A candlestick pattern shows price movement in a set timeframe, using open, high, low & close data to help traders identify trends, sentiment, and possible reversals.
An example of a candlestick pattern is the Bullish Engulfing, where a small red candle is followed by a large green one that engulfs the previous one, signalling a reversal.
Candlestick patterns show market psychology; bullish patterns reflect buying pressure, while bearish ones show selling dominance, helping traders predict price moves.
Candlestick patterns include bullish, bearish & continuation types like Doji, Hammer, Engulfing, and Morning Star; used to spot trend reversals and gauge market momentum.
To analyse a candlestick chart, study the body, wicks, and colours to spot patterns. Combine with volume and price action to improve trading decisions.
The components are the body, upper wick, lower wick, and colour. The body shows open-close range, wicks represent high-low points, and colour indicates bullish or bearish.
Common candlestick patterns include Doji, Hammer, Shooting Star, Morning/Evening Star, Engulfing, Piercing Line, & Marubozu; used to spot trend reversals & market signals.
The main difference is Bullish candlestick patterns signal upward momentum or reversals, while bearish patterns indicate selling pressure & downtrends.
Single patterns form from one candle, while double need two, and triple use three consecutive candles to reflect price action and trend signals.
Structure:
Single patterns are simple to read, whereas double require comparison, and triple offer stronger confirmation with slightly more complexity.
Complexity:
Single gives instant trend clues, while double confirms reversals or continuation, and triple offers strong, reliable trend change signals.
Common Patterns:
Single is less reliable and needs confirmation, while double is more accurate, and triple offers the highest reliability for trend prediction.
Reliability:
Single is for quick trend cues, while double helps confirm direction, and triple is ideal for validating trend momentum and major shifts.
Usage:
Single works best with indicators, while double supports key-level reversals, and triple gives strong entry/exit cues for trend-based trades.
Trading Strategy: