1. Learn the Basics
Candlestick charts show open, high, low, close, and volume. Understanding bars and wicks is essential before diving into patterns .
2. Reversal Patterns (Sign of a trend change)
Double bottom (“W” shape)
Price hits support twice, with a bounce in between. When it breaks above the peak between dips, and volume increases, that confirms a bullish reversal .
Inverse head-and-shoulders
Three troughs appear, the middle one lowest. A breakout above the neckline—ideally on higher volume—signals a strong bullish reversal .
Hammer / Inverted hammer & Morning star
Hammer: small body with long lower wick at the bottom of a downtrend; it shows buyers stepped in .
Morning star: three candles—long bearish, small indecisive, then long bullish—often means trend reversal .
3. Continuation Patterns (Trend likely to resume)
Bullish flag and pennant
Flag = short sideways channel after a sharp rise. Pennant = small symmetrical triangle after a big move. Volume usually dips during the pattern and jumps on breakout .
Ascending triangle
Flat resistance line with rising lows suggests buyers are creeping up. A breakout above the top on volume points to upward continuation .
Symmetrical triangle (in uptrend)
Converging lines, and when price breaks out in line with the prior trend it’s typically bullish .
Cup and handle
Rounded dip (cup), followed by a smaller sideways pullback (handle). Expect volume to drop during the cup and then spike on the breakout .
4. Candlestick Confirmation Tools
Bullish engulfing
A large bullish candle completely covers the prior bearish one—buyers overtook sellers .
Three white soldiers
Three consecutive strong bullish candles, signaling sustained buying .
Piercing line & bullish harami
Piercing line: second bullish candle opens lower but closes above midpoint of prior bearish candle
Bullish harami: small bullish candle completely inside a larger bearish one—shows hesitation and potential reversal .
5. Use Volume and Indicators
After spotting a pattern, check volume: breakout should coincide with rising volume . Use RSI (above 50), MACD signal-line crossovers, or bullish diverging MACD to double-check .
6. Plan Entries, Stops, and Targets
Entry: just above breakout point.
Stop-loss: just below breakout or pattern low.
Target: measure pattern’s height and project from the breakout .
7. Practice on Binance
Try these patterns in Binance’s charting tools using demo mode or backtests. Start small, track volume, confirm with indicators, and review your trades to refine your strategy.
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