Major Candlestick Reversal Patterns
Learn and master these powerful reversal patterns with “Candlestick Trading for Maximum Profits”. You’ll also learn to find these patterns when they are the most profitable, filtering out invalid signals to give you the most profit for your trade. To find out more about “Candlestick Trading for Maximum Profits” just visit our home page.
Bearish Candlestick Reversal Patterns.
Bearish Dark Cloud
|
Psychology
A long white candlestick is formed on the 1st day and a gap up is created on the 2nd day. This is encouraging to the bulls. However, the 2nd day closes below the midpoint of the 1st day. Longs quickly question their strategy.
|
Bearish Doji Star
|
Psychology
The uptrend is in full force with a strong 1st day. All confidence built up by the bulls from the 1st day is destroyed when the 2nd day’s gap up closes near its open. Profit takers will quickly appear if the next day opens lower.
|
Bearish Engulfing Pattern
|
Psychology
If not much volume occurs on the 1st day of the Bearish Engulfing formation compared to the 2nd day, then this increases the strength of the pattern. The 2nd day opens above the close of the 1st day, however quickly sells off to finally close below the open of the 1st day. This scares the longs and brings into question the bull trend which prompts additional selling in the coming days.
|
Bearish Evening Star
|
Psychology
The 2nd day gaps higher, but trades in a small range. The bearishness of this indecision is confirmed by the lower close of the 3rd day. Look for lower prices.
|
Bearish Evening Doji Star
|
Psychology
The bearishness of the doji star created on the 1st two days is confirmed with the 3rd day. If the penetration of the 3rd day is more than 50 percent, then this formation has a much better chance to succeed for the trader.
|
Bearish Hanging Man
|
Psychology
As with any single candlestick, confirmation is required. The Hanging Man formation shows the price goes much lower than the open then closes near the opening price. This could mean that many longs have positions that they are attempting to sell. Ideally, a black real body Hanging Man with a lower open the following day could be a bearish signal for the days ahead.
|
Bearish Harami
|
Psychology
A long 1st day with high volume in the existing uptrend brings complacency to the bulls. The next day trades in a small range within the previous day’s real body. Light volume on the 2nd day should give rise to concern by the bulls of an impending change of trend. Look for lower prices over the coming days, especially if the next day provides confirmation of a trend change by closing lower.
|
Bearish Harami Cross
|
Psychology
The 2nd day’s price range does not pierce the previous day’s range and closes about where it opened. Volume on the 2nd day is low which indicates that traders are lacking enough information to decide whether to go long or short.
|
Bearish Shooting Star
|
Psychology
The long upper shadow and small real body at the bottom of the trading range are cause for concern by the bulls. They wonder if this is the end of the uptrend and take measures to protect their gains.
|
Bullish Candlestick Reversal Patterns.
Learn and master these powerful reversal patterns with “Candlestick Trading for Maximum Profits”. You’ll also learn to find these patterns when they are the most profitable, filtering out invalid signals to give you the most profit for your trade. To find out more about “Candlestick Trading for Maximum Profits” just visit our home page.
Bullish Doji Star
|
Psychology
The downtrend is in full force with a strong 1st day. All confidence built up by the bears from the 1st day is destroyed when the 2nd day’s gap down closes near it’s open. Short covering will quickly appear if the next day opens higher.
|
Bullish Engulfing Pattern
|
Psychology
If not much volume occurs on the 1st day of the Bullish Engulfing formation compared to the 2nd day, then this increases the strength of the pattern. The 2nd day opens below the close of the 1st day, however quickly rallies to close above the open of the 1st day. This damages the spirits of the shorts and brings into question the bear trend which prompts additional buying in the coming days.
|
Bullish Hammer
|
Psychology
As with any single candlestick, confirmation is required. The Bullish Hammer formation shows the price goes much lower than the open then closes near the opening price. This fact reduces the confidence of the bears. Ideally, a white real body Hammer with a higher open the following day could be a bullish signal for the days ahead.
|
Bullish Harami
|
Psychology
A long 1st day with high volume in the existing downtrend brings complacency to the bears. The next day trades in a small range within the previous day’s real body. Light volume on the 2nd day should give rise to concern by the bears of an impending change of trend. Look for higher prices over the coming days, especially if the next day provides confirmation of a trend change by closing higher.
|
Bullish Harami Cross
|
Psychology
The 2nd day’s price range does not pierce the previous day’s range and closes about where it opened. Volume on the 2nd day is low which indicates that traders are lacking enough information to decide whether to go long or short.
|
Bullish Inverted Hammer
|
Psychology
The long upper shadow and small real body at the bottom of the trading range are cause for concern by the bears. They wonder if this is the end of the downtrend and take measures to protect their gains. If the next day opens above the body of the Inverted Hammer, then expectations could be for shorts to cover and propel a reversal rally.
|
Bullish Morning Star
|
Psychology
The 2nd day gaps lower, but trades in a small range. The bullishness of this indecision is confirmed by the higher close of the 3rd day. Look for higher prices.
|
Morning Doji Star
|
Psychology
The bullishness of the doji star created on the 1st two days is confirmed with the 3rd day. If the penetration of the 3rd day is more than 50 percent, then this formation has a much better chance to succeed for the trader.
|
Bullish Piercing Pattern
|
Psychology
The gap down on the 2nd day perpetuates the downtrend. However, the 2nd day’s close is above the midpoint of the 1st day’s body. This suggests to the bears that a bottom could be forming. This price action is not nearly as discernable using bar charts as it is with candlestick charts. The more penetration of the close on the 2nd day to the 1st day’s body, the more probable the reversal signal will succeed.
|