14 Tradable Candlestick Patterns

04/14/2014 6:00 am EST

Focus: STRATEGIES

Graham Neary

Technical Analyst, FuturesTechs

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


Chart1

2. Bearish Marabuzo
Number of candles: 1
Description: long red candle which opens near its high, and closes near its low
Implications: Bearish

Chart2

3. Doji
Number of candles: 1
Description: candle which closes near where it opened
Implications: Reversal

Chart3

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)

Chart4

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)

Chart6

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)

Chart7

NEXT PAGE: 7 More Tradable Patterns

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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)

Chart8

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)

Chart9

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)

Chart10

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)

Chart11

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)

Chart12

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)

Chart13

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)

Chart14

Graham Neary, MSTA, of FuturesTechs.com

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