classic reverse pattern due to its appearance. Price opens lower after the first black candle, however the market shows its strength and closes above the midpoint of the first line. In the stock market, the reliability of the pattern is higher when an increase in trading volume can be observed on the second line. Like any other pattern, the Piercing pattern must be confirmed by the following candles. Confirmation can be, for example, in the form of a breakout of a support zone or a trend line. If a perforation pattern is confirmed, its second line acts as a support area. Building: First candle • Or a candle in a downtrend • O black body Second candle • Or white body • Or the opening below or equal to the previous low • Or the close above the midpoint of the previous candle's body • Or the close below the previous opening Example: PFE, 06 Feb, 2012, 1d Chart. 13-Falling Window Description: The descending window is classified as a bearish continuation pattern. The lines of both patterns can be basic candles, appearing as a long or a short line. The only exception is the Four Price Doji, which cannot appear as part of the pattern. The pattern is characterized by a price gap that appears between the low of the first candle and the high of the second candle. Windows are known in Western technical analysis and are often referred to as gaps. The Japanese are very particular about windows and claim that the trend will continue until the gap is closed. Shimizu mentions that in Japan they also call holes hollows. Morris doesn't think of windows as patterns that look strange. That is, he is not doing the same with patterns like kick up / kick down, two candlestick shooting star / inverted hammer or others, where a price gap is also required. Nison and Bulkowski also find windows as patterns, but note that Bulkowski's interpretation is somewhat different than ours (see Ascending Window for more details). Nison mentions that windows are among the most important candle patterns. In our interpretation, for the descending window, it is sufficient that the closing price of the first candle is below the trend line, while the opening price can be located above. The assumption that the descending window pattern requires a few candles in a downtrend, before it occurs, can lead to missing very significant signals. Particular attention should be paid to the second candle of the pattern, which may be part of another conflicting pattern, that is, a bullish pattern. In such unclear situations, the focus should be on the general market context and the resistance / support lines. Building: First candle • Or any candle except the four price Doji • Either a candle in a downtrend or closing below the trend line Second candle • Or any candle except the four price Doji • Or the candle is high below the low of the previous candle Example: INTC ,21 Sep, 2012, 1d Chart. 14-Rising Window Description: The ascending window is classified as a bullish continuation pattern. The lines of both patterns can be basic candles, appearing as a long or a short line. The only exception is the Four Price Doji, which cannot appear as part of the pattern. The pattern is characterized by a price gap that appears between the high of the first candle and the low of the second candle. Nison and Bulkowski in their books provide examples with a visible uptrend prior to the occurrence of a pattern that can be confusing. In our interpretation, for the ascending window, it is sufficient that the closing price of the first candle is above the trend line, while the opening price can be below. The assumption that the ascending window pattern requires a few candles in an uptrend, before it occurs, can lead to missing very significant signals. Windows are known in Western technical analysis and are often referred to as gaps. The classical interpretation says that after three occurrences of the ascending window, the trend can be reversed. Most often, the Popup Window acts as a support. Nison claims that when a rising window is preceded by a bullish reversal pattern, its reliability is higher. Our research also says that if the second candle of a rising window forms at high volume, its reliability is better. Special attention should be paid to the second candle in the pattern. A black candle or a doji candle can weaken the signal. The second line may be part of another conflicting pattern. Sometimes the Ascending Window can be recognized at the same time also as the Bearing Doji Star or the Two-Candle Shooting Star. In such unclear situations, the focus should be on the general market context and the resistance / support lines. A warning is needed for traders who take a position on the second line of the pattern. That is, when the price opens higher, the candle can still close lower producing a black body. So instead of having a rising window, we can have a bearish reversal pattern, for example dark cloud cover or bearish engulfing. Either way, the most important thing is to be consistent. Therefore, when presenting any statistics from the ascending window, it is important to remember which interpretation is used to compare apples to apples. Building: First candle • Or any candle except the four price Doji • Or a candle in an uptrend or closing above the trend line Second candle • Or any candle except the four price Doji • Or the candle is low above the previous high candle Example: PFE, 06 Feb, 2012, 1d Chart. You should have mastered the theory by now. So now it will only be the examples. Time to put it into practice. 15- Bearish Separating Lines Description: Bearish parting lines are classified as a bearish continuation pattern. The first line is a white candle that appears as a long line in a downtrend. The second line is a black body candle that appears as a long line. Both candles open at the same price level and then the prices separate. The pattern appears very rarely on candlestick charts. Building: First candle • Or a candle in a downtrend • Or white body • Or appears as a long line Second candle • O black body • Or the opening price is equal to the previous opening price Example: PFE, 17 Jan, 2003, 1d Chart. 16- Homing Pigeon Description: The Homing Pigeon is a two-line bullish counterpart of the Descending Hawk. It is also closely related to the Bullish Harami pattern. All of these patterns belong to the harami family of patterns. The first line, being a black candle, wraps around the second line, being also a black candle. The length of the candle shadows does not matter. The first candle in the pattern can be any black candle that appears as a long line, i.e .: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu. The second candle can be any black candle that appears as a short or long line, that is, Short Black Candle, Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu. As a bullish reversal pattern, the carrier pigeon must form in a downtrend because it predicts its reversal. The pattern should be confirmed on subsequent candles. It can be, for example, a bullish breakout of a resistance zone or a trend line and a close above the pattern. Otherwise, the appearance of the pattern should be seen as a temporary pause from a price decline. One must be careful because the first line of the Homing Pigeon pattern forms an area of ​​resistance. Building: First candle • Or a candle in a downtrend • O black body Second candle • O black body • Or the body of the candle wrapped by the body of the previous candle Example: JNJ , 15 Mar, 2011, 1d Chart. 17- Thrusting Description: Thrusting is a two-line bearish continuation pattern. It is very similar to the perforation pattern. The first candle is a black candle that appears in a downtrend as a long line. It can be one of the following basic candles: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu. The second candle also appears as a long line but has a white body and opens below the previous low. The second line closes between the midpoint of the previous candle and its closing price. It can be one of the following basic candles: White Candle, Long White Candle, White Marubozu, White Marubozu Opening, White Marubozu Closing. Spinning tops and doji candles cannot appear as part of the pattern. The Thrusting pattern appears in a downtrend that predicts its continuation. The forecast should be confirmed in the form of a black candle following the pattern. That candle should close below the opening price of the second line. If a volume data is relevant to a certain market (for example, stock market), it should increase for the candles that form the pattern. If a white candle follows the pattern, a trend reversal can be expected. In that case, the white candle that follows the pattern should close above the opening price of the first line. Alternatively, the candle can break a trend line or the nearest resistance zone. It is good if a higher trading volume (if available for a given market) accompanies that candle. Building: First candle • Or a candle in a downtrend • O black body • Or appears as a long line Second candle • Or white body • Or the opening below the previous low • Or the close above the close of the previous candle • Or the close below the midpoint of the previous candle's body • Or appears as a long line Example: XOM, 06 Sep, 2006, 1d Chart. 18- Bearish Tasuki Line Description: The Bearish Tasuki line is a bearish two-line reversal pattern, which belongs to the family of tasuki patterns. The first line of the pattern is a white candle that appears as a long line. The second line also appears as a long line, but the candle is black. The length of the shadows doesn't matter; however, the volume (if available in the given market) of the second line is significant. The relationship of the bodies is not important. The pattern requires confirmation, that is, to break out of the nearest resistance zone or trend line. The bearish Tasuki line can appear as a second and third candlestick from patterns such as Upside Tasuki Gap or Upside Gap Three Methods. Since these patterns are bullish, we deal with so-called conflicting lines, that is, opposite patterns that occur at the same time. Building: First candle • Or a candle in an uptrend • Or white body • Or the low price below the previous high price • Or appears as a long line Second candle • O black body • Or the opening price below or equal to the previous closing price • Or the closing price below the previous opening price • Or appears as a long line Example: HD , 26 Jan, 2011, 1d Chart. 19- In Neck Description: The In Neck pattern is a two-line bearish continuation pattern, which implies that the pattern appears in a downtrend. The first line is a black candle that appears in a downtrend. The second line is a white candle, and the length of the upper and lower shadow cannot exceed more than twice the length of the body. Also, the closing price of the second candle should be slightly above the previous closing price (up to 15% of the body of the first line). The pattern should be confirmed by a subsequent candle that closes below the closing price of the second line. The In Neck pattern rarely occurs on candlestick charts. Building: First candle • A candle in a downtrend • Black body • Appears as a long line Second candle • White body • The opening price below the previous closing price • The closing price is slightly above the previous closing price (up to 15% of the body of the first line) Example: INTC, 19 Sep, 2012, 1d Chart. 20- Turn Down Description: The Turn Down pattern is a bearish reversal pattern. Whenever we write about pattern confirmation, we mention that it can be, for example, in the form of a trend line breakout. The Turn Down pattern, and its bullish counterpart, the Turn Up pattern, works exactly like this. The first candle in the pattern can be any basic candle except the four price Doji. It can appear as a long or short line. Your entire body should be above the trend line, although your lower shadow can reach below it. The second line of the pattern has to be a black candle, which appears as either a long or a short line, except for the four price Doji. The body of the candle should be completely below the trend line. The volume of the second candle must be above the average of the last candles. The size of the bodies does not matter. However, as usual, the market context in which the pattern appeared is critical. The Turn Down pattern requires a confirmation on the following candles, in the form of breaking the closest support level. It happens that a price gap is formed between the first and second lines of the pattern. In such cases, the reliability of the pattern is higher, assuming it does not appear within a strong support zone. The reliability of the pattern decreases when the market retreats above the trend line. Building: First candle • Or any uptrend candle except the four price Doji • Or a candle with a body above the trend line Second candle • O black body • Or a candle with a body below the trend line Example: PFE, 22 Oct, 2012, 1d Chart. 21- Bullish Doji Star Description: The first line of the bullish Doji Star is a black candle that appears as a long line (Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu). The next candle is any doji candle, except the four price Doji. The body of the doji is below the body of the previous candle. The length of the doji shadows does not matter. The Bullish Doji star appears in a downtrend and belongs to the group of bullish reversal patterns. Its appearance must be confirmed in the following candles. This pattern is characterized by a space between the low of the first candle and the high of the next candle or between the bodies of these two candles. The first confirmation is when the gap in the candlestick pattern is covered. It can be a white candle whose body is completely above the body of the doji. Another stronger type of confirmation is when a downtrend line or resistance zone breaks. Morris and Bulkowski point out that doji shadows shouldn't be too long. It may indicate that only the doji candle that appears as a short line should be considered valid. However, our tests show that the introduction of this additional condition does not have a significant impact on the number of patterns found. Building: First candle • Or a candle in a downtrend • O black body Second candle • Or a doji candle • Or a body under the body of the first candle Example: MSFT, 30 Dec, 2005, 1d Chart. 22- Inverted Hammer Description: The inverted hammer pattern is made up of two candles. The first candle appears as a long line and has a black body. That means it can be one of the following candles: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu. Candles that are spinning tops, even with black bodies, cannot appear on the first line. The second candle can be a white or black spinning top, appearing as a long or short line. It can be one of the following candles: white top, black top, high wave. The lower shadow does not exist or is shorter than the body. The upper shadow must be at least 2.5 times longer than the body. The pattern appears in a downtrend, predicting its reversal. It should be confirmed in the form of a breakout of a closer resistance zone or a trend line. As always, the pattern requires confirmation on subsequent candles, which means that the nearest resistance zone or trend line should be suppressed. The market context in which the pattern appears is critical. The pattern can occur within the Morning Star three-line pattern, being its confirmation. Morris states that the upper shadow cannot be longer than the body of the candle. This is most likely a typo because the examples in the book feature candles with significantly longer shadows than the bodies. Presumably Bulkowski has noticed this error because, although not directly, he mentions that there are different definitions of the upper shadow. Building: First candle • Or a candle in a downtrend • O black body Second candle • Or a white or black small-bodied candle • Either there is no lower shadow or the shadow cannot be longer than the body • Or upper shadow at least 2.5 times longer than the body • Or the opening below or at the level of the close of the previous candle Example: MRKSY , 08 Apr, 2015, 1d Chart. 23- Turn Up Description: The Turn Up pattern is a bullish reversal pattern. Whenever we write about pattern confirmation, we mention that it can be, for example, in the form of a trend line breakout. The Turn Up pattern, and its counterpart, the Turn Down pattern, works exactly like this. The first candle in the pattern can be any basic candle except the four price Doji. It can appear as a long or short line. Your entire body should be below a trend line, although your upper shadow may reach above it. The second line of the pattern has to be a white candle, which appears as a long or short line, except for the four price Doji. The body of the candle should be completely above the trend line. The volume of the second candle must be above the average of the last candles. The size of the bodies does not matter. However, as usual, the market context in which the pattern appeared is critical. The Turn Up pattern requires a confirmation on the following candles, in the form of breaking the closest resistance level. It happens that a price gap is formed between the first and second lines of the pattern. In such cases, the reliability of the pattern is higher, assuming that it does not appear within a zone of strong resistance. The reliability of the pattern decreases when the market retreats below the trend line. Building: First candle • Or any uptrend candle except the four price Doji • Or a candle with a body below the trend line Second candle • Or white body • Or a candle with a body above the trend line Example: JNJ , 05 Sep, 2012, 1d Chart. 24-Bullish Engulfing Description: The bullish engulfing is a two-line pattern, in which the body of the black candle on the first line is engulfed by the body of the white candle on the second line. The first line can be any basic black candle, appearing as a long or short line. It can even be a doji candle, except for the four price Doji. The second line is any white candle that appears as a long line: White Candle, Long White Candle, White Marubozu, Opening White Marubozu, or Closing White Marubozu. Spinning tops and doji candles are not acceptable. The length of the shadow does not matter, neither in the first nor in the second line. The pattern appears in a downtrend and predicts its reversal. If trading volume data is available for a given market and grows on the second line, the reliability of the pattern is higher. The bullish engulfing pattern needs confirmation on subsequent candles. Morris created the Three Outside Up pattern as confirmation of the Bullish Engulfing. In general, it is recommended to confirm all patterns. Confirmation can be in the form of breaking out of the nearest resistance zone or a trend line. It is crucial where, on the chart, a bullish envelope appears. Depending on the market context, the candlestick pattern may just be a short break before the market declines. Especially if, above a bullish envelope, there is an area of ​​strong resistance. If a bullish engulfing pattern is confirmed, its second line may form a support zone. Building: First candle • Or a candle in a downtrend • O black body Second candle • Or white body • Or the body of the candle wraps around the body of the previous candle (black) It is the opposite of Bearish Engulfing. 25- Kicking Down/Bearish Kicking Description: The Kicking Down pattern (also called Bearish Kicking) is made up of two marubozu candles that appear as long lines. The first candle in the pattern is a white Marubozu; the second line is a BlackMarubozu. The opening of the second line is lower than the previous opening, which forms a price gap. Depending on the trend in which the pattern appears, you can predict its continuation or reversal (see The Kicking Up article). The next candle determines the direction of the price. The pattern is extremely rare, especially in liquid markets. Building: First candle • Or a white Marubozu • Or appears as a long line Second candle • Or a black Marubozu • Or downward price gaps • Or appears as a long line Example: BLK , 21 Apr, 2010, 1d Chart. 26- Tweezers Bottom Description: The bottom of the calipers is classified as a two-line pattern, although it can be made up of more than two candles. The first line can be any candle of any color except the four price Doji. The following candles can be of any color and type, except for the four price Doji. Also, all low prices must be the same. The bottom of the calipers can be part of other patterns in a downtrend. It must be confirmed in the following candles. The pattern occurs rarely. Building: First candle • Or a candle in a downtrend • Or any color • Or any candle except the four price Doji Second candle • Or any candle except the four price Doji • Or any color • Or the low price equal to the previous low price All the following days • Or any candle except the four price Doji • Or any color • Or the low price equal to the previous low price Example: PG , 23 Nov, 2011, 1d Chart. 27- Tweezers Bottom Description: The bottom of the calipers is classified as a two-line pattern, although it can be made up of more than two candles. The first line can be any candle of any color except the four price Doji. The following candles can be of any color and type, except for the four price Doji. Also, all low prices must be the same. The bottom of the calipers can be part of other patterns in a downtrend. It must be confirmed in the following candles. The pattern occurs rarely. Building: First candle • Or a candle in a downtrend • Or any color • Or any candle except the four price Doji Second candle • Or any candle except the four price Doji • Or any color • Or the low price equal to the previous low price All the following days • Or any candle except the four price Doji • Or any color • Or the low price equal to the previous low price Example: PG , 23 Nov, 2011, 1d Chart. 28- Bullish Harami Description: The Bullish Harami is a two-line pattern in which the body of the black candle in the first line wraps around the body of the white candle in the second line. The first line can be any basic candle with a black body, appearing as a long line, that is: Black candle, Long black candle, Black Marubozu, Black opening Marubozu, Black closing Marubozu. Candles that are spinning tops, even with black bodies, cannot appear on the first line. The second line can be any basic white candle, appearing as a long or short line. It can even be a doji candle, except for the four price Doji. Shadows don't matter what is explained in the following article: Two-line patterns. The pattern appears in a downtrend and predicts its reversal. The Bullish Harami pattern needs confirmation on subsequent candles. Morris created the Three Inside Up pattern as confirmation of the Bullish Harami. The pattern can be confirmed by breaking the nearest resistance zone or a trend line. If a candle that follows the appearance pattern closes below the opening price of the second line (i.e. white candle), the downtrend is likely to continue. On the contrary, when a candle that follows the pattern closes above its second line, there is a possibility that the downtrend will stop. Care should be taken when the first line of a bullish Harami has a long black body, as it can form a strong resistance zone. The market context in which a bullish Harami is developing is more important than the bodies of the candles or the length of the shadows. Building: First candle • Or a candle in a downtrend • O black body Second candle • Or white body • Or the body of the candle wrapped by the body of the previous candle (black) Example: BAC , 14 Nov, 2012, 1d Chart. 29- Tweezers Top Description: Description: The upper part of the calipers is classified as a two-line pattern, although it can be made up of more than two candles. It acts as a bearish reversal. The first line can be any uptrend candle of any color except the four price Doji. The following candles can be of any color and type except the Four Price Doji, but all high prices must be the same. The tops of the calipers can be part of other patterns in an uptrend. It must be confirmed in the following candles. Building: First candle • Or a candle in an uptrend • Or any color • Or any candle except the four price Doji Second candle • Or any candle except the four price Doji • Or any color • Or the high price is equal to the previous high price All the following days • Or any candle except the four price Doji • Or any color • Or the high price is equal to the previous high price I did not find an example for this Pattern .. Sorry. 30- Kicking Up/Bullish Kicking Description: The Kicking Up pattern (also called the Bullish Kicking) is made up of two marubozu candles that appear as long lines. The first candle in the pattern is a black Marubozu; the second line is a white Marubozu. The opening of the second line is higher than the previous opening, which forms a price gap. We assume that the pattern can be reversible and continuous. Therefore, the trend prior to the occurrence of the pattern is not important: whenever we are faced with a Kicking Up pattern, the white candle signifies buying demand, predicting the price increase. As Shimizu writes, the bullish line pattern can continue an uptrend or reverse a downtrend. Because the bullish parting lines are quite similar to momentum, we made the same assumption. The pattern is extremely rare, especially in liquid markets. It can be seen as more of an exoticism rather than a seriously negotiated pattern. Building: First candle • Or a black Marubozu • Or appears as a long line Second candle • Or a white Marubozu • Or upward price differences • Or appears as a long line I did not find an example for this Pattern .. Sorry. 31- Bullish Harami Cross Description: The Bullish Harami Cross is a bullish two-line reversal pattern. The first candle envelops the second, being a doji candle, including the shadows. The first line of the pattern can be any black candle that appears as a long line, i.e .: Black Candle, Long Black Candle, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu. Tops with black bodies are not accepted. The second line is a doji candle that has two shadows that form a cross. The Bullish Harami Cross appears in a downtrend and predicts its reversal. The pattern should be confirmed on the next closest candles. A doji candle appearing as the second line indicates market indecision. Interestingly, to recognize the pattern as valid, your first line must be a long black candle, which can become a major resistance zone. For this reason, care must be taken when such a pattern forms on the chart. Building: First candle • Or a candle in a downtrend • O black body • Or appears as a long line Second candle • Or a doji candle with two shadows • Or the candle (including the shadows) is enveloped by the body of the previous candle Example: 32- Last Engulfing Bottom Description: The definition of the latest engulfing bottom is exactly the same as the bearish engulfing pattern, except for the trend requirement. The bearish engulfing bottom appears within an uptrend, while the last engulfing bottom occurs within a bearish trend. One wonders why such a pattern can reverse a downtrend. That is, there is a downtrend, but the bearish momentum slows down a bit because a small white candle appears. However, the next candle has a long black body, which confirms the strength of the bear. In general, most of us would intuitively say that we are facing a bearish continuation pattern. The Last Engulfing Bottom is a good example to explain that the occurrence of a pattern is not equivalent to the price prediction. In the case of the Last Engulfing Bottom pattern, its name gives us a clue that illustrates how it can work. The pattern must be preceded by a bearish engulfing pattern. So we can expect the downtrend to reverse if a price is confirmed on the next candles. If a last engulfing bottom appears alone, that is, it is not preceded by a bearish engulfing pattern, a downtrend is likely to continue. It can be especially true if the next candle closes below the occurrence of the pattern. Prediction of the reversal of the trend requires confirmation, that is, the next candle will close above the pattern. If the volume data is relevant to the analyzed market, it should be taken into account. If it raises for candles with white bodies, the probability of reversing a downtrend increases. Building: First candle • Or a candle in a downtrend • Or white body Second candle • O black body • Or the body of the candle wraps around the body of the previous candle Example: BAC, 25 Apr, 2011. Chart 1d. 33- Bullish Meeting Lines Description: The bullish meeting lines are a two-line bullish reversal pattern. The first line is a black candle that appears as a long line. The second candle also appears as a long line, but the body of the candle is white. Both candles close at the same level. Although the shape of the pattern is simple, it appears very rarely in charts. The pattern should be confirmed on subsequent candles. Visually, the pattern of bullish meeting lines is similar to that of the neck, being a bearish continuation pattern. However, the main difference is in the length of the body of the second line. In the case of the In Neck pattern, the body of the second candle is shorter. Building: First candle • Or a candle in a downtrend • O black body • Or appears as a long line Second candle • Or white body • Or the closing price is equal to the previous closing price Example: T , 28 Jul, 2011. Chart 1d. 34- Last Engulfing Top Description: The description of the latest engulfing top is precisely the same as the bullish engulfing pattern except for the trend requirement. The Bullish Engulfing appears within a downtrend, while the Last Engulfing Top occurs within an uptrend. You may wonder why this pattern can reverse an uptrend. After all, it is not difficult to find short black candles that appear within an uptrend. It is not an unusual situation because, during an uptrend, the price often stops before going higher. However, when the latest engulfing top appears, it should not be ignored, especially when preceded by a bullish engulfing pattern. The ideal setting is where we deal with both patterns on the chart; first having a bullish envelope (the price rises), and after a while a last engulfing ceiling. As the name implies, the last engulfing top symbolizes the end of an uptrend. When such a pattern emerges, one should wait for what happens on the next candles. If a black candle appears and closes significantly lower, then we can expect the reversal of the trend. However, if we are faced with a candle that closes much higher, the uptrend is likely to continue. Building: First candle • Or a candle in an uptrend • O black body Second candle • Or white body • Or the body of the candle wraps around the body of the previous candle Example: MSFT , 20 Sep, 2012. Chart 1d. 35- Two Black Gapping Candles Description: The Two Black Gapping Candles is a bearish continuation pattern. The first and second lines of the pattern can be any candle with a black body, except doji candles. In other words, the following candles can appear within the pattern: Short Black Candle, Black Candle, Long Black Candle, Black Top, Black Marubozu, Opening Black Marubozu, Closing Black Marubozu. If a Black Spinning Top candle appears within the pattern, none of its shadow lengths can exceed more than twice the length of the body (for that reason, the High Have candle cannot appear within the pattern). Doji candles cannot appear within the pattern. The opening price of the candle of the first pattern should be a gap lower than the previous candle. The Two Black Gapping Candles pattern appears in a downtrend and predicts its continuation. As with any other pattern, this one should also be confirmed on the following candles. Your second line can become the first line of some bullish reversal pattern, for example a bullish Harami or a Carrier Pigeon. For that reason, to consider the pattern as confirmed, the next candle must be black with the closing price below the close of the previous candle. In markets where volume data is relevant, trading volume should increase on the candle following the pattern. Building: First candle • Or a candle in a downtrend • O black body • Or opening price gaps lower than the previous candle Second candle • O black body • Or the open below the open of the previous candle but higher than its low • Or the close below the close of the previous candle Example: WMT , 01 Apr, 2002. Chart 1d. 36-Two-Candle Shooting Star Description: The first line of the pattern is a candle with a white body that appears as a long line. It can be one of the following candles: White Candle, Long White Candle, White Marubozu, Opening White Marubozu, Closing White Marubozu. Candles that are spinning tops, even with white bodies, cannot appear on the first line. The second candle can be a white or black top that appears as a long or short line. It can be one of the following candles: white top, black top, high wave. The lower shadow does not exist or is shorter than the body. The upper shadow must be at least 2.5 times longer than the body. The pattern appears in an uptrend, predicting its reversal. It should be confirmed in the form of a breakout of a closer support zone or a trend line. The two-candle shooting star can be part of the evening star, being a three-line pattern. In such a case, reinforce the two-candle shooting star forecast. First candle • Or a candle in an uptrend • Or white body Second candle • Or a white or black small-bodied candle • Either there is no lower shadow or the shadow cannot be longer than the body • Or upper shadow at least 2.5 times longer than the body • Either the opening above or at the level of the close of the previous candle I did not find an example for this Pattern .. Sorry. Remember that it is not necessary to learn all patterns by heart. Just master the theory of hollow candles and you can use these patterns only when necessary. Thank you very much for the support.
COINBASE:BTCUSDEducation
by UnknownUnicorn18500526
57
Bitcoin making a Bullish Harami. Identifying Candlesticks.Keeping it very simple today. Big red candle to the left totally enveloping a green candle to the right = Bullish Harami. It's ok that there is a big red candle to the left. That candle needs to be there or else the current green candle wouldn't be what it is (bullish harami). It's relative. ---- Remember: Never take trades off of candlestick identification alone. Combine with other elements. *I have been trying to get off of caffeine lately, ok. Don't get upset because this isn't a challenging lesson.*
Education
by emehoke
Patterns Candlestick, Guide Part 4.Guide Candles Patterns Candlestick patterns are usually quite good when trying to finish an analysis as it can help you confirm a trend. Basic Candles 11- Long White Candle Description: When analyzing the situation on the chart, it is always more important to observe what is happening at that moment. Therefore, in order to determine whether the candle appeared as a long or a short line, the last appointments are crucial. If market volatility is low for a long time, even a small breakout may be enough to form a long white candle. However, in the same chart below, when market volatility is much higher, a candle has to be appropriately larger to recognize it as a valid long white candle. Many analysts make a mistake when determining whether the candle is a long or a short line, position on historical charts. They forget that by the time a candle is forming, it is not clear what the market will look like in the future. In other words, if we have a candle on the chart today that meets the requirement of a valid long line, it does not mean that the same requirement will be met in the future. What appears to be extremely long today may not be at a later time, when market volatility will grow rapidly. Some authors (eg Bulkowski) classify Long White Candle as a continuation (bullish) pattern. Let us think for a moment whether this should be regarded as a correct interpretation. First, the candle should appear only in an uptrend; otherwise, we could not call this pattern a bullish continuation. But this is not true, as we can find this candle in an uptrend or a downtrend. Second, Long White Candle is not a pattern in itself, it is a basic candle and can be part of both bullish and bearish patterns. Some people choose to think of this candle as bullish, but in fact it may appear as part of, for example, bearish engulfing patterns or dark clouds. Third, if this candle is formed with a low trading volume, it is recommended to be very suspicious as far as its bullish meaning is respected. According to Nison, the appearance of a long white candle body (that is, no shadows) after a series of dips, may indicate a change in the current trend. Especially if the closing price is higher than the close of several previous candles. Nison also adds that when the long white candle appears during an uptrend and breaks some major recent resistance level, there is a good indication of the continuation of the trend. The higher the volume when the Long White Candle is forming, the louder the signal will be. Long white candles, accompanied by a large volume of trades, should also be considered as a support zone. The support level appears within the average and low price of that candle. Others are treating the entire Long White Candle as a support zone. Building: • White paste • Upper and lower shade required • None of the shadows can be bigger than the body • The body of the candle is three times higher than the average body of the last 5 or 10 candles. • Appears as a long row Example: NASDAQ,05 Mar, 2021. Long White Candle. Chart 1d. 12- White Marubozu Description: Marubozu in Japanese means "bald head" or "shaved head". This is because said candle does not have at least one shadow, which implies that the opening or closing price will be equal to one of the maximum prices of the candle. A Marubozu, which does not have both shadows, indicates that the market opened and closed at the extreme levels of that candle. The white Marubozu that appears as a long line, like the Long White Candle, has substantial meaning. It indicates the strength of the market, especially if it is forming with high trading volumes. Depending on how it appears on the chart, it can be thought of as a continuation or reversal candle. White Marubozu that appears in an uptrend may suggest its continuation, especially if it appears after a price gap (Shimizu). As with many other basic candles, White Marubozu can appear within patterns, both bullish and bearish. In a downtrend, White Marubozu can be part of a bullish reversal pattern, for example in Bullish Engulfing. While occurring during an uptrend, it can form a bearish reversal pattern, for example, the Bearish Tasuki Line. Building: • White body • Lack of shadows • Appears as a short or long line Example: ALCOA INC,31 Jan, 2011. White Marubozu. Chart 1d. 13- Closing White Marubozu Description: Closing White Marubozu is a candle belonging to the marubozu group. Depending on its appearance on the chart and how the lower shadow looks, you can predict the continuation of a trend or indicate its reversal. The sail is notable for the absence of the upper shadow, but it must have a body that covers at least 51 percent of the overall height of the sail. If a closing white Marubozu candle appears in an uptrend, it is a much stronger trend continuation signal than the opening white Marubozu candle. This is because the high price and the closing price are the same (no upper shadow), which means that the market has remained strong until the end of the session (if we consider the daily charts). Building: • White paste • No upper shadow • Lower shadow smaller than the body • Appears as a short or long line Example: ALCOA INC,15 Jan, 2012. Closing White Marubozu. Chart 1d. 15- Long-Legged Doji Description: The literature contains many descriptions of doji candles that provide examples of schematic thinking. It is widely accepted that doji candles are neutral. However, it is an extremely important type of candle that must be interpreted differently for different types of situations. An example is a basic long-legged Doji candle. The appearance of this type of doji on a chart can be a sign of a reversal, especially if it occurs after a long white candle. Seiki Shimizu writes that traders often take positions in the direction designated by the candle opening after the long-legged Doji (i.e. if the open is lower, take a short position and vice versa). This is very aggressive behavior; It is important to recognize that when the market returns to trend after the doji, it is seen as a sign of defeating momentary weakness. It is worth remembering how the creation of this candle arises. The opening and closing prices are the same, but during the day (if we use daily candles) we are dealing with extremely rapid growth and decline. Such situations indicate considerable concern among traders. In many cases, these rapid movements take place in a few minutes. It can represent a momentary euphoria causing sharp rises and then a sudden market leak or vice versa. Therefore, the next candle is of great importance for the interpretation of subsequent events. Building: • A doji candle • The opening and closing prices are the same or similar • The upper and lower shadows are very long • The body is located in the middle of the candle or almost in the middle range • Appears as a long line Example: Intel INC,18 April, 2002. Long-Legged Doji. Chart 1d. 15- White Spinning Top Description: The tops are candles with very small bodies. They are different in nature compared to long candles, which show the strength of the trend. In this case we are facing indecision. The importance of a spinning top depends largely on the current situation on the chart. If one or more spinning tops occur in a stable market, it doesn't mean anything in terms of predicting how prices will evolve. However, when the market is growing rapidly and there is this type of candle - long shadow (s) and a small body - this means that, despite the large fluctuations during the session, the market does not have the strength to continue the current trend. Confirmation of this weakness can be the appearance of black candles after the top. When the top appears following a clear trend (downtrend or uptrend) its importance is greater, if at the same time we notice a rapid increase in volume - this situation should be considered as a potential sign of the trend change. In the case of a spinning top, the color of the body, in principle, does not matter, so the interpretation of Black Spinning Top and White Spinning Top is identical. Building: • White paste • At least one shade is required • At least one shadow must be longer than the body • Appears as a long and a short line • If it appears as a long line, none of the shadows can exceed three times the body (otherwise we would have the basic High Wave candle) Example: PFE INC,06 April, 2010. White Spinning Top. Chart 1d. 16- Dragonfly Doji Description: Dragonfly Doji is a basic candle shaped like a Hanging Man pattern (in an uptrend) or Takuri Line (in a downtrend). Due to the identical opening and closing prices, it is classified as a doji candle. The Japanese name means not only "dragonfly" but also bamboo helicopter or bamboo dragonfly (jap. Taketombo), which is a toy helicopter rotor that flies upward when its shaft rotates rapidly. Shimizu points out that the market after the appearance of the Dragonfly Doji can behave as unpredictably as the toy: both go up and down. Morris, on the other hand, draws attention to the fact that such a candle can announce a reversal after a long downtrend, especially when the lower shadow is very long, then we have the pattern called the Takuri Line. A little difference between opening and closing is accepted. Building: • The opening, closing and maximum prices are the same or very similar • Long lower shadow • Appears as a long line Or Example: Intel,14 Sep, 2006. Dragonfly Doji. Chart 1d. 17- Opening Black Marubozu Description: The Opening Black Marubozu candle has no upper shadow and its high price is equal to the opening price. According to Shimizu, Opening Black Marubozu is a bearish candle, either reversal or continuation. In a clear downtrend, the appearance of such a candle preceded by a price gap can predict the acceleration of declines. Another important factor is the length of the lower shadow (note that the shadow cannot be longer than the body of the candle). The shorter the shadow, the more negative the candle's meaning. The Black Marubozu opening can also occur within bullish patterns, both continuation and reversal. This candle is very similar to the Bearish Belt Hold pattern, but at the Black Marubozu open the lower shadow can be longer. Building: • Black body • No upper shadow • Lower shadow smaller than the body • Appears as a long or short line Example: Intel,07 Aug, 2007. Opening Black Marubozu. Chart 1d. 18- Doji Description: This candle doesn't really have any trend meaning for the most part. It is usually only a continuation of the current one. Building: • A doji candle • Appears as a long or short line Example: Intel,18 Aug, 2006. Doji. Chart 1d. 19- Four-Price Doji Description: The Four Price Doji is a basic candle that has all four of the same prices (i.e. Open, Close, Low and High). Usually this means that we are dealing with a very small number of transactions, and in many cases a single transaction. Therefore, its importance is very limited. Note that we can assume, as for all other types of doji candles, that a very small body is acceptable. In the case of the four price Doji, this means that the open, close, high and low prices are not necessarily all the same, but are very similar. The Four Price Doji often appears in pre-market and after-hours trading. Also, when the candles are low frequency (for example 1 minute candles), the chances of such candles being seen are higher. When such candles occur on a daily chart, it means that the trading volume is likely to be extremely low. Building: • A doji candle • All prices are the same • Lack of shadows • Appears as a short line Example: NRG Energy INC,31 Mar, 2009. Four Doji. Chart 1d. 20- Opening White Marubozu Description: Opening white Marubozu is similar to a long white candle and should be treated similarly, that is, depending on the context, as a reversal or continuation candle. Distinguished by the absence of the lower shadow, the body must be at least 51 percent of the overall height of the sail. The length of the upper shadow and the context in which the candle is forming on the chart (see the bullish belt hold pattern) may be relevant to your interpretation. The appearance of this basic candle in an uptrend can suggest a continuation of the uptrend, but it can also be part of the bearish reversal pattern (for example, Dark Cloud Cover). In the downtrend, the opening white Marubozu may be part of the bullish reversal pattern. The White Marubozu basic opening candle is considered a bullish belt hold pattern, but then a downtrend is required before it occurs, and the upper shadow should not be too long. Building: • White body • No lower shadow • Upper shadow smaller than the body • Appears as a long or short line Example: NRG Energy INC,30 Jul, 2009. Opening White Marubozu. Chart 1d. Just relax. If you do not master everything it is normal, to be realistic I have not learned all this in its entirety, but with a script and simply knowing how to interpret them you can use them whenever you want. You don't need to know them by heart. With this we finish the Basic Candles. We will continue with One Line Patterns tomorrow.
COINBASE:BTCUSDEducation
by UnknownUnicorn18500526
6
All candlestick patterns for Trading : Bullish reversal patternsHello everyone 😃 In this article we present Most useful bullish reversal patterns of candlesticks and How to trade with them. ( Sorry for my irregular chart 🤦‍♂️ I'm not good in drawing 😁 ) 📊 What is Candlestick charts ? Candlestick charts are a type of financial chart for tracking the movement of securities. They have their origins in the centuries-old Japanese rice trade and have made their way into modern day price charting. Some investors find them more visually appealing than the standard bar charts and the price actions easier to interpret. Candlesticks are so named because the rectangular shape and lines on either end resemble a candle with wicks. Each candlestick usually represents one day’s worth of price data about a stock. Over time, the candlesticks group into recognizable patterns that investors can use to make buying and selling decisions. 📍 Bullish reversal Candlestick Patterns : Over time, groups of daily candlesticks fall into recognizable patterns with descriptive names like three white soldiers, dark cloud cover, hammer, morning star, and abandoned baby, to name just a few. Patterns form over a period of one to four weeks and are a source of valuable insight into a stock’s future price action. Before we delve into individual bullish candlestick patterns, note the following two principles: 1- Bullish reversal patterns should form within a downtrend. Otherwise, it’s not a bullish pattern, but a continuation pattern. 2- Most bullish reversal patterns require bullish confirmation. In other words, they must be followed by an upside price move which can come as a long hollow candlestick or a gap up and be accompanied by high trading volume. This confirmation should be observed within three days of the pattern. 📌 The bullish reversal patterns can further be confirmed through other means of traditional technical analysis—like trend lines, momentum, oscillators, or volume indicators—to reaffirm buying pressure. There are a great many candlestick patterns that indicate an opportunity to buy. We will focus on five bullish candlestick patterns that give the strongest reversal signal. 🈺 Now let's talk about patterns that we provided on chart.. ! - Hammer : Hammers have a small real body and a long lower shadow. 📚 The hammer candlestick shows sellers came into the market during the period but by the close the selling had been absorbed and buyers had pushed the price back to near the open. - Inverted hammer : The Inverted Hammer formation is created when the open, low, and close are roughly the same price. Also, there is a long upper shadow which should be at least twice the length of the real body. 📚 The Inverted Hammer candlestick formation occurs mainly at the bottom of downtrends and can act as a warning of a potential bullish reversal pattern. - Dragonfly DOJI : The open, high, and close prices match each other, and the low of the period is significantly lower than the former three. This creates a "T" shape. 📚 A dragonfly DOJI after a price decline warns the price may rise. If the next candle rises that provides confirmation. - Bullish kicker : This pattern is characterized by a sharp reversal in price over the span of two candlesticks. 📚 Traders use kicker patterns to determine which group of market participants is in control of the direction. - Bullish spinning top : A spinning top is a candlestick pattern that has a short real body that's vertically centered between long upper and lower shadows. 📚 Spinning tops are a sign of indecision in the asset; the long upper and lower shadows indicate there wasn't a meaningful change in price between the open and close. - Bullish engulfing : This pattern appears in a downtrend and is a combination of one dark candle followed by a larger hollow candle. 📚 Bullish engulfing patterns are more likely to signal reversals when they are preceded by four or more black candlesticks. - Bullish harami : It is generally indicated by a small increase in price (signified by a white candle) that can be contained within the given equity's downward price movement (signified by black candles) from the past couple of days. 📚 A bullish harami is a candlestick chart indicator for reversal in a bear price movement. - Tweezers bottom : A tweezers bottom occurs when two candles, back to back, occur with very similar lows. 📚 Tweezers are more meaningful as part of other trends, especially pullbacks. - Morning star : A morning star is a visual pattern made up of a tall black candlestick, a smaller black or white candlestick with a short body and long wicks, and a third tall white candlestick. 📚 The middle candle of the morning star captures a moment of market indecision where the bears begin to give way to bulls. The third candle confirms the reversal and can mark a new uptrend. - Morning DOJI star : A Morning Doji Star consists of a long bearish candle, followed by a Doji that has gapped below it, then a third bearish candle that closes well within the body of the first candle and in doing so confirming the reversal. It is considered a strong bullish price reversal candlestick pattern. 📚 It is considered as a signal of a potential upcoming reversal of the current trend of the market. - Bullish abandoned baby : It forms in a downtrend and is composed of three price bars. The first is a large down candle, followed by a doji candle that gaps below the first candle. The next candle opens higher than the doji and moves aggressively to the upside. 📚 This pattern signals the potential end of a downtrend and the start of a price move higher. - Three white soldiers : The pattern consists of three consecutive long-bodied candlesticks that open within the previous candle's real body and a close that exceeds the previous candle's high. 📚 Three white soldiers are considered a reliable reversal pattern when confirmed by other technical indicators like the relative strength index (RSI). 📌 These candlesticks should not have very long shadows and ideally open within the real body of the preceding candle in the pattern. - Three line strike : The bullish formation is composed of a big green candle, 3 up candles, and one down candle erasing the advance made by the prior 3 candles. 📚 After prices trend in a particular direction, they will pause before refreshing higher. This is seen as a continuation pattern and is different from a pattern that would signal a reversal. - Three inside up : The three inside up pattern is a bullish reversal pattern composed of a large down candle, a smaller up candle contained within the prior candle, and then another up candle that closes above the close of the second candle. 📚 Consider using these patterns within the context of an overall trend. For example, use the three inside up during a pullback in an overall uptrend. 📌 These patterns are short-term in nature, and may not always result in a significant or even minor trend change. - Three outside up : The three outside up and three outside down patterns are characterized by one candlestick immediately followed by two candlesticks of opposite shading. 📚 Three outside up/down are patterns of three candlesticks that often signal a reversal in trend. 📌 Each tries to leverage market psychology in order to read near-term changes in sentiment. - Three stars in the south : It is formed by three black or red (down) candles of decreasing size following a price decline. 📚 The pattern indicates a bullish reversal, although the price should ultimately move in the expected direction before taking a trade. This is called confirmation. 📌 The three stars in the south candlestick pattern is a very rare pattern that doesn't typically precede large price moves. - Bullish stick sandwich pattern : One candlestick pattern is the stick sandwich because it resembles a sandwich when plotted on a price chart - they will have the middle candlestick oppositely colored vs. the candlesticks on either side of it, both of which will have a larger trading range than the middle candlestick. 📚 Candlestick charts are used by traders to determine possible price movement based on past patterns; These patterns may indicate either bullish or bearish trends, and so should be used in conjunction with other methods or signals. - Matching low : The matching low pattern is created by two down candlesticks with similar or matching closing prices. 📚 The pattern occurs following a price decline and signals a potential bottom or that price has reached a support level. - Break breakaway : The first candle in the formation is long and black. The second candle is also long gaps away from the first in the direction of the trend. The third candle can be either color, but does not show a change in trend direction. The fourth candle continues in the direction of the proceeding trend. The fifth candlestick has a long white body, opens against the trend and continues in that direction to close the gap. 📚 The Bullish Breakaway pattern is a five candle reversal formation that occurs during a downtrend. - Bullish Tri-Star : Tri-Star patterns form when three consecutive DOJI candlesticks appear at the end of a prolonged trend. 📚 A Tri-Star is a three line candlestick pattern that can signal a possible reversal in the current trend, be it bullish or bearish. 📍 A Tri-Star pattern near a significant support or resistance level increases the probability of a successful trade. - MARUBOZU : A large real body, There will be no shadow at either sides of the candle, The color of the candle will be of a significant meaning. 📚 MARUBOZU means “bald head” or “shaved head” in Japanese, and this is shown in the absence of wicks or shadow on the candlestick, meaning that the opening or closing price will be the same as the maximum prices of the candle. The absence of shadow indicates that the trading session opened at a high price and close at a low price at the end of the day (or the opposite). 🔴 NOTES : - There are many bullish reversal patterns that we only present most useful patterns for trading ! - Most of them have 2 definition and direction ( Bearish and Bullish ) and we only present bullish reversal patterns ! - For better result in your trading, You need to confirm patterns through trend lines, momentum, oscillators, or volume indicators. ⏰ Best timeframes to work with candlestick patterns : Traders usually use Monthly, Weekly, Daily, 4-Hour, Hourly, 15-Minute and even 1-Minute timeframes. Ideally, traders pick the main timeframe they are interested in and then choose a longer and a shorter timeframe to complement the main one. The longer timeframes typically contain fewer and more reliable signals. The shorter timeframes usually contain more signals with less accuracy. There are several types of traders, and they have different trading styles. 📍 We will provide more contents for candlestick patterns in next weeks ! So stay tuned and support us with your LIKES, COMMENTS and FOLLOWINGS... Have a great moments. @Helical_Trades
NSENG:ACADEMYEducation
by Helical_Trades
122
All candlestick patterns for Trading : Bearish reversal patternsHello everyone 😃 In this article we present Most useful bearish reversal patterns of candlesticks and How to trade with them. ( Sorry for my irregular chart 🤦‍♂️ I'm not good in drawing 😁 ) 📊 What is Candlestick charts ? Candlestick charts are a type of financial chart for tracking the movement of securities. They have their origins in the centuries-old Japanese rice trade and have made their way into modern day price charting. Some investors find them more visually appealing than the standard bar charts and the price actions easier to interpret. Candlesticks are so named because the rectangular shape and lines on either end resemble a candle with wicks. Each candlestick usually represents one day’s worth of price data about a stock. Over time, the candlesticks group into recognizable patterns that investors can use to make buying and selling decisions. 📍 Bearish reversal candlestick patterns : Bearish reversal candlestick patterns can form with one or more candlesticks; most require bearish confirmation. The actual reversal indicates that selling pressure overwhelmed buying pressure for one or more days, but it remains unclear whether or not sustained selling or lack of buyers will continue to push prices lower. Without confirmation, many of these patterns would be considered neutral and merely indicate a potential resistance level at best. Bearish confirmation means further downside follow through, such as a gap down, long black candlestick or high volume decline. Because candlestick patterns are short-term and usually effective for 1-2 weeks, bearish confirmation should come within 1-3 days. To be considered a bearish reversal , there should be an existing uptrend to reverse. It does not have to be a major uptrend, but should be up for the short term or at least over the last few days. A dark cloud cover after a sharp decline or near new lows is unlikely to be a valid bearish reversal pattern. Bearish reversal patterns within a downtrend would simply confirm existing selling pressure and could be considered continuation patterns. There are many methods available to determine the trend. An uptrend can be established using moving averages, peak/trough analysis or trend lines. A security could be deemed in an uptrend based on one or more of the following : - The security is trading above its 20-day exponential moving average (EMA). - Each reaction peak and trough is higher than the previous. - The security is trading above a trend line. 🈺 Now let's talk about patterns that we provided on chart.. ! - Hanging man : The hanging man is characterized by a small "body" on top of a long lower shadow. The shadow underneath should be at least twice the length of the body. 📚 The hanging man represents a potential reversal in an uptrend. While selling an asset solely based on a hanging man pattern is a risky proposition, many believe it's a key piece of evidence that market sentiment is beginning to turn. The strength in the uptrend is no longer there. - Gravestone DOJI : A gravestone DOJI is a bearish reversal candlestick pattern that is formed when the open, low, and closing prices are all near each other with a long upper shadow. 📚 A gravestone DOJI is a bearish pattern that suggests a reversal followed by a downtrend in the price action. 📌 A gravestone pattern can be used as a sign to take profits on a bullish position or enter a bearish trade. - Bearish kicker : This pattern is characterized by a sharp reversal in price over the span of two candlesticks. 📚 Traders use kicker patterns to determine which group of market participants is in control of the direction. 📌 The pattern points to a strong change in investors' attitudes towards a security that typically follows the release of valuable information about a company, industry, or economy. - Shooting stars : A shooting star is a bearish candlestick with a long upper shadow, little or no lower shadow, and a small real body near the low of the day. 📚 A shooting star occurs after an advance and indicates the price could start falling. The formation is bearish because the price tried to rise significantly during the day, but then the sellers took over and pushed the price back down toward the open. - Bearish spinning top : A spinning top is a candlestick pattern that has a short real body that's vertically centered between long upper and lower shadows. 📚 The real body should be small, showing little difference between the open and close prices. 📌 Since buyers and sellers both pushed the price, but couldn't maintain it, the pattern shows indecision and that more sideways movement could follow. - Bearish engulfing : A bearish engulfing pattern is a technical chart pattern that signals lower prices to come. The pattern consists of an up (white or green) candlestick followed by a large down (black or red) candlestick that eclipses or "engulfs" the smaller up candle. 📚 A bearish engulfing pattern can occur anywhere, but it is more significant if it occurs after a price advance. This could be an uptrend or a pullback to the upside with a larger downtrend. 🔴 The pattern can be important because it shows sellers have overtaken the buyers and are pushing the price more aggressively down (down candle) than the buyers were able to push it up (up candle). - Bearish harami : A bearish harami is a two bar Japanese candlestick pattern that suggests prices may soon reverse to the downside. The pattern consists of a long white candle followed by a small black candle. The opening and closing prices of the second candle must be contained within the body of the first candle. An uptrend precedes the formation of a bearish harami. 📚 A bearish harami is a candlestick chart indicator for reversal in a bull price movement. 📌 Traders can use technical indicators, such as the relative strength index (RSI) and the stochastic oscillator with a bearish harami to increase the chance of a successful trade. - Dark cloud cover : Both candles should be relatively large, showing strong participation by traders and investors. When the pattern occurs with small candles it is typically less significant. 📚 Dark Cloud Cover is a candlestick pattern that shows a shift in momentum to the downside following a price rise. The pattern is composed of a bearish candle that opens above but then closes below the midpoint of the prior bullish candle. 📌 Traders typically see if the candle following the bearish candle also shows declining prices. A further price decline following the bearish candle is called confirmation. - Evening star : An evening star is a stock-price chart pattern used by technical analysts to detect when a trend is about to reverse. It is a bearish candlestick pattern consisting of three candles: a large white candlestick, a small-bodied candle, and a red candle. 📚 Evening star patterns are associated with the top of a price uptrend, signifying that the uptrend is nearing its end. - Evening DOJI star : The Evening DOJI Star is a bearish reversal pattern, being very similar to the Evening Star. The only difference is that the Evening Doji Star needs to have a doji candle (except the Four-Price Doji) on the second line. The DOJI candle (second line) should not be preceded by or followed by a price gap. 📚 The pattern, as every other candlestick pattern, should be confirmed on the next candles by breaking out of the support zone or a trendline. If the occurrence is confirmed, then its third line may act as a resistance area. It also happens, however, that the pattern is merely a short pause prior further price increases. - Bearish abandoned baby : A bearish abandoned baby is a specialized candlestick pattern consisting of three candles, one with rising prices, a second with holding prices, and a third with falling prices. Technical analysts expect that this pattern signals at least a short-term reversal in a currently upward trending price. 📚 This is a rare pattern that has a fairly strong track record for forecasting a short-term downward trend. The key item of the pattern is the middle day, which should have a gap in front of it and following it, and which should close the session with price unchanged. - Three black crows : The black crow pattern consists of three consecutive long-bodied candlesticks that have opened within the real body of the previous candle and closed lower than the previous candle. 📚 Three black crows is a bearish candlestick pattern used to predict the reversal of a current uptrend. Traders use it alongside other technical indicators such as the relative strength index (RSI). - Tweezer top : A tweezers topping pattern occurs when the highs of two candlesticks occur at almost exactly the same level following an advance. 📚 Tweezers are more meaningful as part of other trends, especially pullbacks. - Three inside down : The three inside down pattern is a bearish reversal pattern composed of a large up candle, a smaller down candle contained within the prior candle, and then another down candle that closes below the close of the second candle. 📚 The down version of the pattern is bearish. It shows the price move higher is ending and the price is starting to move lower. Here are the characteristics of the pattern. - Three outside down : The three outside down describe a pair of three-candle reversal patterns that appear on candlestick charts. The pattern requires three candles to form in a specific sequence, showing that the current trend has lost momentum and might signal a reversal of an existing trend. 📚 The first candle marks the beginning of the end for the prevailing trend as the second candle engulfs the first candle. The third candle marks an acceleration of the reversal. - Advance block : Advance block is the name given to a candlestick trading pattern. The pattern is a three-candle bearish setup that is considered to be a reversal pattern—a suggestion that price action is about to change from what had been an upward trend to a downward trend in relatively short time frames. 📚 An advance block is a three-period candlestick pattern considered to forecast a reversal. The pattern's success at predicting reversal is barely above random. - Bearish stick sandwich : One candlestick pattern is the stick sandwich because it resembles a sandwich when plotted on a price chart - they will have the middle candlestick oppositely colored vs. the candlesticks on either side of it, both of which will have a larger trading range than the middle candlestick. 📚 These patterns may indicate either bullish or bearish trends, and so should be used in conjunction with other methods or signals - Matching high : The first line of the pattern appears as a long line whereas the second one can be either long or short. Both candle lines need to close at the same level. Additionally, the opening of the second candle need to be higher than the opening of the previous candle. 📚 The Matching High is built of two MARUBOZO candles having white bodies. In other words, it can be a White MARUBOZO or a Closing White MARUBOZO. - Bearish breakaway : The bearish breakaway is a formation of five candlesticks where the first is always bullish and the last is always bearish. The middle candlesticks will be rising and can be either bearish or bullish, but will usually be bullish. 📚 A bearish breakaway is a chart formation that can appear in a rising market when the price starts to pull or break away gradually to the downside. - Bearish Tri-Star : Tri-Star patterns form when three consecutive DOJI candlesticks appear at the end of a prolonged trend. 📚 A Tri-Star pattern near a significant support or resistance level increases the probability of a successful trade. - MARUBOZO : The black MARUBOZO is simply a long black (down, or red on the charts below) candle, with little to no upper or lower shadows. The pattern shows that sellers controlled the trading day from open to close, and is therefore a bearish pattern. 📚 How to avoid false MARUBOZO signals and setting stop-loss : If bearish, take a short when price falls below; Place a stop above candlestick. 🔴 NOTES : - There are many bearish reversal patterns that we only present most useful patterns for trading ! - Most of them have 2 definition and direction ( Bearish and Bullish ) and we only present bearish reversal patterns ! - For better result in your trading, You need to confirm patterns through trend lines , momentum, oscillators, or volume indicators. ⏰ Best timeframes to work with candlestick patterns : Traders usually use Monthly, Weekly, Daily, 4-Hour, Hourly, 15-Minute and even 1-Minute timeframes. Ideally, traders pick the main timeframe they are interested in and then choose a longer and a shorter timeframe to complement the main one . The longer timeframes typically contain fewer and more reliable signals. The shorter timeframes usually contain more signals with less accuracy. There are several types of traders, and they have different trading styles. 📍 We will provide more contents for candlestick patterns in next weeks ! So stay tuned and support us with your LIKES, COMMENTS and FOLLOWINGS... Have a great moments. @Helical_Trades
NSENG:ACADEMYEducation
by Helical_Trades
57