Candlestick Patterns

All About Candlestick Patterns

Intro

@cryptocred on candlestick charts

Shadows

Long shadows serve as an indicator of the comparative strengths between the buyers and the sellers. The longer the shadow, the more likely prices move in the opposite direction.

\ source: Forex Candlesticks Made Easy

Doji

All doji are created when price closes at or around the same price as opening, and all gains or losses are returned. The length and direction of the shadow are important indicators. Doji commonly appear when there is indecision in the market, at a turning point in a trend.

You will find it during periods of resting after big moves higher or lower. When found at the bottom or top of a trend, it is a sign that trend is losing strength.

As an indecisive indicator, look for confirmation.

Single Candlesticks

Common Patterns

Reversal Candlesticks

  • Tradingview - Scripts - Reversal Patterns
    1. Engulfing
    2. Harami
    3. Piercing Line
    4. Morning Star
    5. Evening Star
    6. Belt Hold
    7. Three White Soldiers
    8. Three Black Crows
    9. Three Stars in the South
    10. Stick Sandwich
    11. Meeting Line
    12. Kicking
    13. Ladder Bottom

According to Bulkowski, the most reliable reversal candlestick patterns are:

Three Stars in the South

Rare but Potent, bullish reversal

Three Line Strike, Bearish

Bullish Reversal

Supposed to be a bearish continuation, but is bullish according to Bulkowski.

Three white soldiers

Rare bullish reversal.

Three black crows

\ Bullish Reversal

Identical three crows

Each days opening is near the previous days close, sucessively lower, a bearish reversal of the uptrend. Not common, but reliable.

Engulfing, bearish

A reliable bearish reversal where second candle is bullish with a longer body in both directions than the previous bullish candle.

Morning star

Bullish Reversal

Morning doji star

Bullish Reversal: Same idea as the morning star, but doji.

Evening star

Bearish Reversal

Three outside up

Bullish Reversal

Shooting Star

Shooting Star is supposed to be a bearish reversal occuring in an uptrend. Accoring to bulkowski that reversal happens only 60% of the time.

Overall I will pass on these, since there is no clear indication from either.

Abandoned Baby

Bearish Breakaway

Rare Bearish Reversal

Top Performing Continuation Patterns

^^^includes a number of his top reversal patterns, only including continuance patterns not already described

Inverted Hammer

Inverted hammer is supposed to be a bullish reversal when occuring in a downtrend but a well performing bearish continuation around 60% of the time, according to Bulkowski.

DYOR on Inverted Hammer

Upside Tasuki Gap

Bullish Continuation

Matching Low

Well performing bearish continuation 60% according to bulkowski. According to prevailing thought its a reversal pattern.

The following are the top performing candlesticks from a pirated copy of Bulkowski’s rankings that I can’t include here:

Another I’ll pass on until I can DYOR.

Window, Falling

Two Black Gapping Candle

Stick Sandwich

Thrusting

Meeting Lines

In Neck

Meeting Lines

Long Black Day

Three Inside Up

Homing Pigeon

Dark Cloud Cover

Downside Tasuki Gap


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