Home  | Analysts  | Learning  | News  | Quotes  | Events  | Newsletter  | Software  | Secrets  | Write for Us  | Affiliates  | Advertise  | About  | Contact  

News courtesy of TraderQuotes.com

August 25th
UK Summer Bank Holiday


August 26th
Consumer confidence/New home sales/Richmond Fed Manufacturing Survey/FOMC minutes released

August 27th
Durable goods orders/Chicago Fed Midwest manufacturing index


August 28th
Q2 Gross Domestic Product/Census crush/Cotton consumption

August 29th
PCE deflator/Personal income, spending/NAPM survey/Existing home sales/Michigan consumer sentiment

Click for more Key Dates
 
















 

 

 

Quick Guide to Main Patterns

Candlestick charts give a more visual presentation of price action than traditional bar charts and have become the chart of choice for many technical analysts.

One candle itself can provide important information about the strength or weakness of the market during a given day or other time period, depending where the close is relative to the open. However, a candlestick pattern usually takes several candles to produce chart formations that give the best signals.

The key in candlestick chart analysis is where a given candle or candle formation occurs during the market action. Candlesticks may look identical but have an entirely different meaning after an uptrend than they do after a downtrend.

The diagrams and descriptions below cover only some of the main candlestick patterns, showing the bullish version on the left and bearish version on the right. There are many other candlestick patterns with clever names that chart analysts use.

Bullish Description Bearish

“Doji stars” - Prices at the open and close of the period are at the same level, indicating indecisiveness about price direction. The signal tends to be more dependable when it appears at a top than at a bottom.

“Stars” - Stars are reversal patterns and come in several different forms. The pattern consists of three candles, the first usually a large candle at the end of an extended trend followed by a smaller candle that leaves a gap or window and then another large body candle in the direction of the new trend. Large volume would help to confirm the reversal signal.

“Piercing line” and “dark cloud cover” - These reversal patterns are mirror images of one another and are close relatives of the engulfing patterns except that the current candle’s body does not engulf the previous candle. Instead, the market has a gap opening, then moves sharply in the opposite direction and closes more than halfway through the previous candle’s body.

“Hammer” and “Hanging Man” - These two reversal patterns look very much alike, but their name and impact on prices depend on whether they occur at the end of a downtrend or an uptrend. The signal candlestick has a small real body and a long lower shadow, suggesting the previous trend is losing momentum. This pattern also requires confirmation by the next candle.

“Harami” - The harami is a reversal pattern following a trend. Rather than engulfing the previous candle, price action for the current candle is entirely within the range of the previous candle body. This pattern requires immediate follow-through for confirmation.

“Engulfing patterns” - Prices open below the previous close (bullish) or above the previous close (bearish) and then stage a strong turnaround, producing a candle body that totally engulfs the previous candle and suggesting a change in trend direction.

“Tweezers” - Tweezers are minor reversal signals that are more important if they are part of a larger pattern. A tweezer bottom has two or more candles with matching bottoms; a tweezer top has two or more candles with matching tops.  They do not have to be consecutive candles. They do require follow-through for confirmation.


 

  1. Candlestick Chart Basics
  2. Indecision and Continuation Candlesticks
  3. Candlestick Reversal Bottoms
  4. Candlestick Reversal Tops
  5. Quick Guide to Main Patterns

Main Trading Resources Section

ADVERTISING

















 

Trading Marketplace
 

FREE OFFER

FREE Weekly newsletter for active traders
and investors trading Forex, Stocks and Futures.

Type your email address here:  

 
 

Home  | Analysts  | Learning  | News  | Quotes  | Events  | Newsletter  | Software  | Secrets  | Write for Us  | Affiliates  | Advertise  | About  | Contact  


Terms and Conditions  -  Copyright © 2008 TradingEducation.com, LLC.   All rights reserved.