Every trader either they are day trading or long-term trading should know about candlestick patterns. It is technical tool that packs data for multiple time frames into single price bars. candlestick pattern pdf file includes all the information for all kind of patterns.
Basically, in simple terms, candlestick patterns are best used on a daily basis, each candlestick captures a full day’s worth of news, data, and price action.
Table of Contents
How to read a candlestick patterns.
Before learning deep about different types of candlestick patterns like bullish candlestick patterns, Japanese candlestick patterns we should learn some basics.
A normal candlestick pattern shows market’s opening, high, low, and closing prices. The dark colored rectangular body represents a drop in price while the light color represents increase in price.
The lines above and below are known as wicks and tails, and they represent day’s maximum high and low.
FX and Market Candles
Alot of candlesticks depends on price gaps as an integral part of their signaling power, they must be noted in all cases.
When analyzing FX candle charts, one needs to use creativity to identify a potential candlestick signal that does not precisely fit into the typical candlestick pattern. By utilizing your imagination, it is possible to identify specific patterns.
Examples of Candlestick Patterns
The below examples patterns perform exceptionally well.
A Doji
A doji is a candlestick pattern where the opening and closing prices are identical or almost identical. The spinning top pattern is quite similar to a doji, but it has a small body where the opening and closing prices are almost the same.
When Doji is formed indicates that buyers are unable to keep price higher, and sellers push prices back to the opening price. This situation clearly indicate that a trend reversal is going to happen.
It should be remembered that a Doji represents equality and indecision in the market, you will often find it during periods of resting after big moves higher or lower. When it is found at the bottom or at the top of a trend, it is considered as a sign that a prior trend is losing its strengths.
Bearish Engulfing Lines
An engulfing line is a powerful signal that indicates a change in direction. A bearish engulfing line is a pattern that shows a reversal after an uptrend.
The bullish engulfing bar pattern indicates that the market is no longer under control of sellers, and buyers can take control of the market. When a bullish engulfing candle forms in the context of an uptrend, it indicates a continuation signal.
Hammer
The Hammer candlestick is made when the opening, high, and closing prices are almost equal. it is also represented by a long lower shadow that tells us about a bullish rejection from buyers and their attempting to push the market higher.
Hanging Man
The Hanging Man pattern is an important and technical indicator that suggests a possible reversal of the current trend towards a downward direction.
There is story behind the candle, when the more sellers entered in market than buyers, it led to the long tail to the downside. The buyers fought back, and the end result is a small, dark body at the top of the candle.
Abandoned Baby Top
An abandoned baby, also known an island reversal. It is a significant pattern suggesting a major reversal in the prior directional movement. This pattern includes a gap in the direction of the current trend either its upward or downward
Candlestick Pattern PDF Download
I have uploaded a candlestick pattern pdf here. Beginner can learn binary trading, Japanese from the pdf guide.