The displayed image is an educational chart showing common Japanese Candlestick Patterns used in technical analysis of financial markets, such as the stock market, cryptocurrencies, or forex.
Each pattern consists of one or more candles and indicates a potential reversal in trend (upward or downward) or its continuation.
Let me analyze each pattern present in the image:
Bearish Reversal Patterns: These patterns indicate that the current uptrend might reverse into a downtrend.
* Bearish Engulfing:
* Consists of a small green candle followed by a large red candle that completely engulfs the green candle.
* Indicates a strong shift from buyers to sellers.
* Bearish Tweezer:
* Consists of two or more candles where their highs are equal (or very close) after an uptrend.
* Indicates that the resistance level has been tested and buyers were unable to break through.
* Evening Star:
* Consists of three candles: a large green candle, followed by a small candle (green or red) with a price gap, then a large red candle that closes deep within the body of the first green candle.
* A strong bearish reversal pattern, especially after an uptrend.
* Shooting Star:
* A small red or green candle with a long upper wick and a small or nonexistent lower wick.
* Appears after an uptrend and indicates strong rejection of high prices by sellers.
* Three Black Crows:
* Three consecutive long red candles, each opening within the body of the previous candle and closing at a new low or near it.
* Indicates a strong and sustained downtrend.
Bullish Reversal Patterns: These patterns indicate that the current downtrend might reverse into an uptrend.
* Bullish Engulfing:
* Consists of a small red candle followed by a large green candle that completely engulfs the red candle.
* Indicates a strong shift from sellers to buyers.
* Bullish Tweezer:
* Consists of two or more candles where their lows are equal (or very close) after a downtrend.
* Indicates that the support level has been tested and sellers were unable to break through.
* Hammer:
* A small red or green candle with a long lower wick and a small or nonexistent upper wick.
* Appears after a downtrend and indicates strong rejection of low prices by buyers.
* Inverted Hammer:
* A small red or green candle with a long upper wick and a small or nonexistent lower wick, but it appears after a downtrend.
* Unlike the 'Shooting Star' in appearance, but it indicates a potential bullish reversal when it appears at the bottom of a trend.
* Three Inside Up:
* Consists of three candles: a large red candle, followed by a green candle that is fully contained within the body of the red candle, and then a third green candle that closes above the high of the first red candle.
* A strong bullish reversal pattern after a downtrend.
* Three White Soldiers:
* Three consecutive long green candles, each opening within the body of the previous candle and closing at a new high or near it.
* Indicates a strong and sustained uptrend. (Shown as 'three white' only in the image).
Continuity or Indecision Patterns:
* Dojis:
* A candle with a very small or nonexistent body (a horizontal line), with both upper and lower wicks.
* Indicates a state of indecision or uncertainty in the market, where buying and selling forces are almost equal. It can precede a reversal.
* Spinning Tops:
* A candle with a small body and two long wicks, upper and lower, that are almost equal.
* Also indicates uncertainty in the market, but is more specific than a doji. It may precede a reversal or continuation depending on its context.
Summary:
The image is an excellent visual reference for traders and technical analysts to understand common Japanese candlestick patterns and how to interpret them to signal potential changes in market trends. It is important to note that these patterns are most effective when used in conjunction with other technical analysis tools and considering the overall market context.
