If you have covered all the fundamental elements of the Forex candlestick chart and know about them thoroughly, it is time for you to dive deeper. There are powerful candlestick patterns that depict a detailed picture of the market condition. Once you develop the ability to identify every single signal these patterns convey, you will feel a sense of authority in your trading approach. That is because you will be able to notice any subtle trends of the current market.
Powerful Candlestick Patterns
Hundreds of candlestick patterns have been detected, which imply different critical market conditions. Below, we will project light upon some of the most powerful patterns. These patterns are highly reliable, and they will infallibly provide you some short-term and long-term opportunities.
1. Evening Star Pattern
This pattern is formed with three candles. You will see a tall bullish bar that carries the movement to a unique high. You can call it a bearish reversal pattern that spawns at the pick of an uptrend. It indicates a slowly falling momentum before a downtrend starts to form.
You cannot just identify an Evening star pattern by observing three candles. You also have to understand the previous price-action and the point where this pattern appeared within the existing trend range. Visit the website of Saxo to learn more about the reversal pattern. You can also seek help from elite traders in Hong Kong to expand your knowledge of the candlestick pattern trading method.
For an evening star pattern, the market should exhibit a higher high and a higher low. The tall bullish bar is a consequence of a great buying demand and the running uptrend’s perpetuation. However, the second and the small bar represents the beginning sign of a weak uptrend. This bar often gaps higher as its high attains more height. The pattern also has a large downtrend candle, which follows some lower lows and lower highs.
2. Three Black Crows
You will see three black bars at or close to the high of a bullish bar. These three black bars will be posting their lower lows, which are also near to the intrabar lows.
This pattern will depict the continuation of a plummeting move, which will have even lower lows. Such lows can probably trigger a wide-scale downtrend.
You will find a three black crow pattern most often after a bullish movement. A down gap may open the pattern. Consecutive candles may open while remaining in the body of the preceding candles. This will indicate that the bears can keep the price close to the session’s low.
3. Two Black Gapping
This is another pattern that shows the continuation of a bearish trend. It consists of two bearish bars, and they can be any black bars but the Dojiones. For instance, you can see a short black bar, a medium black bar, a long black bar, a black spinning top, and different types of black Marubozu.
In cases where a black spinning top occurs in this pattern, no shadows’ length exccedsmore than twice the main body length. Often, the shadow doesn’t exceed the length of the body. You will notice the opening of the first candle gaps are lower than the previous bar. The second line can be the starting line of a reversal bullish pattern like a homing pigeon or a bullish harami.
One thing is certain about this pattern: the first black bar will create a gap between itself and the previous one regardless of whether it is bearish or bullish trend. The second black bar will have a high below the first one’s high.
There are many reversal and perpetuation indications given by various candlestick patterns that don’t work in the modern digital environment. But gaining aptitude in recognizing these powerful candlestick patterns and the signals they depict will make it easier for you to make the right trading decisions.