Traders use candlestick patterns to spot trend reversals and confirm market moves. Here are four key patterns to know:
1️⃣ Hammer Candle 🔨 (Buy Signal)
✅ Shape: Small body with a long lower tail, and the absence or shortness of the upper tail.
✅ Meaning: It indicates an upward reversal after a downtrend, where sellers pushed the price down, but buyers regained control and closed the candle near the top.
📌 Trading Tip: Wait for the next candle to close above it to confirm entering a buy trade.
2️⃣ Shooting Star Candle 🌠 (Sell Signal)
❌ Shape: Small body with a long upper tail and absent or short lower tail.
❌ Meaning: A sign of a bearish reversal after an uptrend, where buyers tried to push the price up but sellers took control and pushed the price back down.
📌 Trading Tip: Wait for the next candle to close below it to confirm a sell trade.
3️⃣ Bullish Engulfing Pattern 🐂📈 (Buy Signal)
✅ Shape: A large green candle completely engulfs the previous red candle.
✅ Meaning: Reflects a strong purchasing power that may lead to a price increase, especially if it appears after a downtrend.
📌 Trading Tip: Enter a buy trade after the engulfing candle closes.
4️⃣ Bearish Engulfing Pattern 🐻📉 (Sell Signal)
❌ Shape: A large red candle completely engulfs the previous green candle.
❌ Meaning: A strong signal of a bearish reversal, where sellers dominate the market, usually appears at the end of an uptrend.
📌 Trading Tip: Sell after the downtrend is confirmed by a subsequent confirmation candle.
🔍 Summary:
✅ Buy signals: hammer candle, bullish engulfing.
❌ Sell signals: Shooting Star, Bearish Engulfing.
⚠ Confirmation is essential! Do not enter the trade until the next candle confirms the expected direction.
Understanding these patterns can help you predict price movements and make smarter trading decisions! 🚀📊
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