Today, we continue to explore the candlestick patterns and their application in trading. In the last lesson, we introduced the cross star. Today, we will focus on several important candlestick patterns such as the "gravestone", "dragonfly line" and "hammer hanging line", and analyze their specific applications in different market trends.

Gravestone (tombstone line)

Definition and Meaning:

  • The Gravestone is a candlestick pattern that appears at the top, usually with a long upper shadow and a short lower shadow or no lower shadow. This pattern symbolizes that the market has a strong bearish pressure, indicating that the market may be about to reverse and fall.

  • When the gravestone appears at the top of the market, it indicates that bearish pressure is accumulating, and the market may soon enter a downtrend. Therefore, investors should consider liquidating or reducing positions to avoid risk when this pattern appears.

Trading advice:

  • If a gravestone appears in an uptrend, accompanied by huge volume and high turnover rate, it is advisable to liquidate boldly. This is because a large amount of selling pressure indicates insufficient market momentum, which may continue to decline subsequently.

Dragonfly line (T-line)

Characteristics and significance

  • The dragonfly line is a candlestick pattern that appears at the bottom, characterized by a long lower shadow and a short upper shadow or no upper shadow. This pattern symbolizes strong bullish forces in the market, indicating that the market may soon reverse upward.

  • When the dragonfly line appears at the bottom of the market, it indicates that bullish forces are accumulating, and the market may soon enter an uptrend. Therefore, investors can consider buying or increasing their positions when this pattern appears.

Trading advice:

  • If a dragonfly line appears in a downtrend, accompanied by high volume, a stop-loss hunting strategy or limit buy may be adopted, buying boldly and aiming for reasonable gains. This is because a large influx of buying pressure indicates ample market momentum, which may continue to rise subsequently.

Hammer line

Definitions and characteristics:

  • The vertical line is a candlestick pattern that appears at the end of a trend, characterized by a long upper shadow and a short lower shadow or no lower shadow. This pattern symbolizes the strengthening of counter-trend forces, indicating that the market may soon reverse.

Market significance:

  • For example, when a vertical line appears at the end of a downtrend, it indicates that bullish forces are gradually gaining the upper hand, and the market may soon enter an uptrend. Therefore, investors should pay attention to the emergence of this pattern and be prepared to go long in subsequent market movements. The same applies to uptrends.

Trading advice similar to the dragonfly

Practical review

Focus on Hanying Bit to avoid getting lost
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