All candlestick patterns for Trading : Bullish reversal patterns
מעודכן
Hello everyone 😃
In this article we present Most useful bullish reversal patterns of candlesticks and How to trade with them. ( Sorry for my irregular chart 🤦♂️ I'm not good in drawing 😁 )
📊 What is Candlestick charts ?
Candlestick charts are a type of financial chart for tracking the movement of securities. They have their origins in the centuries-old Japanese rice trade and have made their way into modern day price charting. Some investors find them more visually appealing than the standard bar charts and the price actions easier to interpret.
Candlesticks are so named because the rectangular shape and lines on either end resemble a candle with wicks. Each candlestick usually represents one day’s worth of price data about a stock. Over time, the candlesticks group into recognizable patterns that investors can use to make buying and selling decisions.
📍 Bullish reversal Candlestick Patterns : Over time, groups of daily candlesticks fall into recognizable patterns with descriptive names like three white soldiers, dark cloud cover, hammer, morning star, and abandoned baby, to name just a few. Patterns form over a period of one to four weeks and are a source of valuable insight into a stock’s future price action. Before we delve into individual bullish candlestick patterns, note the following two principles:
1- Bullish reversal patterns should form within a downtrend. Otherwise, it’s not a bullish pattern, but a continuation pattern.
2- Most bullish reversal patterns require bullish confirmation. In other words, they must be followed by an upside price move which can come as a long hollow candlestick or a gap up and be accompanied by high trading volume. This confirmation should be observed within three days of the pattern.
📌 The bullish reversal patterns can further be confirmed through other means of traditional technical analysis—like trend lines, momentum, oscillators, or volume indicators—to reaffirm buying pressure. There are a great many candlestick patterns that indicate an opportunity to buy. We will focus on five bullish candlestick patterns that give the strongest reversal signal.
🈺 Now let's talk about patterns that we provided on chart.. !
- Hammer : Hammers have a small real body and a long lower shadow.
📚 The hammer candlestick shows sellers came into the market during the period but by the close the selling had been absorbed and buyers had pushed the price back to near the open.
- Inverted hammer : The Inverted Hammer formation is created when the open, low, and close are roughly the same price. Also, there is a long upper shadow which should be at least twice the length of the real body.
📚 The Inverted Hammer candlestick formation occurs mainly at the bottom of downtrends and can act as a warning of a potential bullish reversal pattern.
- Dragonfly DOJI : The open, high, and close prices match each other, and the low of the period is significantly lower than the former three. This creates a "T" shape.
📚 A dragonfly DOJI after a price decline warns the price may rise. If the next candle rises that provides confirmation.
- Bullish kicker : This pattern is characterized by a sharp reversal in price over the span of two candlesticks.
📚 Traders use kicker patterns to determine which group of market participants is in control of the direction.
- Bullish spinning top : A spinning top is a candlestick pattern that has a short real body that's vertically centered between long upper and lower shadows.
📚 Spinning tops are a sign of indecision in the asset; the long upper and lower shadows indicate there wasn't a meaningful change in price between the open and close.
- Bullish engulfing : This pattern appears in a downtrend and is a combination of one dark candle followed by a larger hollow candle.
📚 Bullish engulfing patterns are more likely to signal reversals when they are preceded by four or more black candlesticks.
- Bullish harami : It is generally indicated by a small increase in price (signified by a white candle) that can be contained within the given equity's downward price movement (signified by black candles) from the past couple of days.
📚 A bullish harami is a candlestick chart indicator for reversal in a bear price movement.
- Tweezers bottom : A tweezers bottom occurs when two candles, back to back, occur with very similar lows.
📚 Tweezers are more meaningful as part of other trends, especially pullbacks.
- Morning star : A morning star is a visual pattern made up of a tall black candlestick, a smaller black or white candlestick with a short body and long wicks, and a third tall white candlestick.
📚 The middle candle of the morning star captures a moment of market indecision where the bears begin to give way to bulls. The third candle confirms the reversal and can mark a new uptrend.
- Morning DOJI star : A Morning Doji Star consists of a long bearish candle, followed by a Doji that has gapped below it, then a third bearish candle that closes well within the body of the first candle and in doing so confirming the reversal. It is considered a strong bullish price reversal candlestick pattern.
📚 It is considered as a signal of a potential upcoming reversal of the current trend of the market.
- Bullish abandoned baby : It forms in a downtrend and is composed of three price bars. The first is a large down candle, followed by a doji candle that gaps below the first candle. The next candle opens higher than the doji and moves aggressively to the upside.
📚 This pattern signals the potential end of a downtrend and the start of a price move higher.
- Three white soldiers : The pattern consists of three consecutive long-bodied candlesticks that open within the previous candle's real body and a close that exceeds the previous candle's high.
📚 Three white soldiers are considered a reliable reversal pattern when confirmed by other technical indicators like the relative strength index (RSI).
📌 These candlesticks should not have very long shadows and ideally open within the real body of the preceding candle in the pattern.
- Three line strike : The bullish formation is composed of a big green candle, 3 up candles, and one down candle erasing the advance made by the prior 3 candles.
📚 After prices trend in a particular direction, they will pause before refreshing higher. This is seen as a continuation pattern and is different from a pattern that would signal a reversal.
- Three inside up : The three inside up pattern is a bullish reversal pattern composed of a large down candle, a smaller up candle contained within the prior candle, and then another up candle that closes above the close of the second candle.
📚 Consider using these patterns within the context of an overall trend. For example, use the three inside up during a pullback in an overall uptrend.
📌 These patterns are short-term in nature, and may not always result in a significant or even minor trend change.
- Three outside up : The three outside up and three outside down patterns are characterized by one candlestick immediately followed by two candlesticks of opposite shading.
📚 Three outside up/down are patterns of three candlesticks that often signal a reversal in trend.
📌 Each tries to leverage market psychology in order to read near-term changes in sentiment.
- Three stars in the south : It is formed by three black or red (down) candles of decreasing size following a price decline.
📚 The pattern indicates a bullish reversal, although the price should ultimately move in the expected direction before taking a trade. This is called confirmation.
📌 The three stars in the south candlestick pattern is a very rare pattern that doesn't typically precede large price moves.
- Bullish stick sandwich pattern : One candlestick pattern is the stick sandwich because it resembles a sandwich when plotted on a price chart - they will have the middle candlestick oppositely colored vs. the candlesticks on either side of it, both of which will have a larger trading range than the middle candlestick.
📚 Candlestick charts are used by traders to determine possible price movement based on past patterns;
These patterns may indicate either bullish or bearish trends, and so should be used in conjunction with other methods or signals.
- Matching low : The matching low pattern is created by two down candlesticks with similar or matching closing prices.
📚 The pattern occurs following a price decline and signals a potential bottom or that price has reached a support level.
- Break breakaway : The first candle in the formation is long and black. The second candle is also long gaps away from the first in the direction of the trend. The third candle can be either color, but does not show a change in trend direction. The fourth candle continues in the direction of the proceeding trend. The fifth candlestick has a long white body, opens against the trend and continues in that direction to close the gap.
📚 The Bullish Breakaway pattern is a five candle reversal formation that occurs during a downtrend.
- Bullish Tri-Star : Tri-Star patterns form when three consecutive DOJI candlesticks appear at the end of a prolonged trend.
📚 A Tri-Star is a three line candlestick pattern that can signal a possible reversal in the current trend, be it bullish or bearish.
📍 A Tri-Star pattern near a significant support or resistance level increases the probability of a successful trade.
- MARUBOZU : A large real body, There will be no shadow at either sides of the candle, The color of the candle will be of a significant meaning.
📚 MARUBOZU means “bald head” or “shaved head” in Japanese, and this is shown in the absence of wicks or shadow on the candlestick, meaning that the opening or closing price will be the same as the maximum prices of the candle. The absence of shadow indicates that the trading session opened at a high price and close at a low price at the end of the day (or the opposite).
🔴 NOTES :
- There are many bullish reversal patterns that we only present most useful patterns for trading !
- Most of them have 2 definition and direction ( Bearish and Bullish ) and we only present bullish reversal patterns !
- For better result in your trading, You need to confirm patterns through trend lines, momentum, oscillators, or volume indicators.
⏰ Best timeframes to work with candlestick patterns :
Traders usually use Monthly, Weekly, Daily, 4-Hour, Hourly, 15-Minute and even 1-Minute timeframes.
Ideally, traders pick the main timeframe they are interested in and then choose a longer and a shorter timeframe to complement the main one.
The longer timeframes typically contain fewer and more reliable signals. The shorter timeframes usually contain more signals with less accuracy.
There are several types of traders, and they have different trading styles.
📍 We will provide more contents for candlestick patterns in next weeks !
So stay tuned and support us with your LIKES, COMMENTS and FOLLOWINGS...
Have a great moments.
Helical_Trades
In this article we present Most useful bullish reversal patterns of candlesticks and How to trade with them. ( Sorry for my irregular chart 🤦♂️ I'm not good in drawing 😁 )
📊 What is Candlestick charts ?
Candlestick charts are a type of financial chart for tracking the movement of securities. They have their origins in the centuries-old Japanese rice trade and have made their way into modern day price charting. Some investors find them more visually appealing than the standard bar charts and the price actions easier to interpret.
Candlesticks are so named because the rectangular shape and lines on either end resemble a candle with wicks. Each candlestick usually represents one day’s worth of price data about a stock. Over time, the candlesticks group into recognizable patterns that investors can use to make buying and selling decisions.
📍 Bullish reversal Candlestick Patterns : Over time, groups of daily candlesticks fall into recognizable patterns with descriptive names like three white soldiers, dark cloud cover, hammer, morning star, and abandoned baby, to name just a few. Patterns form over a period of one to four weeks and are a source of valuable insight into a stock’s future price action. Before we delve into individual bullish candlestick patterns, note the following two principles:
1- Bullish reversal patterns should form within a downtrend. Otherwise, it’s not a bullish pattern, but a continuation pattern.
2- Most bullish reversal patterns require bullish confirmation. In other words, they must be followed by an upside price move which can come as a long hollow candlestick or a gap up and be accompanied by high trading volume. This confirmation should be observed within three days of the pattern.
📌 The bullish reversal patterns can further be confirmed through other means of traditional technical analysis—like trend lines, momentum, oscillators, or volume indicators—to reaffirm buying pressure. There are a great many candlestick patterns that indicate an opportunity to buy. We will focus on five bullish candlestick patterns that give the strongest reversal signal.
🈺 Now let's talk about patterns that we provided on chart.. !
- Hammer : Hammers have a small real body and a long lower shadow.
📚 The hammer candlestick shows sellers came into the market during the period but by the close the selling had been absorbed and buyers had pushed the price back to near the open.
- Inverted hammer : The Inverted Hammer formation is created when the open, low, and close are roughly the same price. Also, there is a long upper shadow which should be at least twice the length of the real body.
📚 The Inverted Hammer candlestick formation occurs mainly at the bottom of downtrends and can act as a warning of a potential bullish reversal pattern.
- Dragonfly DOJI : The open, high, and close prices match each other, and the low of the period is significantly lower than the former three. This creates a "T" shape.
📚 A dragonfly DOJI after a price decline warns the price may rise. If the next candle rises that provides confirmation.
- Bullish kicker : This pattern is characterized by a sharp reversal in price over the span of two candlesticks.
📚 Traders use kicker patterns to determine which group of market participants is in control of the direction.
- Bullish spinning top : A spinning top is a candlestick pattern that has a short real body that's vertically centered between long upper and lower shadows.
📚 Spinning tops are a sign of indecision in the asset; the long upper and lower shadows indicate there wasn't a meaningful change in price between the open and close.
- Bullish engulfing : This pattern appears in a downtrend and is a combination of one dark candle followed by a larger hollow candle.
📚 Bullish engulfing patterns are more likely to signal reversals when they are preceded by four or more black candlesticks.
- Bullish harami : It is generally indicated by a small increase in price (signified by a white candle) that can be contained within the given equity's downward price movement (signified by black candles) from the past couple of days.
📚 A bullish harami is a candlestick chart indicator for reversal in a bear price movement.
- Tweezers bottom : A tweezers bottom occurs when two candles, back to back, occur with very similar lows.
📚 Tweezers are more meaningful as part of other trends, especially pullbacks.
- Morning star : A morning star is a visual pattern made up of a tall black candlestick, a smaller black or white candlestick with a short body and long wicks, and a third tall white candlestick.
📚 The middle candle of the morning star captures a moment of market indecision where the bears begin to give way to bulls. The third candle confirms the reversal and can mark a new uptrend.
- Morning DOJI star : A Morning Doji Star consists of a long bearish candle, followed by a Doji that has gapped below it, then a third bearish candle that closes well within the body of the first candle and in doing so confirming the reversal. It is considered a strong bullish price reversal candlestick pattern.
📚 It is considered as a signal of a potential upcoming reversal of the current trend of the market.
- Bullish abandoned baby : It forms in a downtrend and is composed of three price bars. The first is a large down candle, followed by a doji candle that gaps below the first candle. The next candle opens higher than the doji and moves aggressively to the upside.
📚 This pattern signals the potential end of a downtrend and the start of a price move higher.
- Three white soldiers : The pattern consists of three consecutive long-bodied candlesticks that open within the previous candle's real body and a close that exceeds the previous candle's high.
📚 Three white soldiers are considered a reliable reversal pattern when confirmed by other technical indicators like the relative strength index (RSI).
📌 These candlesticks should not have very long shadows and ideally open within the real body of the preceding candle in the pattern.
- Three line strike : The bullish formation is composed of a big green candle, 3 up candles, and one down candle erasing the advance made by the prior 3 candles.
📚 After prices trend in a particular direction, they will pause before refreshing higher. This is seen as a continuation pattern and is different from a pattern that would signal a reversal.
- Three inside up : The three inside up pattern is a bullish reversal pattern composed of a large down candle, a smaller up candle contained within the prior candle, and then another up candle that closes above the close of the second candle.
📚 Consider using these patterns within the context of an overall trend. For example, use the three inside up during a pullback in an overall uptrend.
📌 These patterns are short-term in nature, and may not always result in a significant or even minor trend change.
- Three outside up : The three outside up and three outside down patterns are characterized by one candlestick immediately followed by two candlesticks of opposite shading.
📚 Three outside up/down are patterns of three candlesticks that often signal a reversal in trend.
📌 Each tries to leverage market psychology in order to read near-term changes in sentiment.
- Three stars in the south : It is formed by three black or red (down) candles of decreasing size following a price decline.
📚 The pattern indicates a bullish reversal, although the price should ultimately move in the expected direction before taking a trade. This is called confirmation.
📌 The three stars in the south candlestick pattern is a very rare pattern that doesn't typically precede large price moves.
- Bullish stick sandwich pattern : One candlestick pattern is the stick sandwich because it resembles a sandwich when plotted on a price chart - they will have the middle candlestick oppositely colored vs. the candlesticks on either side of it, both of which will have a larger trading range than the middle candlestick.
📚 Candlestick charts are used by traders to determine possible price movement based on past patterns;
These patterns may indicate either bullish or bearish trends, and so should be used in conjunction with other methods or signals.
- Matching low : The matching low pattern is created by two down candlesticks with similar or matching closing prices.
📚 The pattern occurs following a price decline and signals a potential bottom or that price has reached a support level.
- Break breakaway : The first candle in the formation is long and black. The second candle is also long gaps away from the first in the direction of the trend. The third candle can be either color, but does not show a change in trend direction. The fourth candle continues in the direction of the proceeding trend. The fifth candlestick has a long white body, opens against the trend and continues in that direction to close the gap.
📚 The Bullish Breakaway pattern is a five candle reversal formation that occurs during a downtrend.
- Bullish Tri-Star : Tri-Star patterns form when three consecutive DOJI candlesticks appear at the end of a prolonged trend.
📚 A Tri-Star is a three line candlestick pattern that can signal a possible reversal in the current trend, be it bullish or bearish.
📍 A Tri-Star pattern near a significant support or resistance level increases the probability of a successful trade.
- MARUBOZU : A large real body, There will be no shadow at either sides of the candle, The color of the candle will be of a significant meaning.
📚 MARUBOZU means “bald head” or “shaved head” in Japanese, and this is shown in the absence of wicks or shadow on the candlestick, meaning that the opening or closing price will be the same as the maximum prices of the candle. The absence of shadow indicates that the trading session opened at a high price and close at a low price at the end of the day (or the opposite).
🔴 NOTES :
- There are many bullish reversal patterns that we only present most useful patterns for trading !
- Most of them have 2 definition and direction ( Bearish and Bullish ) and we only present bullish reversal patterns !
- For better result in your trading, You need to confirm patterns through trend lines, momentum, oscillators, or volume indicators.
⏰ Best timeframes to work with candlestick patterns :
Traders usually use Monthly, Weekly, Daily, 4-Hour, Hourly, 15-Minute and even 1-Minute timeframes.
Ideally, traders pick the main timeframe they are interested in and then choose a longer and a shorter timeframe to complement the main one.
The longer timeframes typically contain fewer and more reliable signals. The shorter timeframes usually contain more signals with less accuracy.
There are several types of traders, and they have different trading styles.
📍 We will provide more contents for candlestick patterns in next weeks !
So stay tuned and support us with your LIKES, COMMENTS and FOLLOWINGS...
Have a great moments.
Helical_Trades
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t.me/Helical_Trades
Instagram ( Persian - فارسی ) :
instagram.com/helical_trades/
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