TOP 6 Candlestick PatternsHi,
I would like to share my TOP 6 candlestick patterns, you can also name your TOP 3 in the comment section.
Perfect scenario: identify the strong area, wait for the price coming inside of it, wait for a candlestick pattern which consists of at least two candles and it has to form in at least 1-hour timeframe (lower TF candlestick patterns are poor), wait for a pullback and GO.
Always wait for a small pullback after the candlestick pattern has formed, you will get a better price. It is so rear case that after candlestick pattern formation the price goes immediately into the shown direction.
MORNING STAR
The Morning Star is a bullish bottom reversal pattern. It warns of weakness in a downtrend that could potentially lead to a trend reversal, especially if it forms on a strong support level. The morning star consists of three candlesticks with the middle candlestick forming a star. The first candlestick in the morning star pattern must be a red candlestick with a relatively large real body. The second candlestick is the star, which has a short real body that is separated from the real body of the first candlestick. The star does not need to form below the low of the first candlestick and can exist within the lower shadow of that candlestick. The star is the first indication of weakness as it indicates that the sellers were not able to drive the price close much lower than the close of the previous period.
This weakness is confirmed by the third candlestick, which must be green in color and must close 50% above the body of the first candlestick.
EVENING STAR
The Evening Star is a bearish, top trend reversal pattern that warns of a potential reversal of an uptrend. It is the opposite of the Morning Star and, like the morning star, consists of three candlesticks, with the middle candlestick being a star. The first candlestick in the evening star must be green in color and must have a relatively large real body. The second candlestick is the star, which is a candlestick with a short real body that does not touch the real body of the preceding candlestick. The star can also form within the upper shadow of the first candlestick. The star is the first indication of weakness as it indicates that the buyers were unable to push the price up to close much higher than the close of the previous period. This weakness is confirmed by the candlestick that follows the star.
This candlestick must be a red candlestick and must close 50% above the body of the first candlestick.
BULLISH/BEARISH ENGULFING
The Engulfing candlestick pattern is a two-candle reversal pattern. A reversal pattern can be bearish or bullish, depending on whether it appears at the end of an uptrend (bearish engulfing) or a downtrend (bullish engulfing pattern). The first candle is a small body, followed by the second candle whose body completely engulfs the previous candle body and closes in the opposite direction of the trend.
BULLISH/BEARISH RAILWAY TRACKS
A bearish railway track pattern has the first candlestick bullish and the second candlestick bearish. That fact that there is a sudden change from bullish to bearish candlestick should be a good indication that there might be a bearish trend forming. If you see it inside of the determined strong area the more powerful it is!
Regards,
Vaido
Bearish Engulfing
Bearish Engulfing Pattern | AUDUSDThe Bearish Engulfing pattern consists of two candles. First one is a small upward candle followed by large bearish candle. The bearish candle must absorbs completely the previous one formed during the uptrend. The bearish candle is not required to cover the shadows of bullish candle.
Requirements for validity:
1. Market in uptrend;
2. Small bullish candle;
3. Second one is large and bearish that compleately cover the bullishcandle.
Tips:
These are standard trading rules. There are many more specifics about order placement that I will reveal in the next posts!
1. Do not trade by candlestick analysis only!
2. Always do combine at least two or more analysis!
3. For example:
- trend analysis (always works);
- support & resistance analysis;
- Fibonacci.
4. Follow us for more tips and analysis!
Recommendations:
Confirmation in the form of a downward candle with a closing price lower than the previous one or a downward gap is recommended, to be sure that the trend is reversing!