One Line Patterns, Guide Part 5
Updated
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 - 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.
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.
Note
All Guide:Note
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