Spotting Patterns: Turning Charts Into Signals

Yesterday, we discussed candlestick charts and how to read them. Today, we’re diving into candlestick patterns—the building blocks of smart trading decisions.

Candlestick patterns reveal the psychology of the market:

Bullish Patterns indicate a potential upward move.

Bearish Patterns warn of a possible decline.

Key Patterns You Should Know:

1. Bullish Engulfing: A small red candle followed by a large green candle. This signals strong buying pressure.

2. Hammer: A small body with a long lower wick. Indicates a potential reversal upward.

3. Shooting Star: A small body with a long upper wick. Signals a possible price drop.

4. Doji: A candle with almost no body. Reflects market indecision.

Why Patterns Matter:

Recognizing these patterns can help you:

Spot trend reversals before they happen.

Avoid traps like false breakouts.

Enter trades at the right time.

Next Up: Tomorrow, we’ll explore support and resistance levels—the key zones that traders use to predict price movement.

Keep learning, and let’s decode the market together!

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