Kingstone
Active member
As a candlestick trader, understanding the chart with the help of candlesticks has helped me a lot to know when to enter and exit a trade. I do believe that candles do not lie and they represent how the market really is. Still, no pattern is 100 percent true. Not candles, not indicators, not loving averages can predict the actual price the market will take. However, here are some of the reversal patterns I look forward to when placing a trade (buy or sell).
1. Bearish engulfing pattern: A bearish engulfing pattern is a bearish pattern that occurs in an uptrend. It signals that the bulls have taken the price up for long and are already losing grip on the market as sellers are setting in. It is a pattern formed by two candlesticks; a short bullish candle followed by a long bearish candle that must enclose the bullish candle by at least 50%. Some do take the trade of it covering less than 50% but I do not. It is too risky.
2. The Hammer: The hammer is a bullish signal that occurs in a downtrend. Buyers are ready to push the price back up after a bearish move. It is a single candlestick pattern, unlike the bearish engulfing pattern. It is believed that a single reversal candle is stronger than two or three candlestick reversal patterns (just a thought). It has the shape of a hammer. A small body followed by a long lower wick or called shadow or tail. Interestingly, this can have any color; green or red but it must occur in a downtrend to signify a bullish reversal.
1. Bearish engulfing pattern: A bearish engulfing pattern is a bearish pattern that occurs in an uptrend. It signals that the bulls have taken the price up for long and are already losing grip on the market as sellers are setting in. It is a pattern formed by two candlesticks; a short bullish candle followed by a long bearish candle that must enclose the bullish candle by at least 50%. Some do take the trade of it covering less than 50% but I do not. It is too risky.
2. The Hammer: The hammer is a bullish signal that occurs in a downtrend. Buyers are ready to push the price back up after a bearish move. It is a single candlestick pattern, unlike the bearish engulfing pattern. It is believed that a single reversal candle is stronger than two or three candlestick reversal patterns (just a thought). It has the shape of a hammer. A small body followed by a long lower wick or called shadow or tail. Interestingly, this can have any color; green or red but it must occur in a downtrend to signify a bullish reversal.