Graham Neary of FuturesTechs.com outlines this set of important candlestick patterns and what they mean for the market.
1. Bullish Marabuzo
Number of candles: 1
Description:
long green candle which opens near its low, and closes near its
high.
Implications: Bullish
2. Bearish Marabuzo
Number of candles: 1
Description:
long red candle which opens near its high, and closes near its
low
Implications: Bearish
3. Doji
Number of candles: 1
Description: candle which
closes near where it opened
Implications: Reversal
4. Shooting Star
Number of candles: 1
Description:
candle which closes near where it opened, at the bottom of the period's range
Implications:
Bearish Reversal (in an uptrend)
5. Hammer
Number of candles: 1
Description: candle
which closes near where it opened, at the top of the period's
range
Implications: Bullish Reversal (in a downtrend)
6. Hanging Man
Number of candles: 1
Description:
candle which closes near where it opened, at the top of the period's
range
Implications: Bearish Reversal (in an uptrend) (only weak
effectiveness)
7. Inverted Hammer
Number of candles: 1
Description:
candle which closes near where it opened, at the bottom of the period's
range
Implications: Bullish Reversal (in a downtrend) (only weak
effectiveness)
NEXT PAGE: 7 More Tradable Patterns
|pagebreak|8. Bullish Engulfing Pattern
Number of candles:
2
Description: green candle with a lower open and a higher close than the
previous candle
Implications: Bullish Reversal (in a downtrend)
9. Bearish Engulfing Pattern
Number of candles:
2
Description: red candle with a higher open and a lower close than the
previous candle
Implications: Bearish Reversal (in an uptrend)
10. Harami
Number of candles: 2
Description: candle
with a real body contained within the range of the prior real body (which must
have moved in the direction of the prior trend)
Implications: Reversal
(only weak effectiveness)
11. Dark Cloud Cover
Number of candles: 2
Description:
red candle with a higher open than the previous candle, but a close in the
bottom half of that prior candle
Implications: Bearish Reversal (in an
uptrend)
12. Piercing Pattern
Number of candles: 2
Description:
green candle with a lower open than the previous candle, but a close in the top
half of that prior candle
Implications: Bullish Reversal (in a downtrend)
13. Morning Star
Number of candles: 3
Description:
long red candle followed by a small-bodied candle which gaps lower. The third
candle closes in the top half of the first candle
Implications: Bullish
Reversal (in a downtrend)
14. Evening Star
Number of candles: 3
Description:
long green candle followed by a small-bodied candle which gaps higher. The third
candle closes in the bottom half of the first candle
Implications: Bearish
Reversal (in a downtrend)
Graham Neary, MSTA, of FuturesTechs.com