Learn the Strongest Reversal Candlestick Patterns
Hey traders,
In this educational article, we will discuss powerful reversal candlestick patterns that every trader must know.
Bullish Engulfing Candle
Bullish engulfing candle is one of my favorite ones.
It usually indicates the initiation of a bullish movement after a strong bearish wave.
The main element of this pattern is a relatively big body. Being bigger than the entire range of the previous (bearish) candle, it should completely "engulf" that.
Such a formation indicates the strength of the buyers and their willingness to push the price higher.
Bearish Engulfing Candle
The main element of this pattern is a relatively big body that is bigger than the entire range of the previous (bullish) candle.
Such a formation indicates the strength of the sellers and their willingness to push the price lower.
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Bullish Inside Bar
Inside bar formation is a classic indecision pattern.
It usually forms after a strong bullish/bearish impulse and signifies a consolidation.
The pattern consists of 2 main elements:
mother's bar - a relatively strong bullish or bearish candle,
inside bars - the following candles that a trading within the range of the mother's bar.
The breakout of the range of the mother's bar may quite accurately confirm the reversal.
A bullish breakout of its range and a candle close above that usually initiates a strong bullish movement.
Bearish Inside Bar
A bearish breakout of the range of the mother's bar and a candle close below that usually initiates a strong bearish movement.
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Doji Candle (Morning Star)
By a Doji we mean a candle that has the same opening and closing price.
Being formed after a strong bearish move, such a Doji will be called a Morning Star. It signifies the oversold condition of the market and the local weakness of sellers.
Such a formation may quite accurately indicate a coming bullish movement.
Doji Candle (Evening Star)
Being formed after a strong bullish move, such a Doji will be called an Evening Star. It signifies the overbought condition of the market and the local weakness of buyers.
Such a formation may quite accurately indicate a coming bearish movement.
I apply these formations for making predictions on financial markets every day. They perfectly work on Forex, Futures, Crypto markets and show their efficiency on various time frames.
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Candlestickpattern
WHY NIFTY WENT UPWARDS TODAY - 28/04/23
Nifty took support twice from yesterday's resistance zone (resistance was tested twice yesterday)
Cradle pattern involving doji, hammer, hanging man was formed in the middle of the day indicating upcoming sudden directional movement which came later in the day
No trades on EURUSDTomorrow the FED is expected to rise interest rates to 5,25%.
We prefer to wait for the news to pass before looking for new trades.
Yesterday we saw a new attempt to rise, followed by sharp decline and test of the lows around 1,0960.
Upon a new test it’s possible to see breakout and heading towards 1,0900.
For new entries, we’ll wait for the news to pass and movement to be confirmed.
Important week for EURUSD Interest rate decisions from the FED and ECB are due this week.
This news will determine the direction in which we will look for trades.
For now, EURUSD continues to make higher highs and higher lows.
On a break of 1.1086, the next resistance is at 1.1153.
An important support level is 1.0908.
A retest of support and Safe House is nearThis particular trading structure may be viewed as an aggressive approach, but it presents a compelling setup for counter-trend traders. The first target is in close proximity, affording the opportunity to adjust our stop-loss to entry once the market reaches that level. This grants us a Risk-Free Trade, providing a favorable risk-to-reward ratio for traders who employ this tactic.
Critical Support Level Identified for GBPUSDOn closer analysis of the GBPUSD on a higher timeframe, it is evident that the candlestick has closed above the previous high, thereby confirming the bullish trend of the currency.
However, one must exercise caution before diving in, as the current market price is currently situated on the weekly chart supply zone, which traditionally indicates a sell zone.
Nevertheless, my outlook remains bullish on the GBPUSD, and I plan to take a measured approach by waiting for the market to retrace back to 1.2500 and watch out for a Double Bottom on the 1-hourly chart before making any trading decisions.
This strategy will enable me to minimize risk while maximizing potential returns.
Profit in Both Bull and Bear MarketsThe EURUSD demonstrates a clear bullish trend based on the current market conditions. As a result, trend traders may seek to capitalize on potential buying opportunities at the support level of 1.0967.
Conversely, counter-trend traders may be interested in shorting the currency pair at the resistance level of 1.1035-1.1044 while placing initial stop-loss orders above 1.1067 to minimise risk. With a well-defined plan, traders can confidently approach the market from either direction and potentially reap substantial profits.
Important levels on EURUSD During the yesterday’s news we saw fluctuations in range 1,1000-1,1060.
Currently, it’s important to see breakout outside of that candle.
Key support level is 1,1000.
Upon pullback from this level we can expect another rise towards 1,1060 and test of the previous tops.
On breakout , we’re headed for a test of 1,0960 and the previous lows.
Advantages of Haiken Ashi over traditional candles [CRYPTO]Haiken Ashi candles are a very popular type of charts used in Forex trading. Unlike traditional Japanese candles, the Haiken Ashi chart uses a special algorithm to process the price data, which makes it easier to read trends and market direction.
Benefits:
What are the benefits of using Haiken Ashi candles? First of all, such charts allow us to detect market trends more clearly and easily read. In addition, Haiken Ashi charts allow us to more easily determine entry and exit points of positions, as well as determine stop loss and take profit.
Construction of Haiken Ashi candles:
Let's start by defining what Haiken Ashi candles actually are. These candles differ from traditional Japanese candles in many ways. First of all, in Haiken Ashi charts, the opening price of each new candle is the average of the opening and closing prices of the previous candle. The closing price, on the other hand, is the average of four values: the opening price, the closing price, the highest price and the lowest price. As a result, the opening and closing price of subsequent candles lags behind traditional Japanese candles.
Advantages of Haiken Ashi:
How can we use Haiken Ashi candles in Forex trading? First of all, it allows us to detect market trends more clearly and easily read. As a result, we can more easily determine entry and exit points for positions, and determine stop loss and take profit.
Strategies:
Trend strategy - involves using Haiken Ashi candles to identify market trends. For an uptrend, we wait for a series of green candles to appear, while for a downtrend, we wait for a series of red candles to appear. Once the trend is identified, we can open a position according to its direction.
Double candlestick strategy - involves waiting for the occurrence of two consecutive Haiken Ashi candles of opposite colors. When a red candle is followed by a green candle, this is a buy signal. On the other hand, when a green candle is followed by a red candle, it is a sell signal.
Inner candle strategy - involves waiting for the appearance of the Haiken Ashi candle, the body of which is completely contained in the body of the previous candle. When such a situation occurs, we can open a position according to the direction of the trend.
Reversal candle strategy - consists in waiting for the appearance of a long red candle after a series of green candles or a long green candle after a series of red candles. The appearance of such a candle may indicate a reversal of the trend, which gives a signal to open a position against the existing trend.
In conclusion, Haiken Ashi candles are a tool that can be very useful in Forex technical analysis. With this tool, we can more easily detect market trends, determine entry points.
On the other hand, Haiken Ashi candles are an addition to a set of various indicators for technical analysis. In our Manticore Invesmtents Scalping strategy, we combine Haiken Ashi candles with a strategy based on RSI and Bollinger Bands.
In the next parts of the tutorials, let's describe the use of RSI and BB.
Advantages of Haiken Ashi over traditional Japanese candlesHaiken Ashi candles are a very popular type of charts used in Forex trading. Unlike traditional Japanese candles, the Haiken Ashi chart uses a special algorithm to process the price data, which makes it easier to read trends and market direction.
Benefits:
What are the benefits of using Haiken Ashi candles? First of all, such charts allow us to detect market trends more clearly and easily read. In addition, Haiken Ashi charts allow us to more easily determine entry and exit points of positions, as well as determine stop loss and take profit.
Construction of Haiken Ashi candles:
Let's start by defining what Haiken Ashi candles actually are. These candles differ from traditional Japanese candles in many ways. First of all, in Haiken Ashi charts, the opening price of each new candle is the average of the opening and closing prices of the previous candle. The closing price, on the other hand, is the average of four values: the opening price, the closing price, the highest price and the lowest price. As a result, the opening and closing price of subsequent candles lags behind traditional Japanese candles.
Advantages of Haiken Ashi:
How can we use Haiken Ashi candles in Forex trading? First of all, it allows us to detect market trends more clearly and easily read. As a result, we can more easily determine entry and exit points for positions, and determine stop loss and take profit.
Strategies:
Trend strategy - involves using Haiken Ashi candles to identify market trends. For an uptrend, we wait for a series of green candles to appear, while for a downtrend, we wait for a series of red candles to appear. Once the trend is identified, we can open a position according to its direction.
Double candlestick strategy - involves waiting for the occurrence of two consecutive Haiken Ashi candles of opposite colors. When a red candle is followed by a green candle, this is a buy signal. On the other hand, when a green candle is followed by a red candle, it is a sell signal.
Inner candle strategy - involves waiting for the appearance of the Haiken Ashi candle, the body of which is completely contained in the body of the previous candle. When such a situation occurs, we can open a position according to the direction of the trend.
Reversal candle strategy - consists in waiting for the appearance of a long red candle after a series of green candles or a long green candle after a series of red candles. The appearance of such a candle may indicate a reversal of the trend, which gives a signal to open a position against the existing trend.
Veiling candle strategy - involves waiting for the appearance of a large Haiken Ashi candle, the body of which completely obscures the body of the previous candle. In this case, we can open a position according to the direction of the trend.
In conclusion, Haiken Ashi candles are a tool that can be very useful in Forex technical analysis. With this tool, we can more easily detect market trends, determine entry points.
On the other hand, Haiken Ashi candles are an addition to a set of various indicators for technical analysis. In our Manticore Invesmtents Scalping strategy, we combine Haiken Ashi candles with a strategy based on RSI and Bollinger Bands.
In the next parts of the tutorials, let's describe the use of RSI and BB.
NZDJPY sell setupHello, From the daily chart, we can see the price is moving in a downtrend, it then broke and closed below the support level.
In 1H, the price formed descending channel in which the price is bouncing within the range.
If the price manages to break past the channel and make a bullish fakeout to retest the daily resistance level, I will short the pair upon candlestick confirmation.
💥 Bullish VS Bearish Candlesticks📍Bullish and bearish candlestick patterns are technical analysis tools used by traders to identify potential market trends and reversals. Bullish patterns indicate a potential rise in the price of an asset, while bearish patterns indicate a potential decline in price.
🔷 Bullish candlestick patterns include the dragonfly doji, hammer, tweezer bottom, morning star engulfing and three white soldiers. These patterns suggest that buying pressure is increasing and that there may be a potential for a trend reversal.
🔷 Bearish candlestick patterns include the gravestone doji, inverted hammer, tweezer top three black crows and more. These patterns suggest that selling pressure is increasing and that there may be a potential for a trend reversal.
🔷When using candlestick patterns for trading, it's important to look for confluence with other signals, such as trend lines, support and resistance levels, and other technical indicators. Combining multiple signals can provide a stronger indication of potential market movements and help traders make more informed trading decisions.
🔷It's also important to note that candlestick patterns should not be relied on as the sole indicator for trading decisions, as they are not always accurate and can produce false signals. Traders should always use a combination of technical analysis tools and fundamental analysis when making trading decisions. This is why its important to create and monitor your own strategy and backtest what works and what doesn't.
👤 @AlgoBuddy
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Seize the Day: Aggressive Traders Can Short GBPAUD with 5-0Despite the current bullish trend in GBPAUD, the market is showing signs of a potential shorting opportunity on the 5-0 pattern, with the 3-bar reversal pattern. This presents a unique trading opportunity for aggressive traders to engage in a short-term trade at 1.8577, with a stop loss set above 1.8605 and an appropriate buffer.
What's even more enticing about this setup is when executed correctly, this trade could yield a profit factor of 2, making it a potentially lucrative opportunity for savvy traders looking to capitalize on market movements.
Candlestick tradetrade based on shooting star candle and pattern formation along with downtrend formation.
📊 The Doji Candle Pattern📍What is the Doji Candlestick Pattern?
The Doji Candlestick Pattern refers to a chart pattern consisting of a single candle. This pattern appears when the opening and closing prices of a candle are nearly the same or identical, resulting in a small-bodied candle with upper and lower wicks resembling a "+". Different variations of Doji patterns exist, with unique names like the Long-legged Doji, Gravestone Doji, Dragonfly Doji, and Doji star candlestick pattern. Regardless of the type, all Doji patterns provide traders with four critical data points: the open, close, high, and low prices for the given period. Doji patterns can occur on any timeframe and in any market, making them the foundation of many trading strategies
🔹Long-legged Doji
The Long-legged Doji pattern has an elongated upper and lower wick and a small body
The Long-legged Doji can be interpreted in several ways and works best when viewed in context with price action. It is a potential price reversal signal in a defined up or downtrend. If it occurs in a flat market, it suggests further consolidation.
🔹Dragonfly Doji
The Dragonfly Doji sets up when the candle’s open, close, and high is approximately the same. Visually, the Dragonfly looks like a “T,” as depicted in the image below. This formation suggests that heavy selling was present, but the market has rebounded. As a general rule, the Dragonfly is considered a reversal indicator. A retracement in price is expected when it occurs at the top of a bullish trend.
🔹Gravestone Doji
The Gravestone Doji pattern is the polar opposite of the Dragonfly; it appears as an inverted “T” and signals that heavy buying has given way to selling. The Gravestone Doji is a reversal chart pattern that signals downward or upward pressure may be on the way. The Gravestone suggests that a reversal is possible when observed within a defined uptrend. Within a downtrend, bullish price action may be forthcoming.
🔸Reversals
Doji candlesticks can be a great way to get in or out of the market in trending markets. The Gravestone and Dragonfly are ideal for reversal strategies as they indicate forthcoming upward and downward movements in price.
🔸Breakouts
One of the lowest-risk ways to utilize Dojis in the FX market is to trade breakouts. A breakout is a sudden directional move in price. Dojis often precede breakouts, as they are a signal of indecisiveness. As soon as the market makes up its mind, a significant move may be in the offing.
👤 @AlgoBuddy
📅 Daily Ideas about market update, psychology & indicators
❤️ If you appreciate our work, please like, comment and follow ❤️
Why choose when you can have both?Listen up, traders! Are you limiting your potential profits by only engaging in one trade at a time? Don't fall into the trap of thinking that just because you're long on AUDUSD, you can't also engage in a short trade on GBPAUD.
I've been charting and trading for 18 years and let me tell you, sometimes the nicest setup doesn't always give us the best returns. That's why it's important to have the right risk management in place and be willing to follow your trade plan.
So don't miss out on potential profits! With the right approach, you can engage in multiple trades at once and maximize your returns. Take control of your trading strategy and reach out to me for guidance on how to do it right.