Candlesticks tell stories about buying and selling pressure in the market. Knowing some key patterns can give you valuable insights! Here’s a summary:
Bullish Reversal Patterns (Indicate possible rise):
* Hammer: Small body at the top and long lower shadow. Indicates potential reversal after a downtrend.
* Bullish Engulfing: White candle completely "engulfs" the previous red candle. Strong buy signal.
* Morning Star: Red candle, followed by a small indecisive candle (usually Doji) and a strong white candle. Signals the end of a downtrend.
Bearish Reversal Patterns (Indicate possible decline):
* Shooting Star: Small body at the bottom and long upper shadow. Suggests reversal after a bullish trend.
* Bearish Engulfing: Red candle completely "engulfs" the previous white candle. Strong sell signal.
* Evening Star: White candle, followed by a small indecisive candle (usually Doji) and a strong red candle. Signals the end of an uptrend.
Continuation Patterns (Suggest that the current trend may continue):
* Three White Soldiers: Three consecutive white candles with relatively long bodies and small upper shadows. Strong bullish momentum.
* Three Black Crows: Three consecutive red candles with relatively long bodies and small lower shadows. Strong bearish momentum.
Indecision Patterns:
* Doji: Candle with a very small (or nonexistent) body and variable shadows. Indicates balance between buyers and sellers, possibly preceding a reversal.
Important: No pattern is infallible! Use them in conjunction with other analysis tools (support, resistance, indicators) to confirm your signals.
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