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Explanantion 14 Candlestick Patterns 04.01.2021

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0% found this document useful (0 votes)
5 views

Explanantion 14 Candlestick Patterns 04.01.2021

Uploaded by

wicks
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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1.

Three Inside Down

Indication: Bearish reversal


Reliability: High
Description: This pattern is a more reliable addition to the standard Harami pattern.
A bearish Harami pattern occurs in the first two candles.
The third candle is a black one with a lower close than the second.
The third candlestick is confirmation of the bearish trend reversal.

2. Three Inside Up

Indication: Bullish reversal


Reliability: High
Description: This pattern is a more reliable addition to the standard Harami pattern.
A bullish Harami pattern occurs in the first two candles.
The third candle is a white candle with a higher close than the second candle and the confirmation of the bullish
trend reversal.

3. Three Outside Down

Indication: Bearish reversal


Reliability: High
Description: This pattern is a more reliable addition to the standard Engulfing pattern.
A bearish Engulfing pattern occurs in the first two candles.
The third candle is a black one with a lower close than the second candle.
The third candlestick is confirmation of the bearish trend reversal.

4. Three Outside Up

Indication: Bullish reversal


Reliability: High
Description: This pattern is a more reliable addition to the standard Engulfing pattern.
A bullish Engulfing pattern occurs in the first two candles.
The third candlestick is confirmation of the bullish trend reversal.
5. Three Black Crows

Indication: Bearish reversal


Reliability: High
Description: During an uptrend, three long black candles occur with consecutively lower closes. This pattern
suggests that the market has been at a high price for too long, and investors are beginning to compensate for it.
More significant if it appears after a mature advance.

6. Dark Cloud Cover

Indication: Bearish reversal


Reliability: High
Description: During an uptrend, the first candlestick is a long white one.
The second candlestick is black with an open above the high of the previous candlestick and close within but below
the midpoint of the first candlestick's body.
The Dark Cloud Cover pattern suggests an opportunity for the shorts to capitalize on the next candlestick's open.
It is a warning sign for bullish investors.
The greater the penetration of the first candlestick by the second and the higher the volume is on the second
candle, the more significant this pattern is.
In addition, if the second body opens above a major resistance level - it may indicate a strong reversal.
The Dark Cloud Cover pattern is the opposite of the Piercing line pattern.

7. Falling Three Methods

Indication: Bearish continuation


Reliability: High
Description: During a downtrend, a long black candlestick occurs, following by three candles of small real bodies
that fall into a short uptrend. On the fifth candle, the bears come in strong to close at a new low. This small
uptrend, in between two long black candles, is consistent with investors taking a break. The downward should
continue.

8. Abandoned Baby BEARISH

Indication: Bearish reversal


Reliability: High
Description: A very rare pattern characterized by a upside "Doji" gap which is then followed by a downside gap.
The shadows on the "Doji" must completely gap above the shadows of the first and third candlesticks
9. Abandoned Baby Bullish

Indication: Bullish reversal


Reliability: High
Description: A very rare pattern characterized by a downside "œDoji" gap which is then followed by an upside gap.
The shadows on the "œDoji" must completely gap below the shadows of the first and third candlesticks.

10. Tri-Star Bearish

Indication: Bearish reversal


Reliability: High
Description: During an uptrend, the market shows signs of weakness as the real bodies have grown progressively
smaller. The trend culminates with the Tri Star, identifying that there is little strength left, and signalling a return of
the bears.
It is a VERY significant reversal pattern.

11. Morning Star

Indication: Bullish reversal


Reliability: High
Description: During a downtrend, the market strengthens the bearish trend with a long black candlestick. The
second candlestick trades within a small range and closes at or near its open. This scenario generally shows the
potential for a rally, as many positions have been changed.
Confirmation of the reversal is given by the white third candlestick.
The stronger the white third body the more significant the pattern is.

12. Evening Star

Indication: Bearish reversal


Reliability: High
Description: During an uptrend, the market builds strength on a long white candlestick. The second candlestick
trades within a small range and closes at or near its open. This scenario generally shows an erosion of confidence
in the current trend. Confirmation of the trend reversal is the black third candlestick.
A gap between the second and the third bodies is not a must.
13. Morning Doji Star

Indication: Bullish reversal


Reliability: High
Description: During a downtrend, the market strengthens the bearish trend with a long black candlestick. The
second candlestick trades within a small range and closes at or near its open. This scenario generally shows the
potential for a rally, as many positions have been changed. Confirmation of the trend reversal is given by the white
third candlestick.
The Morning Doji Star is a fully realized bullish Doji Star pattern.
It is important reversal signal.

14. Evening Doji Star

Indication: Bearish reversal


Reliability: High
Description: During an uptrend, the market builds strength on a long white candlestick. The second candlestick
trades within a small range and closes at or near its open. This scenario generally shows an erosion of confidence
in the current trend. Confirmation of the trend reversal is the black third candlestick. The Evening Doji Star
indicator is the fully realized bearish Doji Star pattern.

15. Rising Three Methods

Indication: Bullish continuation


Reliability: High
Description: During an uptrend, a long white candlestick occurs, following by three candlesticks of small real bodies
that fall into a short downtrend. On the fifth candlestick, the bulls come in strong to close at a new high. This small
downtrend, in between two long white candlesticks, is consistent with investors taking a break. The upward trend
should continue.
It has more significance if volume of white candlesticks is greater than on black candlesticks.

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