Beginner Traders: Understand Confirmation Candles for Better Trades
For every beginner trader, understanding confirmation candles is a key step toward mastering price action. Two of the most important confirmation candles you need to recognize are the hammer candle and the engulfing candle.
The hammer candle usually appears after a downtrend and signals a potential reversal to the upside. It has a small body near the top of the candle and a long lower wick, showing that buyers managed to push the price back up after strong selling pressure. When you spot a hammer after a downtrend, it’s often a sign that the price is likely to rise.
Next, we have the engulfing candle pattern. An engulfing candle forms when a larger candle completely "engulfs" the previous smaller candle. In a bullish scenario, a green candle covers a smaller red candle. The red candle typically has two small wicks and a large body. When this happens during a downtrend, it’s a strong indication that buyers have taken control, and a reversal to an uptrend is likely.
Remember, in an uptrend, the colors are reversed — the engulfing pattern would involve a larger red candle taking over a smaller green one, signaling a potential price drop.
Good luck to everyone and happy trading! 🚀
